Chinese Lunar New Year Golden Week

According to the Shanghai Statistics Bureau 2011 census, 9 million of Shanghai’s 23 million residents are long-term migrants. During Chinese Lunar New Year Golden Week, residents tend to return to their hometowns across China to spend the holiday season with their families.

This means that during the Lunar New Year, shopping capitals like Shanghai and Beijing appear like a ghost town, and consequently, many retail stores are closed. But the weeks leading up to the mass exodus present a potentially lucrative selling period that is currently under-served.

“People who live in big cities go to their hometowns or villages, they buy something and they send or bring it to the parents. That’s kind of how it’s been with people in China. Rather than buying locally [at their destination], they will buy it from big cities and then transport it to the hometown,” says David Zhao, founder and chief executive officer of Shangpin.com, a Chinese retailer selling fashion brands like Lanvin and Topshop.

E-commerce could play a larger role during this period as the convenience of having items shipped directly to their hometown would be appealing to some Chinese consumers, Zhao says.

But in order to capitalise on this opportunity, global brands must treat domestic Chinese travellers with equal care and consideration as they do international travellers, experts note. Many brands invest heavily in attracting the international Chinese traveller, launching advertising campaigns to educate the consumer on what to buy before they have even left China. But few international brands have done the same to trigger domestic retail for what can be a very specific traveller within China.

While many Chinese will return to their homes during the Spring Festival, wealthier Chinese have the option of taking luxury family vacations to a preferred domestic resort destination, such as Sanya in Hainan Province. International destinations like Hawaii and Thailand remain important, but Sanya, marketed as China’s South Sea “paradise,” provides a relaxed and familiar environment to shop. Hoping not to miss out on the opportunity, over 300 brands including Prada, Louis Vuitton and Rolex have set up shop in the favoured getaway.

With two purchasing points — the CDF Mall, the largest duty free mall in the world, and the Meilan International Airport — the island is one of the most accessible and valuable duty-free opportunities in China. Since local authorities lifted the limit on duty-free shopping on February 2 this year, travellers to Hainan can spend up to 1,600 yuan (about $2,450) per visit, twice a year. In just one week, around the 2016 Chinese New Year period, the Meilan International Airport saw 30,000 customers spend more than 60 million yuan (about $9.1 million).

But Sanya’s duty-free sale points are an exception on the mainland. Until the price gap for consumer goods between the domestic and overseas market is narrowed, the overall value of China’s domestic travel market for global retailers will be less attractive than the market driven by the enthusiastic outbound Chinese tourist.

Indeed, international Chinese travellers account for a larger percentage of retail sales, but China’s domestic travel market is significantly larger. If fashion brands become better aware of who the domestic traveller is, what motivates them and how to influence their purchases, then China’s golden weeks could become an even more golden opportunity than they already are.