Cal Poly Pomona Targeting Chinese Shoppers Abroad Paper Read white paper “Chinese Shopper Abroad” – everyone read page 1-6 and page 36-42.please answer the

Cal Poly Pomona Targeting Chinese Shoppers Abroad Paper Read white paper “Chinese Shopper Abroad” – everyone read page 1-6 and page 36-42.please answer the following question:Based on what you have read in the white paper, how can you, as a future hospitality leader, capture the values from Chinese shoppers? How to Target Chinese
Shoppers Abroad
Not to be distributed without permission.
HOW TO TARGET
CHINESE SHOPPERS
ABROAD
CONNECT WITH US
© EU R OMONITOR INTER NAT I ONA L 2 0 16
CONTENTS
iv
1
INTRODUCTION
3
CHINESE SHOPPERS VIEWED FROM CHINA
7
CHINESE TOURISTS IN THAILAND
13
CHINESE TOURISTS SPEND BIG ON
US LUXURY GOODS
18
FRANCE: KEY DESTINATION FOR
CHINESE SHOPPERS
24
HOW “BAKUGAI” IS CHANGING JAPAN
29
CHINESE SHOPPERS DOWN UNDER
36
THE CHANGING DEMANDS OF
CHINESE TRAVELLERS
40
CONCLUSION
43
ABOUT EUROMONITOR INTERNATIONAL
© E UR OM O N I TO R IN TERN ATIO N A L
INTRODUCTION
All eyes are firmly on China. The country is the world’s second largest consumer
market, having overtaken Japan in 2011 in terms of consumer expenditure at current
prices with fixed 2015 US$ exchange rates. As a result, China has emerged as the
market to watch.
However, it’s not just the expenditure of Chinese consumers on the domestic market
that’s turning heads. We are currently witnessing what many observers have dubbed
the “Golden Age of Travel” for China, and the rise of Chinese shoppers is having
a ripple effect on destinations around the world. From luxury sales across Western
Europe, North America and the Asia-Pacific region, to the more quotidian, sales
of diapers / nappies, infant formula, cosmetics and vitamins in Japan and Australia, the
impact of Chinese tourists injecting a new vitality into stagnant and even declining
FMCG categories has been significant. With reports of supermarket shelves being
stripped bare, and even the Japanese coining a new term, bakugai, for the “explosive
buying” impact of Chinese tourists on the domestic market, Chinese tourists
are clearly having a positive impact on not just travel brands’ revenues, but also on
a diverse range of international retailers and manufacturers’ bottom-lines.
Throughout this white paper, Euromonitor International will outline the position of
the Chinese government towards tourism, the simplification of the visa process for
Chinese travellers by many destinations featured in the analysis and explain the allure
of shopping abroad in terms of attractive pricing and duty-free incentives.
© EU R OMONITOR INTER NATIONAL
1
I nt ro d uc t i o n
The white paper spans a number of geographies across Asia, Western Europe, North
America and Australasia, featuring articles from local analysts best placed to assess
the impact of Chinese shoppers on various domestic markets and additionally assess
the success—or otherwise—of measures by governments and retailers to facilitate
commerce between local vendors and tourists from China.
BETTINA KURNIK
Communications Executive
Euromonitor International, Sydney
Connect via LinkedIn
2
© E UR OM O N I TO R IN TERN ATIO N A L
CHINESE SHOPPERS
VIEWED FROM CHINA
Increased enthusiasm for travel among
Chinese people
Travel has become a core aspect of Chinese consumers’ new and more prosperous
lifestyle. China has enjoyed strong economic growth the past few decades and, with
that, a growing middle class has emerged. This growing economic class has come with
a booming desire to allocate more time and budget on travel, especially outbound and
international tourism, resulting in astronomical growth in the number of trips and
expenditure taken by the Chinese.
Their enhanced confidence and interest to travel abroad stems from the gradually
disappearing language barrier, as well as online research and booking options.
Meanwhile, the continuous appreciation of Chinese yuan over the review period
during 2010 and 2015 reduced the expense of outbound trips to some extent,
encouraging more Chinese consumers to travel internationally. In addition,
ever-expanding numbers of international airlines across mainland China, in line
with the accelerated construction of international airports, contributed to the strong
momentum for outbound trips. Furthermore, intensified competition among
travel agencies, particularly online travel agencies (OTAs), introduced a price war
and improved pricing transparency, benefitting consumers and growth of travel.
The huge efforts from the destination countries that Chinese tourists travel to have
also been a key driving force behind the healthy development of outbound trips.
