After years of historical isolation, people from the middle-kingdom are flocking abroad in record numbers. In 2013, ninety-seven million Chinese tourists went to foreign countries, an increase of 14 million from 2012. These record numbers are set to expand, reaching 100 million by 2015. Foreign businesses have a love-hate relationship with the new influx of Chinese tourists, wanting to attract the huge amounts of capital offered by the travellers, but also resenting the habits and cultural norms of the inexperienced globe trotters. In this week’s blog post, we hope to provide an overview of the outbound tourism of China, analyzing the most popular destinations, methods of travel, spending habits and the cultural impact of the Chinese travellers abroad.
In 2000, the number of Chinese visitors to foreign countries numbered around 10 million. In just fourteen years, these numbers had increased nearly tenfold; fuelled by China’s rapid urbanization levels, rising disposable incomes and the relaxation of government restrictions on outbound travel. Now, nearly one in ten international tourists worldwide are Chinese and the new travellers are eager to experience the cultures previously closed off to them. According to DaoDao, the Chinese version of TripAdvisor, the most popular locations for Chinese tourists continue to be Southeast Asian destinations, with Hong Kong; Phuket, Thailand; and Taiwan, topping the list respectively. Interest in South Korea and Japan is exploding. Europe is also becoming increasingly attractive with Paris, France, now reaching the fifth most visited destination. Dubai, as the sixth most popular destination, attracted 276,000 Chinese visitors in 2013, reflecting the allure of luxury shopping opportunities – but more on this trend later.
Chinese tourists are renowned for travelling in large bus tours, intent on seeing the most sites possible in a short amount of time. While group travel continues to dominate the market, a new trend of independent travellers are emerging from China demanding a more authentic experience from their excursions abroad, placing an emphasis on the quality of a trip, and not on the quantity of the places visited. In fact, in the most recent Chinese International Travel Monitor report (CITM), two-thirds of consumers surveyed said that they now preferred to travel independently. Most Chinese visits to East Asia are now self-organized, constituting 80% of all visits to Hong Kong, and 60% of all visits to Thailand in 2013. Europe is the next most popular destination, receiving 28% of independent travellers in 2013, according to Ningbo University’s Sino-European Institute of Tourism and Culture.
Independent travellers are typically, young, affluent members of Generation Y – those born after 1980. Technically savvy and autonomous, they are leading a travel planning revolution in China. According to the CITM, online bookings now account for over 50% of all international reservations made in China. Independent travellers typically trust their own research more than the recommendations of a travel agent, valuing word-of-mouth recommendations on travel discussion boards and social media above all else. Ctrip is China’s largest online travel booking site, taking 55% of the market share last year. As online bookings account for 40% of the company’s overall sales, Ctrip also employs 7000 people to man its telephone booking service. Ctrip offers both group and individual travel options, however they have recently placed greater emphasis on the development of their upmarket travel options online, recently offering a 500,000 RMB global tour – within nine minutes of the deal being online, all thirty places on the trip were sold out!
Chinese spending habits abroad are now world renowned. Dubbed “walking-wallets” by one observer, Chinese tourists now constitute the world’s largest spenders abroad, splurging an average of $1000 per day during their trips. In 2013, Chinese tourists spent a total of $129 billion abroad, followed by the Americans at $86 billion. While the mentality is slowly changing, Chinese tourists find shopping to be of vital importance to their travel plans. In fact, 39% prefer to purchase luxury items in Hong Kong, 24% prefer to shop in Europe, and 10% in the United States. There are a number of reasons for this, with the most significant being the cost of imported luxury goods, and the distrust of purchasing foreign brands in China. China is a society where stature is everything and owning a foreign luxury product is the ultimate symbol of personal wealth and success. However, due to a multitude of import duties on foreign products and luxury goods in China, the prices of these products can be 60% higher than their original sale price; and that’s not even including the mark-up slapped on by some brands hoping to make themselves more exclusive in the China market. Chinese consumers are then further discouraged to purchase these goods at home, due to the multitude of fake products in the market masquerading as official luxury items.
