On January 8, 2023, China announced the opening of its border, that’s meant to end three years of the zero-covid policy, that secluded Chinese shoppers from trips abroad. Before the pandemic, the Chinese represented the first tourist market in the world. In 2019, Chinese tourists spent about 254.6 billion U.S. dollars while traveling abroad.
Now all the marketers and luxury brands rub their hands, waiting to welcome Chinese citizens in their department stores in Paris, Tokyo, or London. However, during those three years, many things have changed, and Chinese consumers’ behavior and needs are also different than they were three years ago. So, will Chinese luxury spending abroad return to pre-pandemic levels? Let’s take a look at the market trends.
The Chinese Tourism Market
Chinese tourists are coming back sonner than everyone expected. According to Trip.com, a popular Chinese website for trips booking, outbound flight queries increased 254% in late December. Although only 10% of Chinese people have a passport, many of them in need of passport renewal most likely, Chinese people make up for the biggest tourism market in the world.
As you can see on the graph from Statista, Chinese tourism spending is predicted to bounce back. Chinese international travelers had been the world’s biggest tourism spenders and Chinese shoppers were spending a lot of money on overseas trips. According to United Nations World Tourism Organization, in 2019 Chinese travelers took 154.6 million trips abroad and spent nearly $255 billion.
It’s predicted that most of the Chinese travelers planning an international travel in 2023 will choose Asian countries due to their proximity and lower flight prices. Chinese shopping is definitely coming back to Japan, South Korea, Singapore and Southeast Asian countries. Chinese people like to shop abroad and are keen on visiting duty-free stores while on holidays.
Top shopping expenses of overseas Chinese consumers
According to the study “Analysis of the tourism potential of the Chinese middle class”, published by Atout France, the Chinese devote more than 30% of their travel budget to fashion accessories, luxury goods, jewelry, perfumes, and wine during a tourist trip.
For example, in Western Europe, 85% of Chinese travelers bought clothes, shoes, and accessories, 50% bought perfumes and cosmetics, 40% bought jewelry and watches, and 7% bought electronic products.
The country where the Chinese spend the most is France. In France, tourists of all nationalities spend on average €1408 against an average basket of €1700 for Chinese tourists, according to the company’s tax rebate Global Blue.
Overseas Chinese shoppers are luxury brands lovers
Take the example of luxury goods. By buying these products in the countries of origin, they will be able to benefit from more attractive prices than in their country (where they are often more expensive) but also from a tax refund. In addition, the purchase of luxury goods abroad guarantees the authenticity of the product. Indeed, they are from the perspective of making a maximum of purchases. They also like to brag about buying luxury goods in their countries of origin.
In general, Chinese travelers from first-tier cities like Beijing or Shanghai are much more experienced in traveling abroad and their travel options are more frequent. They are less sensitive to the luxury goods offered in the country visited because they know that they are also available all over the world and the price difference is less important to them.
Younger generations from first-tier cities are more in search of exceptional experiences, superior accommodation, local gastronomy, outdoor adventures and original discoveries, and not just shopping like older generations before. While shopping abroad, they will look for unique experiences, for example; special showrooms, fashion events, great discounts, and opportunities that they wouldn’t get in those store in China.
Travelers from tier 2 and 3 cities spend more on shopping
According to the result of the study “Chinese Outbound Tourists: More diverse, More sophisticated”, travelers from lower-tier cities spend an average of €2052, or 10% more than those of first-tier cities, who spend on average €1952. They often have more disposable income than people from first-tier cities, as life in lower tier is less expensive, so they can spend money on entertainment, travels and shopping.
Young digitized travelers in China can be divided into three groups:
Adventurous influencers: These individuals enjoy a very strong influence on Chinese society. They want to be different from the rest of the population while inspiring them. They are very interested in culture. They like to share their experiences on social networks often followed by many followers who are inspired by their experiences. They often are also travel influencers, that post content from other countries to inspire their followers.
Fashion Followers: This second group has significant financial resources, they like to be fashionable, follow trends, and show themselves in popular places by following the advice of the previous category. They place particular importance on destinations offering great comfort. They are also most likely to engage in luxury cross-border shopping, especially in Europe.
Culturally Curious: These category is the largest, they consider travel as a way to enrich themselves on the cultural level. They are curious and ambitious and in search of destinations where they can discover a maximum of things (landscapes, meetings). They are looking for authenticity. These are travelers who tend to focus more on the speed and convenience of hotel services.
How to attract Chinese shoppers abroad?
Chinese consumers are very digital and they usually come to stores with products on their list on WeChat. They search in e-commerce platforms and social media to get the newest updates, recommendations and special offers.
Social networks are a very important part of their lives because they allow them to stay up-to-date on the latest trends and learn about what other members of their communities are doing and influencers influence who they want to look like. Social networks are their window to the world. This is why it’s important to be present on the trendiest and more relevant social media platforms in China.
The magic power of social media
In tourism, social networks can both enable them to learn about popular destinations, and also share their travels or exchange with other Internet users as proposed by social networks specializing in travel: Mafengwo and Qyer or even Little Red Book, WeChat or Weibo.
Thus, 87% of them say they have had a unique and innovative experience thanks to digital innovation and 75% are positively influenced in the decision to purchase services based on artificial intelligence.
In China, the weight of social networks cannot be neglected if you want to lead an effective marketing campaign to reach Chinese consumers. To attract Chinese tourists, it is necessary to build partnerships with Chinese platforms and KOLs (Key Opinion Leaders, who are Chinese influencers).