In view of the mounting demand of outbound tourism from China, many destination
countries have adjusted their visa application policies, such as decreasing visa fees,
simplifying visa application procedures by speeding up and reducing the
documentation required, opening more application centers and providing longer term
multi-entry visas for regular visitors. Moreover, an increasing number of retailers
in the destination countries have started to employ tour guides and salespeople who
can speak Chinese to cater to and better serve Chinese tourists.
© EU R OMONITOR INTER NATIONAL
3
C h i n ese S ho p p e r s V iew ed fr om Ch ina
Popular destinations mainly
concentrate in Asia
Asia has been dominating China’s outbound tourism market. This can be mainly
attributed to the relatively fewer differences in culture and tastes, lower travel costs,
more convenient and short-haul transportation and less jet lag.
Hong Kong and Macau are the two most popular destinations for Chinese tourists
thanks to the geographical closeness, delicious food, various attractions and wide
choice of products with competitive prices for shopping. Since 2014, both cities face
pressure from the protests from Hong Kong local residents, Occupy Central. The
protestors demand more autonomy from the Chinese government, and are protesting
against Chinese shoppers looking to benefit from VAT discounts by emptying the
shelves of local shops. This has led to a significant decline in Chinese tourists visiting
Hong Kong. On the other hand, the Chinese government started to clamp down on
some of the illegal activities such as money laundering associated with the gambling
industry in Macau, which has decreased the amount of travel by rich Chinese
tourists to the area. Consequently, other popular Asian destinations such as Japan,
South Korea and Thailand have benefited from the decreasing popularity of Macau
and Hong Kong. And as Chinese tourists become more adventurous with their
growing travel frequency and focus more on the recommendations from friends
and relatives, they are shifting travel interests to newly rising destinations with
consistent and maturing tourism facilities and significant shopping opportunities.
However, some negative factors such as political instability in Thailand and health
threats such as MERS in Korea strongly affected the decisions of Chinese tourists
due to safety concerns.
Some European countries and the United States have also been gaining in popularity,
thanks to the presence of outstanding natural parks, numerous cultural activities, art
and atmosphere, as well as the variety of cities and places to visit.
Shopping is the top priority for
Chinese tourists
Since 2012, China has been the country with the highest outbound expenditure in the
world, overtaking the US and Germany. Unlike other leading countries whose tourists
concentrate spending more on lodging, Chinese tourists spend the majority of their
budget on shopping and other expenditures such as gambling. These spending patterns
are apparent when looking at the top destinations for Chinese travellers.
4
© E UR OM O N I TO R IN TERN ATIO N A L
Chin ese Shoppers Viewed f ro m C hi na
Chinese outbound tourists are very open to conspicuous consumption and normally
consider shopping, especially designer outlets, as an essential element of the trip.
Luxury brands covering categories from watches, jewellery, bags and apparel are the
key targets for Chinese consumers owing to the huge price differences and wider
product collections available in overseas markets. In addition, some domestic beauty
and personal care brands from South Korea and Japan such as Sulwhasoo and Clé de
Peau Beauté also rank at the top on their shopping list.
Chinese Tourists Outbound Expenditure in 2014
Lodging
Activities
Food
Travel in Destination
Shopping
Other
Source: Euromonitor International
Dynamic growth expected in the
forecast period
Travel is becoming the “norm” for Chinese families despite the potential and
impending economic downturn, which is unlikely to have a significant impact on
Chinese travel rates. Outbound tourism is expected to continuously register
healthy growth over the short- to mid-term future, due to the steady increase in the
disposable income of Chinese consumers, along with their increased willingness
to travel abroad. The strong support from the Chinese government including better
infrastructure in second- and third-tier cities, added flight capacity to international
destinations and the recently launched 2.5-day-weekend campaign where state-owned
and privately-held companies receive incentives if they allow workers to take leave
in Friday afternoon, will further promote outbound tourism.
© EU R OMONITOR INTER NATIONAL
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C h i n ese S ho p p e r s V iew ed fr om Ch ina
Continued changes in consumer demand and spending behaviour are projected to
be seen in the short- to mid-term future. Growth in the number of tourists in small
groups, such as singles and couples, is likely to outpace growth in the number of larger
groups, such as families and tour groups, because young Chinese tourists prefer a
higher degree of flexibility. Consumers will focus more on planning and preparing their
travel arrangements, as well as the quality and details of the products and services,
rather than worrying about prices. Chinese consumers are also likely to purchase
general merchandise such as toothpaste, electric cookers and other necessities in
the department stores and supermarkets of their travel destinations, due to the high
quality of these products manufactured in the destination countries and lower prices
compared with China.
