China travel market update 20 November ‘20

China’s domestic travel market continues to make a strong post-pandemic recovery. China’s three largest carriers each launched 10 new domestic routes in October while China’s largest airline, China Southern, returned to profit in Quarter 3. Meanwhile key hotel markets including Sanya, Shenzhen, Chengdu and Xi’an have recently recorded occupancy levels of more than 70%.  And Alibaba’s online travel platform Fliggy reported more than double last year’s sales of domestic hotel nights during China’s annual online shopping bonanza Singles Day.

Intra-China passenger flights stood at 98% last year’s volumes in September in the build-up to Golden Week, the first in the time of Covid-19. And while countries across Europe were entering second lockdowns in early October, photos of busy tourist spots and transport hubs showed the Middle Kingdom rediscovering its wanderlust. The chairman and co-founder of online travel mega-agency Trip.com, Liang Jianzhang, forecast that China’s domestic tourism market would be fully recovered by the end of 2020.

China-Southeast Asia travel bubbles opening

At least 500 million Chinese went on holiday during Golden Week. In fact China’s Ministry of Culture and Tourism puts the number of travellers as high as 637 million. And Chinese online travel agency Qunar.com reported an increase of around +20% in the average hotel booking price compared to last year.

Attesting to China’s regained consumer confidence, a USD500 million Legoland theme park is planned for Shanghai. The first Chinese holidaymakers in 7 months arrived in Thailand in October, and a Hong Kong-Singapore travel bubble is due for launch on 22 November.

A return to explosive shopping?

The Pfizer/BioNTech announcement that their Covid-19 vaccination candidate proved 90% effective in global trials has received widespread coverage in China. This follows positive news for the nation’s own candidate vaccines. And with Covid-19 largely under control at home, the return of one coronavirus positive tourist from Mongolia in recent days has been headline news.

Chinese tourists are not just returning to travelling – they’re spending too. The Middle Kingdom’s – and perhaps the world’s – biggest annual shopping day, Singles Day, on 11 November broke all spending records. China’s online retail giant Alibaba reported record sales of 583,000 purchases every second with 1.9 billion sales in total.

Although the Chinese economy took a significant dip during the heights of the pandemic in Quarter 1, it picked up speed in Quarters 2 and 3. Quarter 3 saw growth of +4.9% year/year, and retail sales grew by +3.3% in September. China is the first major economy to resume growth at pre-pandemic levels and is expected to be the only G20 economy to grow this year.

Explaining Chinese Payment Systems – What’s the fuss about?

Chinese mobile payment systems are more than just a modern convenience – they have a considerable impact on China’s travel and tourism industry.

As we know, Chinese travellers enjoy travelling as conveniently as possible, and they dislike being overwhelmed by a destination’s cultural difference.

One way a destination can demonstrate a strong “China Welcome” is by allowing visitors to purchase goods and services using popular Chinese payment systems – in particular WeChat Pay and Alipay. Destinations which accept these payment systems are a step ahead of the rest in streamlining the shopping experience for Chinese visitors travelling abroad.

This article aims to explain developments undergone by different Chinese payment systems, their similarities and differences, and their importance to marketing a destination or attraction in the Chinese market.

Mobile payment systems are in-demand…

In a recent interview with our Beijing Director Vivienne Song, I asked her why mobile payment systems are so important to Chinese consumers. Vivienne told me that, ultimately, it comes down to the convenience and ease-of-use they provide.

Recent research conducted by Nielsen in partnership with Alipay found that if given the option, 90% of Chinese tourists would use mobile payment systems overseas. Most glaringly, 91% of Chinese tourists indicated that the widespread availability of mobile payments abroad would encourage them to spend more. This is certainly something destinations and venues should keep in mind when marketing to the Chinese.

Chinese tourists love using mobile apps to make holidays more convenient. Mafengwo recently conducted a report asking 3,500 Chinese tourists how they use Chinese apps during their travels. According to results, over 85% of the subjects constantly use their phone while travelling, averaging out at six hours a day. If the Chinese are this attached to their mobile phones, why draw them away to make payments?

