In the last decade China’s outbound tourism has experienced a great change. Thanks to the growing value of the Yuan and the expanding of a new middle class, the international trips have grown from10 million in 2000 to nearly 1,000 million in 2013, and as this process is progressing, the result could be a growth of up to 200 million Chinese travelers in 2020. This trend is considered to be the biggest jump of any country in the world. In addition, China’s global share of outbound travel keeps increasing as well; from 1% in 2005 it is estimated to account for one-fifth of global travel by 2023.
Chinese Tourist Profile and Traveling Habits
Until now, Chinese outbound tourists were mainly from South China, North China and East China, but gradually this trend is expanding because more and more people can afford themselves to go abroad.The current Chinese outbound tourists are still among the higher income groups in China. In 2013, the monthly income of an individual outbound tourist was RMB 11,512 on average, which is triple the average of an ordinary individual monthly income (RMB 3,798) in medium and large cities in China.
When it comes to the tourist average age, over half of the Chinese outbound tourists are post 1980’s (56.21%). The various tourism patterns are reflecting the different needs of tourists. Currently, about 37.41% of the Chinese tourists prefer to travel abroad in groups. These tourists are usually over 40 years old and travel abroad once every 2-3 years. On the other hand, nowadays more and more younger tourists (31.39%) prefer to travel independently several times a year. Semi-independent tours, a newly marketed tourism product, have an 18.74% share of the total market; tourists aged between 26 and 35 years old particularly prefer semi-independent tours. Nearly all of China’s outbound tourists have been abroad for leisure reasons. However, some Chinese travelers had visited other countries for business or education purposes. While outbound tourists tend to take leisure trips abroad more frequently than business trips, some travelers prefer to combine the two (22%).
Chinese outbound tourists are quite generous in consumption. Their per capita overall spending is about RMB 19,871 (close to 3,226 USD or 2,410 Euros). Retail is where Chinese outbound tourists spend most of their money on. Over half of the tourists (57.76%) mentioned that their travel budgets mainly focus on shopping. The reason for that is that most of the luxury brands are much cheaper in Europe and in the US then they are in China. For a culture who is very materialistic, cheaper prices means more shopping; the higher the income the more they spend. Other Chinese spending include lodging, site seeing, entertainment, food and transport.
Booking Trends and Preferred Destinations For 2015
According to the latest figures from the China Internet Network Information Center, China now boasts more than 618 million internet users, more than 80% of whom access the web via their mobile device. This trend is reflected in the responses from the Chinese outbound travelers, 53% of whom prefer to book their hotel accommodation either on the web or via mobile apps. The top most popular websites are Qua.com, eLong and ctrip. 47% of the Chinese travelers are still booking their trips either directly with the hotel or via an online travel company. The most popular traveling agencies are CITS Group Corporation, China Travel Service, Shanghai Spring International Travel Agency, China Youth Travel Agency and China Comfort Travel Agency.
A growing number of travel options are opening up for Chinese international travelers. Rising incomes, increased confidence to travel independently and trying out new destinations, easier research and booking options and an increase in low cost airlines lead to a growing number of outbound tourists. Therefore, more and more countries are introducing easier visa policies to attract Chinese visitors. In 2014, many countries adjusted their visa application process for Chinese people by speeding it up, reducing the documentation required, opening more application centers, and providing longer term multi-entry visas for regular visitors. Greater flexibility is already leading to more freedom of choice and there is a far greater appetite to see the new places, and as China’s travel market heats up, so will the competition. In 2015, the most popular destinations are expected to be New Zealand, US, Canada, Australia, Singapore, Italy, Thailand, United Kingdom, France, South Korea, Japan, Hong Kong and Macao.
Chinese outbound tourism trends for 2015
- Visa-free access goes global – Although China ranks low on the Henley & Partners 2014 Visa Restrictions Index (83rd place), the number of countries to which Chinese travelers can visit more easily will rise in 2015 as more governments and tourism boards integrate visa-free access into their China tourism strategies.
