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Missed Opportunity: China’s Neglected Domestic Travellers

  • ENRIQUE MENENDEZ
  • 2016年2月18日
  • 讀畢需時 3 分鐘

LONDON, United Kingdom — Global retailers are still reeling from the Chinese New Year shopping frenzy. Stores of every size and persuasion geared up for the week-long holiday just past, arming shops with Mandarin-speaking staff, boosting inventory and decorating windows with cheerful New Year wishes, for many of the Chinese tourists who streamed into cities like Paris, Tokyo and Bangkok had one thing on their mind: shopping.

The China Outbound Tourism Research Institute reports that outbound tourists spent 57 percent of their budgets on shopping in 2014. Despite China’s slowing economy, total spending by Chinese travellers on outbound trips hit over $154 billion in 2015, an increase of 9.6 percent on the previous year, according to research firm Euromonitor International. Indeed, after years of serving the Chinese consumer abroad, most global retailers and fashion brands have become adept at capturing their spending power at flagships in Europe, Asia and North America. However, there is another opportunity that most have yet to crack: the Chinese domestic tourist.

As of 2014, Chinese domestic travellers make up 71 percent of China’s tourism market share with an aggregated revenue of almost 3 trillion yuan (about $460 billion), according to a report published by the EU SME Centre, a European Union organisation specialising in China market research. But while the volume of Chinese domestic travellers is over three fold those of outbound travellers, the latter spend a significantly larger percentage of their travel budget on shopping. The centre estimates that domestic travellers spend about 10 percent of their travel budget on shopping.

One reason for this is that prices for luxury goods can be 30 to 40 percent higher in China when compared to abroad. Until this price gap is mitigated, domestic travel retail will never be as appealing for Chinese tourists as shopping overseas.

“It’s been years that customers have experienced luxury products being cheaper outside China [so] it would take years and a lot of effort to change the customer’s perception,” says Hong Kong-based fashion retail expert Eddy Tao.

Nonetheless, the domestic Chinese travel market is growing rapidly, and spending is growing with it. For the 2016 Spring Festival period, China’s Ministry of Commerce reported that national retail sales grew to about 754 billion yuan ($115 billion), an increase of 11.2 percent from the previous year. The EU SME Centre estimates that the overall domestic tourism market will continue to grow by around 16 percent per year until 2020.

The challenge for global fashion brands will be to convince Chinese travellers to allocate a significant share of their budgets to fashion rather than small gifts and other items. “Domestically in China, we don’t see that price difference so the trigger of where you shop is less about the price difference but the accessibility of product,” says Youchi Kuo, lead expert for the Boston Consulting Group’s (BCG) Center for Customer Insight in Asia-Pacific.

China’s travel industry focuses on two extended holiday periods known as ‘golden weeks’: Chinese Lunar New Year Golden Week, also known as Spring Festival, which takes place in January or February, and the National Holiday Golden Week, which celebrates the founding of the People’s Republic of China later on October 1. A handful of other holidays such as Labour Day occur throughout the year but are not as popular with Chinese travellers as they only provide a single day off work.


 
 
 

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