…But they are not yet widely accommodated

In 2017, mobile payments yielded an extraordinary total sum of $32 trillion USD, according to the People’s Bank of China. However, since mobile payments are not yet widely accepted outside China, the usage rate of mobile payments by Chinese outbound tourists abroad is currently lower than that of cash and bank card payments at 65%. This is still significantly higher than the usage rate among non-Chinese tourists, which stands at 11%. All in all, destinations should look to accommodate Chinese mobile payment apps to ensure the widespread availability of Chinese tourists’ preferred payment method.

WeChat Pay and Alipay – what’s the difference?

A relative latecomer to the mobile payments market when compared with Alibaba’s Alipay, Tencent’s WeChat Pay launched in 2013, came to Europe in 2017 with a number of approved merchants, and has rapidly grown since. The service aims to be as convenient as possible, allowing users to pay for an endless variety of goods and services both on and offline. WeChat Pay borrows Alipay’s model for offline purchasing by using system generated QR codes – it’s common to see codes for both platforms at points of sale.

Conversely, with around 520 million users, Alipay is China’s most popular mobile payment system. The service launched in 2004 as the Chinese alternative to PayPal, over a decade before WeChat Pay. Alipay allows its users to make payments on China’s largest e-commerce marketplaces, Taobao and Tmall, by linking their bank card to the app. It shares much of the same functionality with WeChat, enabling users to make payments using QR codes, and both services offer no transactions fees except for large withdrawals. Both WeChat and Alipay control over 90% of China’s $5.5 trillion mobile payment market.

WeChat Pay’s most notable feature is ‘red envelope’, which allows users to virtually send money to family and friends on special occasions. Reportedly, 768 million people sent out red envelopes in celebration of the Lunar New Year back in February 2018, 55% of China’s billion-plus population.

A huge difference between the two mobile payment systems is WeChat Pay’s integration into China’s most popular social media platform, WeChat, which recently passed one billion monthly active users. WeChat’s popularity is bolstered by how it comes pre-installed on 90% of Chinese smartphones, and every WeChat user has access to WeChat Pay as long as their account is linked with their bank. This has had an evident effect on Alipay’s growth – Alibaba’s market share fell by nearly half at the end of 2017, while Tencent witnessed growth of more than a third.

Alipay has a transaction limit in Europe of  40,000 euros, where WeChat Pay’s limit is 10,000. For most shopping transactions, that’s more than enough, but the big spenders may opt for Alipay.

So, in my opinion, the main reason WeChat Pay trumps Alipay is that people don’t want to leave the app they spend their life on, WeChat. They expect to do everything via WeChat – messaging, booking tickets, work communications, doctor appointments, and, of course, pay for things.

Similar developments

Some retailers have been adopting a variety of Chinese payment methods to ensure the needs of Chinese travellers are fully accommodated. Alongside their 200-plus Mandarin speaking staff, and the redevelopment of their jewellery department to align more with Chinese consumer interests, Harrods accepts both WeChat Pay and Alipay payments.

Furthermore, they both recently formed partnerships with tax refund companies, allowing for Chinese tourists to use either mobile payment method to receive rebates on their purchases. WeChat now offers instant tax refunds for Chinese tourists departing from Madrid airport, and Alipay introduced a similar service for Chinese tourists returning to Changi airport in Singapore.

Both payment methods have begun their expansion in Western markets. In 2017, WeChat Pay accounted for 29% of all Starbucks transactions, and back in November, Camden Market began to promote rollout of WeChat Pay across over 1,000 shops and restaurants to encourage Chinese shoppers. Following the successful integration of Alipay throughout Munich airport in 2016, WeChat Pay is now also accepted.

It was recently announced that the US hotel giant Marriott is preparing to accept Alipay mobile payments in around a quarter of its hotels globally. This complements their existing “Li Yu” loyalty initiative, which by introducing conveniences such as Mandarin speaking staff, hopes to make Chinese guests feel more comfortable staying in Marriott hotels.

More recently, Chinese visitors to the world’s largest shopping mall in Dubai can now use Alipay for their various shopping, dining, and leisure attractions. This development succeeds a continued effort by The Dubai Mall to accommodate the needs of Chinese visitors with Mandarin mall guides and Chinese helpdesk staff.