- A surge in strategic business agreements – Partnerships between Chinese and foreign tourism providers and developers were an emerging feature of the tourism landscape in 2014. Notable collaborations include China Eastern and Qantas, Accord and China Lodging Group, Air China and Air New Zealand, Jin Jiang Hotels and Interstate Hotels, Beijing Capital Land and Pierre & Vacances-Center Parcs, Qyer.com and Airbnb and Singapore NETS and Alipay. Malaysia-based LCC Air Asia has prioritized finding a Chinese partner. Expect many more in the near future.
- Secondary Chinese airports take center stage – With capacity growth restricted at China’s over-worked primary airports (at least until the opening of the new RMB 80 billion Beijing international airport at Daxing), carriers are developing new routes from China’s secondary cities. The Centre for Aviation notes that in 2015 there will be 11 daily long-haul flights into China’s secondary cities, spread across 26 city pairs – up from just four in 2010. In 2015, at least eight foreign airlines, including KLM, Lufthansa, Etihad Airways, Qatar Airways, British Airways and United Airlines, will operate secondary routes, and five Chinese airlines. Furthermore, the number of non-stop routes to the US is currently 35, an additional three non-stop flights are already announced for 2015.
- Travel niches ready for take – off -The fragmentation of Chinese outbound tourism and the quest for new experiences, especially at the top end of the market, is encouraging tourism boards to focus on niche promotions. Australia is luring Chinese travelers with its culinary offerings, Switzerland has marketed ski resorts and Canada promoted winter holidays. Cruise, safari and adventure and winter sports travel marketing will ramp up in China in 2015, as will self-drive car hire.
- The rise of UnionPay cards – According to a 2014 Nilson report, UnionPay, the world’s most popular bankcard brand, with a global market share larger than American Express, MasterCard and Visa combined, accounts for 90% market share of all cards in China. It also has a much larger average purchase transaction ($319) in comparison to Visa ($80) and MasterCard ($87). The UnionPay brand has been expanding rapidly overseas with 400 domestic and overseas associate members, covering more than 140 countries and regions worldwide.
- Extending beyond UnionPay – Airport duty free stores, retailers, hotels and ATM providers worldwide have upgraded their systems to accept China UnionPay cards, and offer seasonally targeted discounts to cardholders. Under World Trade Organization rules, China must remove UnionPay’s interbank clearing monopoly in 2015, enabling other credit card companies to make a greater claim for market share. Expect plentiful credit card advertising targeting Chinese travelers, plus a rise in the profile of Alipay and the UnionPay payment app.
- Big year for the US – the number of independent travelers will continue to rise – Under the new visa policy regulations, Chinese travelers can continually visit the US for ten years on a single visa and no longer need a travel agency to complete the application process. While this is not important for tourists who travel in groups and rarely leave China, this is a major win for independent Chinese travelers, who are becoming repeat guests to businesses worldwide. It’s predicted that the new policy will result in up to 7.3 million Chinese visitors to the US by 2021, with an economic impact of $85 billion, according to a report by the US Department of Commerce.
- The growing importance of search and booking trips on mobile – According to the China Internet Network Information Center, China now boasts more than 618 million internet users, more than 80% of which access the web via a mobile device, and the percentage of those using mobile apps has risen from 6% in 2013 to 17% in 2014. The rise of the digital age in China means that travel booking is also going online with more than half of Chinese international travelers (53%) booking their hotel accommodation on the web or via mobile apps, a method that is particularly popular with independent travelers under the age of 25.
- Chinese firms buy more tourism assets – In 2014, Anbang Insurance became the new owner of the Waldorf Astoria hotel in New York, Jin Jiang Hotels acquired Louvre Hotels, HNA raised its stake in Spain’s NH Hoteles, Fosun stepped up its bid for control of Club Med, Dalian Wanda launched an IPO in Hong Kong to fund its targeted global portfolio of 150 hotels, and Ctrip bought a cruise ship from Royal Caribbean. This is just the beginning.
As we discussed in this article, the rapid growth of the Chinese outbound market is deeply recognized worldwide as it carries a huge potential with it. As China is predicted to be the top country with the most overseas tourists, understanding this market, its needs and preferences are essential for all countries for attracting, satisfying and promoting themselves to the new target market. By doing that, countries can create a positive destination image for other tourists and boost further development of their tourism industry.
If you have any questions regarding tapping into the Chinese retail market, please do not hesitate to contact Maxxelli Consulting.