What recent China consumer data tells us about current tourism preferences

China’s first quarter retail growth didn’t look too bad at 4.7%. But behind the headline numbers, the actual growth varied a lot depending on which category you sit in.

For companies providing a service such as tourism or hospitality, the January-March data was particularly healthy, growing at 12.7% from 2023. On the other hand, the data wasn’t so upbeat for brands selling goods. Services now account for 43.3% of consumer expenditure, meaning consumers actually spent less on goods than a year ago. In short, they were buying less stuff, and were more price sensitive about the things they did buy.

Some goods categories have fared better than others. Food & beverage sales are tracking well - up 9%, with healthy foods commanding stronger growth in average prices and sales overall. Most things related to health are tracking well, as are mum & baby, outdoors, pets and brands that connect emotionally with their target audience. Cars also flew off the lots, with Q1 sales up 10.6% from a year ago, and EV sales up 31.8%. It helps that EVs are now cheaper than gas-powered cars in China.

What is particularly interesting about the car sales is who is driving the growth. In developing countries, there are few possessions more symbolic about reaching the middle class than a car. In China the middle class is coming to the fore most dramatically in the smaller cities. Tier 3 and lower cities made up just 23% of EV sales in 2019; this year they are tracking to account for 46%.

Increasing car ownership has many repercussions influencing consumer behaviour in China. Although many still shop online and have their purchases delivered (online sales grew 12.7% in Q1 versus the 4.7% overall), when they shop in the physical world, cars can make it easier to do so at bulk retailers, shop further afield and buy larger-format goods.

Higher car ownership also has a noticeable impact on tourism. Obviously Chinese travelling domestically are more likely to go by car, but similarly, they are more confident when they travel overseas to take self-driving holidays.

Similarly, cars have enabled more Chinese to take part in outdoor activities such as camping, which is building preferences for similar pursuits when travelling abroad.

As retail spending data illustrates, consumers coming out this side of the pandemic are more interested in having experiences than accumulating stuff. Domestic travel has been a large beneficiary, but the trajectory is positive for overseas travel too. In September last year, international travel was at just 54% of 2019-levels. It grew to 63% by December and was at 77% by Jan-Feb this year.

There are some noticeable differences in the way Chinese are travelling now than pre-pandemic. Based on some of the things we observed during this month’s May Day holiday, we highlighted a few Chinese travel trends and preferences including three ways Chinese youth are travelling, and what is appealing to youth with specialised peer tour groups.

Chinese tourists are becoming more valuable than they have been in a long time. But they also have higher standards and expectations, and will be strong advocates for overseas experiences that meet those. Conversely, they have no qualms about slamming experiences that don’t meet their expectations.

Hopefully the articles below will provide some inspiration about how to cater to post-pandemic Chinese tourists. For deeper, more specific insights and recommendations, please contact us to discuss how we can assist. 

For our Shanghai-based readers, China Skinny’s Mark Tanner will be joining an esteemed line up of speakers from brands as diverse as Gucci to Volvo at the Nordic Marketing Day 2024 on 29 May. Reserve a spot and do come and catch up with Mark on the day. More information here.