So… WeChat or Alipay?

Perhaps for some Western corporations, the fact WeChat Pay is fully integrated within one of the world’s most popular social media platforms has given it the edge over Alipay. It was recently announced that Walmart had dropped Alipay in favour of WeChat Pay for its 400-plus stores in western China. When asked to comment on the decision, Walmart simply remarked “WeChat Pay is widely accepted and trusted in China.”

By tapping into its social media influence, WeChat Pay is looking to rollout its platform internationally to feed the growing demand among Chinese outbound tourists. As Grace Yin, WeChat Pay Director for Overseas Operation, commented

“As mobile payment is increasingly welcomed by mainland Chinese outbound tourists, WeChat Pay plans to constantly invest in its cross-border business, with the aim of duplicating the domestic WeChat lifestyle overseas”.

This reinforcement of ‘domestic WeChat lifestyle overseas’ emphasises the urge among Chinese tourists to rely on familiar Chinese apps to help them vault over language and cultural barriers.

However, the decision is a bit like ‘should we take Visa or MasterCard’. The answer is that you should be taking both.

But we also have UnionPay – isn’t that enough?

UnionPay, the world’s largest bank card service, lags behind WeChat Pay and Alipay in terms of mobile payments, having first introduced their QR code-based payment method in 2017. While nowhere near as popular as WeChat Pay and Alipay, it still boasts a huge user base – in participating with 165 banks, every Chinese bank account is linked with UnionPay. UnionPay’s QR code-based payment method witnessed huge growth in volume over the Chinese New Year holiday period this year – specifically a 150% year-on-year increase.

UnionPay has issued over 5.4 billion credit or debit cards, however due to their magnetic strip and security pin system, they are considered less secure than WeChat Pay and Alipay. UnionPay is widely accepted internationally, from card purchases to ATM withdrawals, and it can process most world currencies.

However, at its heart, UnionPay is a credit card and the market has moved on to mobile payments, while UnionPay runs to keep up.

How does Apple Pay plan to compete?

While Apple’s products remain universally popular, its Apple Pay service, despite continued efforts, is having difficulties grabbing the attention of Chinese consumers. Due to WeChat Pay and Alipay’s market dominance, Apple Pay has seen limited success despite the estimated 243 million iPhone users in China. According to Bloomberg, a mere 1% of a Chinese bank’s 10 million online banking customers had the service activated.

Perhaps Chinese consumers are all too familiar with using WeChat Pay and Alipay’s QR code systems to consider other payment methods. To pay with Apple Pay, customers hold down their iPhone near a contactless reader and scan their fingerprint with Touch ID, which confirms the payment. This requires an expensive installation of a Near Field Communication (NFC) antenna – there is little incentive for Chinese shopfronts to install this when WeChat Pay and Alipay compatible QR codes can be cheaply displayed.

Submitting to the demand of Chinese payment systems, Apple recently rolled-out Alipay across mainland China’s 41 Apple retail stores, and WeChat Pay users can make purchases on Apple’s App Store.

Where does this leave us?

Mobile payment systems make the travel experience for Chinese outbound tourists far less daunting and more convenient. If widely implemented, they should result in increased revenue due to their ease-of-use and familiarity.

As China outbound tourism numbers continue to rise, displaying a “China Welcome” is becoming more important. A small merchant, restaurant or hotel accepting a Chinese payment method instantly gives the message that they welcome Chinese guests. For a small business, it’s a lot more realistic than employing Mandarin speaking staff. For larger retailers, there is the benefit of increase spend per transaction. The mobile payment apps show what the user is paying in RMB, and shoppers are more confident in spending more as they know exactly what they’ll be charged back home.

It’s also important to consider that technology like mobile payments can go out of date very quickly as the next best thing comes along. If you’re looking to enter this market, our advice is to find a middle man with an app that they will develop as things move along (so you don’t have to).