Social networks are the ideal place to offer loyalty programs and recommendations to this highly connected Chinese generation.
WeChat: First channel of information and means of communication preferred by the Chinese. 94% of Chinese users who have WeChat use it every day. They go there on average 10 times a day. They can send messages and call their contact. But also pay directly with the app, in stores, or online. Sending documents to WeChat is now more convenient than using your mailbox.
Wechat also allows to create personal and professional groups to bring together a community. Users can also follow accounts to receive real-time news. That’s why many companies are creating a WeChat account that will be their gateway to the Chinese market.
Apart from WeChat, it’s also worth it to have official accounts on Weibo, RED and Douyin, which are the most popular social media platforms. There Chinese people search for luxury brands to check if there are some discounts or other items available abroad. There you can also collaborate with fashion and travel influencers that will promote your brand to their audience, attracting tourists to your stores.
Travel Forums are powerful in China
There are many travel forums and websites where travel companies and users can share content in a form of photos and videos, travel tips and recommendations or opinions about travel agents, shops, retailers and more. One of these websites is Mafengwo.
The most popular bloggers are featured on the homepage of the site and companies can take advantage of their brand name by partnering with them for partnerships that will ensure a good reputation in this market. Its qualified and highly committed audience makes it an ideal platform for tourism agencies and foreign luxury brands wishing to attract a Chinese clientele.
Another popular platform is Qyer which is an application originally designed to advise Chinese students to exchange abroad. Today the application accounts for 88 million users who publish content on their trips abroad. What is interesting for companies is that the application has many other derived applications dedicated to travel planning, such as Itinerary Assistant, which works with Booking.com.
To get to Chinese overseas shoppers you need good Baidu SEO
In order to get awareness, Baidu is probably the most cost-efficient long-lasting solution out there. It pairs very well with social media and forums. Create a Chinese website hosted in China and work your way up to the very top of Baidu when travelers are looking for a shopping destination just like One Nation Paris did without help.
Remember about Chinese mobile payments
The ability to support payment services such as UnionPay or Alipay is critical. Mobile payments are the most popular platform method in China and Chinese shoppers will expect such option available in your store or business. You might even loose customers, as many of Chinese people doesn’t have cash with them at all.
A report by Nielsen and Alipay, titled “Trends in Chinese Mobile Payment in Outbound Travel in 2018,” revealed that the average budget for Chinese tourists traveling abroad rose to more than $ 6,026 per person in 2018. In addition, some 69% of tourists used mobile payments when shopping abroad, up 4% from the previous year.
Such sums offer merchants and tourist attractions a huge opportunity to exploit this increased spending. 2,806 Chinese tourists who participated in the survey, 93% said they would probably increase their spending if mobile payment was accepted more widely.
For their part, industry experts believe that understanding the habits and preferences of Chinese tourists is crucial for European traders if they want to take advantage of the opportunity and increase total sales.
Consider duty-free offerings
The Chinese e-commerce giant Alibaba and the Swiss duty-free retail juggernaut will set up a joint venture in China to shake up China’s huge, fast-growing duty-free airport shopping market.
From the perspective of the Chinese duty-free market, CDFG (China Duty-Free Group) is still the Chinese duty-free leader in the market. It has won the bids for Hong Kong Airport, Capital Airport, Guangzhou Baiyun Airport, Macau Airport, Shanghai Airport Duty-Free, and other Chinese duty-free shops. The company owns more than 80% of the total Chinese duty-free market.
In the first half of 2020, CDFG’s revenues reached 19.309 billion yuan and realized a net profit of 931 million yuan. From the performance of CDFG in the first half of the year, it has already surpassed Dufry to rank first as the global duty-free retailer. A partnership with Alibaba could help Dufry increase its presence in the fast-growing Chinese travel retail market.
Duty-free shopping is very popular among travelers from China and they are the nation that shops the most at the airports, in comparison to other countries. The establishment of duty-free zone in Hainan, a Chinese holiday island also contributed to the growth in this market, presenting great opportunities for all duty-free shops abroad.
How to apply for the establishment of duty-free shops in China?
Any independent legal person can apply for the establishment of duty-free shops. Businesses should have a sale place and supervised warehouse for Duty-free goods that meet the supervision requirements of the Customs. To operate a duty-free shop, you must first obtain the qualification, that is, the relevant license. It is difficult to apply for the qualification of a duty-free shop and has to be submitted to multiple departments for approval.
A certain business scale is a must, and in the case of applying for the port duty-free shop, the annual entry and exit person-time of the port should be more than 50,000. All activities of the duty-free shops must conform to the supervision requirements of the Customs.
For the application, the business operator should submit a written application (no specified format available currently) and materials to prove compliance with the relevant qualifications to the General Administration of Customs; After gaining approval from the Customs, the business operator applies to the customs for acceptance and completion of relevant recordation formalities.
Do you want to promote your products and services to Chinese travelers?
Entering the Chinese market through social networks remains the most effective way to promote a brand (Weibo, WeChat, Mafengwo, Qyer).
Gentlemen Marketing Agency is a Shanghai-based digital marketing agency that helps foreign brands gain a foothold in China by providing marketing strategies tailored to your needs and targets.
Our team is up-to-date on all the latest marketing trends in China and uses all the most effective digital tools to promote your business in China.
Don’t hesitate to leave us a comment or contact us if you want to reach out to Chinese overseas shoppers with your offer!