Because of the Chinese fascination with luxury products, tour guides in Europe have had to adapt their tours specifically to cater to Chinese customers. In the UK, for example, most visitors would wish to spend more time at historical sites like the Tower of London, Buckingham Palace or Stonehenge. However, Chinese visitors would much prefer to spend time in large outlet centers and malls; pausing at the historical sites only long enough to snap a few photos, before piling back on the bus. One tour guide’s experience sums this up perfectly: “Some want to go to the Tower of London, but tickets are expensive so normally they just go round the outside of it and take photos,” he explains. “It’s the same with Westminster Abbey. They want to avoid spending on entry but they spend a lot of money shopping. I took a group of eight to Harrods last week and they spent £70,000 in two hours. One of them almost bought a watch for £290,000 (2,900,000 RMB)!” Despite the efforts of the tour guides, one of the most popular locations requested by Chinese customers continues to be Bicester Village, an outlet center for designer and luxury labels in Oxfordshire. Recognizing this trend, other communities are also starting to cash in. The small town of Street, in Somerset, recently renovated the original Clark’s shoe factory, turning the derelict site into a huge factory shopping centre, specializing in footwear, known as Clark’s Village. Chinese tourists are flocking here by the bus load to buy shoes of the British label that are, ironically, now made in China!
They’re Coming! Now what?
Because of their spending sprees, Chinese tourists are coveted the world over. Nations and brands are now attempting to use a multitude of strategies to further increase their visits from Chinese tourists. But businesses are going to have to do a lot more than offer congee at the breakfast buffet to attract the new globe-trotters from the middle-kingdom!
The Guardian newspaper calls the discreet red, blue and green banded symbol ‘a harbinger of the gradual shift in global power.’ For those unfamiliar with the brand, UnionPay is the only domestic bank card organization authorized by the People’s Republic of China. This monopoly made taking out cash very difficult for Chinese tourists in the past, however as the country has developed, more and more nations have made efforts to accommodate the unfamiliar system. Currently, 141 countries around the world accept UnionPay in some way. In the US, for example, Chinese tourists can now use any Citibank or Pulse ATM. Similarly, in France UnionPay can be used at all Crédit Agricole and Caisse d’Epargne ATMs. For stores hoping to attract a significant Chinese clientele, accommodating UnionPay is an absolute must. Harrods, the luxury department store of London, now has UnionPay outlet at its cash registers. They say that the Chinese are the “most significant and rapidly growing proportion” overseas customer base. Echoing this, Hermes, the luxury bag retailer, is now reported to receive 30% of its revenue from Chinese customers. Therefore, while you might not see a UnionPay logo down your local Walmart or Tesco’s anytime soon, you’ll be sure to see it in Emporio Armani or Louis Vuitton!
‘To learn a language is to have one more window from which to look at the world.’ This old Chinese saying stresses the cultural value of being able to speak a foreign language. For the retail and tourism industry, nothing is more important to Chinese customers than staff able to speak mandarin. The CITM report listed this as a service that 50% of respondents would classify as their most important criteria. Recognizing this, stores and hotels are rushing to hire as many Chinese speakers as possible. Harrods, of London, for example, now has 75 trained mandarin speakers. Chanel employees in 2012 had to take a compulsory five sessions of mandarin training, learning basic phrases; such as greetings and numbers, as well as an introduction to cultural differences. Louis Vuitton also started a 10 week education programme this year in America, aimed at training their employees “how to best serve their Chinese speaking customers.” Similarly, Burberry reports that they plan to double the number of mandarin speaking staff in their European stores.
International hotels are ahead of the curve when it comes to Chinese speakers, with 85% having at least one employee able to speak mandarin. However, 39% of Chinese travellers still say that it needs improvement. One of these improvements, related to language, could be to offer a mandarin version of the hotel’s site online. This is a service offered by just 11% of international hotels.
Wi-Fi, Wi-Fi, Wi-Fi!