At China Travel Outbound, we like to make life easy so have teamed up with specialists, Globepay, to offer mobile payment solutions to our clients.  Their solutions include both Alipay AND WeChat Pay, so now there is no need to choose between the two.

If you are interested in Chinese mobile payment methods and how they could benefit your business, we would be more than happy to talk you through the process. Please feel free to contact us for advice.

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Get Ready for Golden Week

Golden Week is one of the most important holidays in the Chinese calendar, a week-long holiday that happens annually at the beginning of October. Traditionally, the Chinese flock in their droves (589 million to be precise) throughout China via train and by car, visiting domestic tourism attractions such as Beijing’s Forbidden City which sold 166 tickets per minute during last year’s festivities. However, times are changing and Chinese tourists are turning their attention to international travel during their week off work.

In 2016, it is thought that a record 6 million Chinese nationals opted to travel overseas for their holiday. Not only are they venturing abroad, they also have money burning holes in their pockets, in 2015 the Chinese spent $180billion abroad. Europe is seen as a favourable destination due to the ability to claim tax back, in the UK goods are almost 30% cheaper than Chinese high street prices because Chinese tourists can reclaim the VAT they’ve spent and taxes on luxury items are lower.

Attract a new market in a quiet period

2018, has been announced as the year for EU-Chinese tourism and, the spotlight is firmly placed on links between Europe and China. As relationships start to strengthen, the number of visiting Chinese should start to multiply. Europe needs to find ways to entice tourists in the off-peak seasons, and adding Golden week to the roster alongside Christian celebrations of Christmas and Easter maybe the perfect way. Golden Week is all about shopping to excess, and the European high streets, and particularly the gift shops, could really benefit from this shopping extravaganza in the post-summer, pre-Christmas lull.

Exchange rates have an impact

Golden Week 2016 saw sterling at the lowest it had been in 10 years, meaning the UK was 10% better value for money than it had been in 2015, enticing Chinese tourists to dig deep and spend, spend, spend. The UK saw a +58% rise year-on-year in Chinese Tax free shopping during Golden Week last year; fuelled not only by the post Brexit exchange rates, but also by dedicated promotions on travel websites such as Ctrip. This steady rise has seen stores such as Gieves and Hawkes on Saville Road benefit from the kind of shameless spending that Golden Week promotes.

So how many Chinese tourists will travel to Europe for Golden Week in 2017? Well, sterling has made a slight come back so the UK isn’t quite so cheap. In October 16, tourists could expect to receive around £0.12 for their Renminbi, where today (August 17), they would receive slightly less – around £0.115, but this is still a good rate in comparison to previous years. Looking at the euro, last year the Renminbi would have bought you €0.136 to splash out in the designer boutiques of the Champs-Elysees, but today that same Renminbi may only take you to Printemps, with a rate of €0.127. So the Chinese will get around 6% less for their money in the Eurozone this year, and around 4% less in the UK.

More importantly, perhaps, will be the response of the Chinese to the recent terrorist attacks in the UK. In the wake of the Paris attacks in 2015, Paris saw a drop of approximately 30% to the city . But, anecdotally, we have heard that the terrorist attacks in the UK received less media coverage in China so perhaps the impact will not be so deeply felt. Let’s hope so.

Are you ready with a Chinese cashless payment solution?

Another important factor for Chinese shoppers, is the availability of Chinese cashless solutions, such as AliPay, Union Pay and WeChat Pay. The might of Alipay is incontestable, more than 250,000 Chinese tourists visited Britain in 2015, and during this period the spend on Alipay topped £586.22 million. The mighty Tencent has brought WeChat Pay to Europe this year, and we can’t wait to see what effect this will have on Golden Week 2017.

Here’s hoping for a golden October.

 

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Is the rise of Chinese travel to the UK unstoppable?

It’s hardly a secret that Chinese tourists stay longer (twice as long) and spend more (3½ times more) than the average visitor to the UK. This long-staying, high-spending market is moving up every tourism provider’s priority list as the value of China’s growing outbound travel market – which already stood at 120 million in 2016 – becomes abundantly clear.