With the ambitious expansion and penetration of China UnionPay credit cards
globally, more overseas merchants will not only accept China UnionPay cards, but also
offer exclusive discounts for payments via China UnionPay to attract more Chinese
consumers. Retailers in destination countries could put more effort towards enhancing
Chinese visitors experience such as hiring staff who can speak Chinese, delivering
purchased products to hotels or airports and tax refund services to attract more
Chinese consumers. In addition, retailers also need to cater to the changing shopping
demands and habits of Chinese consumers to including changing preferences of luxury
brands and their shift to purchasing general merchandise for daily life.
FANGTING SUN
Senior Research Analyst
Euromonitor International, Shanghai
Connect via LinkedIn
6
© E UR OM O N I TO R IN TERN ATIO N A L
CHINESE TOURISTS
IN THAILAND
Thailand’s popularity as a travel
destination among Chinese tourists
Thailand has been experiencing exponential growth in the number of arrivals from
China since 2010, reaching 4 million arrivals in 2014 and nearly doubling in 2015
with seven million Chinese tourists. This is all despite the Erawan Shrine bombings
in Bangkok in August 2015. Thailand’s surge in popularity among Chinese tourists
can be attributed to the increasing transportation options to the country, as well as
the growing awareness of Thailand as an ideal destination for nature, culture and
entertainment. Moreover, a Chinese comedy box-office hit in 2012, “Lost in Thailand”,
drew much attention to the country. The comedy follows the adventures of two
scientists and a tourist as they explore Thailand. It showcased Thailand’s scenery
and culture and piqued the interest of Chinese viewers, driving sharp growth in
visitor arrivals.
© EU R OMONITOR INTER NATIONAL
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C h i n ese To ur ists i n T ha il a nd
The
dimensions
are from
meant
to fit 2010–2015
with a 580 pixel with consistent with Passport site.
Thailand:
No. of
of these
Visitorcharts
Arrivals
China
Thailand: No. of Visitor Arrivals from China
(in millions)
8
7
6
5
4
3
2
1
0
2010
2011
2012
2013
2014
2015
Source: Euromonitor International
Note: Data for 2015 from Department of Tourism, Thailand
Importance of Chinese tourists to
Thailand’s economy
Tourism plays a significant role in Thailand’s economy, accounting for an estimated
9% of GDP in 2015. China clocked in the highest number of visitor arrivals, composing
27% of international arrivals. In comparison, the rest of ASEAN (Brunei, Cambodia,
Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore and Vietnam), made up
26% of international arrivals. Chinese tourists are also the main contributors to
tourism receipts, raking in 189 billion baht in 2015. These numbers demonstrate the
heavy reliance Thailand’s tourism and economy has on Chinese tourists and the
opportunities businesses have to tap into the potential of this market.
8
© E UR OM O N I TO R IN TERN ATIO N A L
Chin ese Tourists in T ha i la nd
Thailand: No. of Visitors by Country-of-Origin 2015
China
ASEAN
Japan
Korea
Rest of Asia
Asia
Europe
The Americas
Oceania
Middle East
Africa
0
5000
10000
15000
No. of visitor arrivals ‘000
20000
25000
Source: Department of Tourism, Thailand
Modes of transport and popular
destinations
The majority of Chinese tourists enter Thailand through air transport. Suvarnabhumi
Airport in Bangkok serves as the primary international airport, although the other
11 commercial airports see frequent visits from Chinese tourists as well. A growing
portion of Chinese travellers have also been driving to Thailand from Yu Nan since the
opening of the Kunming-Bangkok road in 2008.
The most popular destinations among Chinese tourists include Bangkok, Chiang Mai
and Phuket. Bangkok’s growing prominence as a shopping haven feeds the need for
Chinese tourists’ favourite brands and products and also offers the best of city life and
entertainment. Chiang Mai has seen an influx of Chinese tourists seeking to replicate
the experiences they watched in “Lost in Thailand”, which was filmed there. The
culturally-rich city houses historical temples and hill tribe villages. It is also an ideal
destination for nature lovers, boasting mountains, caves and waterfalls. Phuket and its
outlying islands, such as Phi Phi Islands, draws Chinese tourists year after year. Beach
getaways are a favourite among tourists and Chinese tourists are no exception, taking
to the clear waters and limestone formations of Phuket.
© EU R OMONITOR INTER NATIONAL
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C h i n ese To ur ists i n T ha il a nd
Consumption of luxury and fashion
Shopping ranks as a high travel priority and is the main expenditure item among
Chinese tourists in Thailand. Shopping brings in more tourism dollars than
accommodation, food, sight-seeing, entertainment and transport as Chinese tourists
prefer to spend on tangible material possessions which they can bring home.