For a case study into smartphone addiction, researchers should go straight to China. Chinese people barely ever seem to crane their necks upwards beyond the screen of their device, turning into smartphone zombies, seemingly unaware of the world around them. As such, it of no surprise that the number one service that hoteliers can offer to Chinese guests is free Wi-Fi. China now has the largest number of online users in the world, and staying constantly connected seems highly important to the younger generation. Wi-Fi allows Chinese guests to connect to social networking sites like Weibo, contact home using messaging platforms, such as WeChat, watch television from China, and conduct research for their trip online. Although, when it comes to research, 48% of Chinese travellers report that translated travel and tourism guides are options that they would greatly like to see offered. This is a service offered by only 10% of hotels worldwide.
Opinions on Local Food
When travelling abroad, Chinese tourists can find local cuisine absolutely unpalatable – in fact, a survey found that during trips to Europe, 46% of Chinese tourists will try local food only once, and 10% not at all. Ansel Travel, a French tour company, typically offers foreign food once in each country to its Chinese guests: seafood in Paris, ham knuckle in Germany, pasta in Italy and so on. After that, “it’s Chinese all the way.” As such, it is of no surprise that many Chinese will choose to simply make instant noodles in their hotel rooms. This explains why a kettle is the second-most requested service asked for by Chinese guests. While the majority of European hotels already offer this service, in North America it is far less common. For those that already have kettles in their rooms, food and drink services can be improved by offering Chinese room service options and a Chinese breakfast. The Sheraton Gateway in Los Angeles is one such hotel offering specialist food items – their breakfast menu now includes steamed rice, congee, milk-tea and soy milk. Nevertheless, it is worthy to note that the tastes of independent travellers are maturing and more and more Chinese are willing to sample local cuisines.
Hotels will do well to offer preferential services to Chinese customers. At home, the Chinese are used to a very different standard of service in shops and hotels than that of the West. For example, while waiting five minutes for a key can be pretty standard in Europe, for Chinese guests, this would make them impatient and irritated, even believing the wait to be an act of discrimination. Simply by expediting the time it takes to complete these small, mundane tasks, Chinese tourists are likely to feel more appreciated. This will translate into higher recommendations through word of mouth and internet travel blogs – increasing the number of Chinese guests a hotel is likely to receive. Although, some requests can be impossible; for example, 23% of Chinese travellers will ask for a room they are able to smoke in. In Europe and America, hardly anywhere still offers this choice and Chinese travellers are frequently fined for lighting-up, even when told they cannot.
In the retail sector, Chinese customers prefer a more personal approach – while Westerners in China often complain of the ghostly following they encounter by retail assistants, the Chinese love it. A more personal touch by retail assistants will go a long way. The Chinese love anything exclusive or specialized to them and are much more likely to make a purchase if a retail assistant actively encourages them that the product is right for them.
Make the Effort to Advertise in China
To reach the new Chinese consumer, online promotion is the best way forward. The most effective form of advertisements are those on social networks and messaging apps. Weibo, the most popular Chinese social network, is a fantastic platform for foreign businesses allowing tourists to easily share recommendations with their friends or over travel discussion boards. Similarly, WeChat, the most widely used messaging app in China allows businesses to set up subscriptions for customers interested in their services. This helps retain Chinese consumer interest, further increasing the likelihood of a recommendation to a friend or online.
Product placement in movies and the opinions of celebrities are also highly effective ways of breaking into the Chinese market. Angela Baby, a star from Hong Kong, received hundreds of comments on Weibo for her microblog from France. Similarly, New Zealand created a highly successful marketing campaign using a Chinese star, Yaochen. Another great example would also be the marriage of Chinese power couple, Tony Leung Chiu Wai and Carina Lau. The day of their wedding, held in Bhutan, attracted 12,000 searches online for ‘Bhutan’, forty times more than usual!
We hope you have enjoyed this small introduction to the changing outbound tourism of China. For more information on specific topics addressed in this article, please visit the Maxxelli Blog or contact Maxxelli directly.