Chinese tourism to the UK increased by +10% in Q4 2016 – and this after a record-breaking 2015. Early indications point to another very healthy year in 2017: May saw an increase of 31% of bookings by Chinese tour operators to London, while the capital’s luxury quarter saw a 39% increase in tax-free shopping for designer clothes, handbags and jewellery in the same period.

Is the rise of Chinese travel to the UK unstoppable? There are plenty of reasons to think so…

The Chinese are flush with hidden money and they’re ready to travel

It turns out that the Chinese travelling middle classes have even more money to spend than the headlines suggest. The government-backed Chinese Academy of Social Sciences in Beijing recently declared that that estimates of household income have undervalued real income by up to 20% through omitting to measure household investments. And we can expect plenty of that income to be spent on travel; a recent report by Sabre found that 90% of Chinese travellers expect to travel more often in the future.

Travel is increasingly the norm and an expected activity for Chinese, which means not just more Chinese travelling, but an increasingly independent, experience-seeking market in search of destinations, hotels, visitor attractions and activities which will genuinely differentiate their holiday from the norm.

The revolutionary rise in independent travel

As new waves of Chinese outbound tourists take to the skies, independent travel is taking off too, especially amongst Chinese millennials. By some measures, around 40% of Chinese outbound tourists travel independently. English-speaking countries are naturally-preferred long-haul destinations since they present fewer language challenges than other nations.

Self-drive tourism, camping & caravanning, and adventure travel are all trending travel segments in China, helping to distribute Chinese tourists and their largesse more widely in destination nations.

The Chinese love spending money in the UK

Chinese visitors to the UK spend £2,174 on average during their stay – more than 3 ½ times more than the average tourist. They spend twice as much time in the UK as the average tourist too – averaging 15 nights vs the average 8 nights.

Encouraging even more spend in the UK is the proliferation of Chinese payment options including UnionPay. The heavyweight retail early adopters long ago proved the value of accepting UnionPay. Harrods introduced 75 China UnionPay terminals in 2011 and has since seen an increase in sales to Chinese tourists of +40%; by 2015, Harrods took £1 for every £5 spent by Chinese tourists in the UK. In 2011, the Ritz became the first London hotel to install China UnionPay terminals, a pioneering move which paid off handsomely with a 17% increase in Chinese guests and 25% rise in spending.

The Royal Observatory Greenwich’s average sale in the shop via UnionPay is 3.7 times higher than the average.

Brexit and the increasing strength of the renminbi

Record numbers of overseas tourists visited the UK in April as the fall in sterling made the UK very good value – a positive Brexit side-effect for inbound tourism. The UK is already a particularly attractive destination for the Chinese to spend their holiday money; Chinese visitors to London spend twice as much time and twice as much money as they do in mainland Europe, greatly benefitting the capital’s luxury goods sellers. So continuing uncertainty surrounding Brexit may actually offer a continuing positive pull to Chinese tourists.

Even Brexit itself seems unlikely to be a deterrent to Chinese tourists visiting, with no new visa requirements since the UK is already outside the Schengen visa zone.

The powerful allure of the UK

VisitBritain has invested heavily in China over recent years. The GREAT names for GREAT Britain campaign in 2014 generated 30 million views of the campaign video and 2 million visits to the campaign website – as well as such memorable monikers as ‘Big White Streaker’ (for the Cerne Abbas Giant) and ‘The Strong-man Skirt Party’ (for the Highland Games). VisitBritain’s recent +56partnership with Alitrip, Alibaba Group’s tourism arm, has created a virtual British marketplace to showcase UK tourist offerings and great British experiences and destinations to Chinese consumers.

And VisitBritain is building on a very strong base of traveller interest. The Chinese rate “a rich and interesting heritage and history” very highly as a travel motivation and this is one of many areas in which the UK excels. “Romance” and “the beauty of the landscape” also feature highly both in Chinese motivations for travel and as qualities which the Chinese ascribe to the UK. And there are plenty of current British qualities are tempting the Chinese to these shores, from the Royal Family, Downton Abbey and Premier League football to designer shopping and Harry Potter. Not to mention the apparently irresistible charm of Curly Fu and Peanut.