Thailand: Average Chinese Tourists’ Expenditure by item
The dimensions of these charts are meant to fit with a 580 pixel with consistent with Passport site.
Sight-seeing
Local Transport
Entertainment
Food & Beverage
Accomodation
Shopping
0
200
400
600
800
1000
1200
1400
1600
1800
Thailand: Average Chinese Tourists Expenditure by item (in THB / person / day)
Source: Department of Tourism, Thailand
Luxury and fashion items contribute the lion’s share of shopping receipts from
Chinese tourists. Chinese consumers pay close attention to status and wealth and
sought-after luxury and fashion items reflect this. They also prioritise value over
style, and seek good deals in hopes of making their money’s worth. Bangkok’s success
as a shopping destination among Chinese tourists is due to the city’s ability to serve
both needs, offering a multitude of local and international fashion brands across a
diverse range of price points and a variety of choices for shoppers. Luxury shopping
centre Siam Paragon, located conveniently at the heart of the city, sees high foot
traffic from Chinese tourists frequenting Louis Vuitton, Dior, Catier, Burberry and
Rolex amongst many others. Thailand offers luxury goods at a more competitive price,
approximately 10–20% cheaper than China, since China imposes higher taxes on these
goods. As such, Chinese consumers splurge on luxury when travelling to Thailand.
On other end of the price spectrum, Platinum fashion mall carries apparel and
accessories at wholesale prices and is a hotspot for Chinese tourists looking for a
bargain. Weekend markets and night markets, such as Chatuchak market and Rod Fai
market, showcase pop-up stores which liven up Bangkok’s retail environment and
draw in crowds of Chinese tourists as well. Few cities in Asia are able to rival Bangkok
as an ideal shopping destination, given the diversity in its offering.
10
© E UR OM O N I TO R IN TERN ATIO N A L
Chin ese Tourists in T ha i la nd
Moving forward: Adapting to changing
Chinese consumption habits
Typically, as an economy transitions from rapid industrialisation to a stable, modern
society, societal values and consumption habits undergo a transformation. Chinese
consumers, especially millennials who are the main demographic segment embracing
travel, are likely to shift away from materialism to embrace experientialism and
self-expression instead. As such, businesses in Thailand must be fast in adapting to
the changing needs of Chinese tourists.
As of now, changing consumer behaviours of Chinese millennials have been taking
root in the luxury industry and impacting it slowly but surely. Logo fatigue has crept
in among some Chinese tourists, causing them to turn away from brands which have
lost their exclusivity, dubbing them “brands for secretaries”. These brands often ride
on conspicuous logo designs and have grown far too common, losing their appeal
among Chinese consumers who no longer perceive them to be as luxurious as they
once were. Instead, these consumers are beginning to seek niche brands like Saint
Laurent and Céline which have more subtle designs. Thus, luxury brands must
maintain an aura of mystique and exclusivity to retain Chinese tourists. They must
abstain from becoming too accessible, even if it is a trade-off from expanding their
consumer base and increasing sales, as this strategy would prove unsustainable in the
long-run. In addition, Chinese consumers have begun placing greater value on luxury
experiences, be it luxurious travel, gourmet dining, perfume-making or art auctions.
To cater to this need for experiential luxury, brands such as Berry Bros & Rudd, a
luxury wine and spirit merchant, offered wine-making experiences in France to
Chinese consumers. Furthermore, Louis Vuitton’s maison shop in Shanghai has an
invitation-only floor designed as a private residence where consumers can pamper
themselves while waiting for customised merchandise from the brand. As consumers
changing consumption of luxury consists not just of the product, but the experience,
in-store experiences would be increasingly valued by the wealthy Chinese tourists.
Luxury brands have to invest in innovation for in-store concepts to ensure customers
derive value when purchasing the brand. For example, Christian Dior incorporated
virtual headsets, Dior Eyes, in its stores for consumers to have a 3D experience of its
runway shows.
© EU R OMONITOR INTER NATIONAL
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C h i n ese To ur ists i n T ha il a nd
Instead of flocking to international fashion brands and purchasing apparel, accessories
and footwear in bulk, this shift in consumer behaviour would mean future Chinese
tourists will prefer purchasing unique fashion items for the purpose of individual
expression or as a memento of their travel experiences. Although international brands
such as H&M and Zara see high traffic volume from Chinese tourists in Thailand
currently, the opening of these stores in their home cities in China will soon driv…
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