The early, concerted and continuing promotion of the UK in China by VisitBritain has brilliantly built and consolidated the UK’s position as an aspirational destination for Chinese travellers.

Chinese friendliness is on the up in the UK

TripAdvisor China’s 2016 survey found that the UK was the most-researched European country. And the world’s most valuable tourists have plenty of reasons to make the UK their European destination of choice. Britain is increasingly welcoming to the Chinese, partly thanks to Visit Britain’s Great China Welcome initiative which has encouraged many UK destinations, hotels, visitor attractions and shops to adopt Chinese-friendly products and service.

Many London visitor attractions, including the Houses of Parliament, now offer audio guides in Mandarin, and Mandarin audio guides make up 50% of the total hired at the British Museum. Increasing numbers of Mandarin- and Cantonese-speaking tour guides and shop assistants are evident, especially in London, and organisations from Great Western Railway to The Globe are undertaking Chinese-specific marketing and promotion initiatives to encourage visitors from the Middle Kingdom.

The future of Chinese travel to the UK

A progressively more Chinese-friendly UK with increasing recognition of the value of Chinese tourists is perfectly poised to keep a lion’s share of the world’s largest outbound market. And while recent terrorist incidents hardly provide the ideal backdrop for welcoming inbound tourists, even these gained favourable coverage in China, with Manchester’s homeless heroes garnering plaudits for their unselfish, typically British kind-yet-practical help.

So is the rise of Chinese tourism to the UK unstoppable? The indications are certainly pretty positive…

 

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How to attract Chinese tourists to your destination

As Chinese outbound tourists travel further and more frequently, competition to attract these high-spending visitors intensifies. From the China-Australia Tourism Year to Mandarin-speaking wine educators in California’s Napa Valley, sometimes it seems as if every destination, visitor attraction and hotel chain is targeting Chinese tourists.

And yet the number of destinations which truly excel in appealing to the Chinese is small. That means there’s a great opportunity for savvy destinations to sneak ahead of their competitors in the Chinese tourism stakes. There is still time to make your destination Chinese-friendly and to make it known amongst this most valuable of target markets.

Here are China Travel Outbound’s top tips for making your destination appealing to the Chinese.

Make yourself attractive to the Chinese before departure

The average Chinese tourist plans and researches their trip almost 3 months in advance, with 43% consulting travel, shopping and fashion websites and 38% using brand channels on social media. To get in front of this audience, you must have some kind of presence on WeChat and Weibo, indispensable social media platforms for the Chinese. You can do this via your own social media accounts, or by using someone else’s and tapping into their influence and their friends and fans.  The digital space is great for promoting your destination; use rich video showcasing its experiential offer or get the support of a Chinese vlogger or KOL.

Make sure the Chinese travel trade know you are there

The vast majority of  bookings overseas from China are still made via travel agents and tour operators, so even if you are targeting the FITs, you still need the Chinese travel trade to sell your destination. Connect with them through trade shows, via DMCs, trade PR or using the services of an in-market representative. Or, ideally, all of the above.

Welcome your Chinese visitors in Mandarin

You don’t have to undertake extensive cultural training to make your Chinese guests feel welcome. Just learning a few key phrases in Mandarin and understanding frequent requests is useful. All the better if you have fluent Mandarin speakers to say ‘ni hao’ to your Chinese arrivals.

Flights to Las Vegas from Hainan are greeted by bilingual ‘ambassadors’ who welcome travellers and help with directions. Tourism Tasmania has started hiring bilingual guides at its most popular national parks. If your Chinese visitor numbers are still small, signage (when used well) and literature can provide a practical and affordable alternative. When China Southern introduced direct flights between Guangzhou and Adelaide, Adelaide rolled out directional signage in Chinese.

Make it easy for your tourism businesses to be Chinese-friendly

Work with your tourism businesses to create a fully Chinese-friendly destination. Chinese tourism has brought £43m to Scotland over the last 3 years and Edinburgh’s Tourism Action Group offers comprehensive support, advice and training to help its tourism businesses to attract, and welcome, Chinese visitors. Work with your service providers to implement some entry-level Chinese-friendly innovations, such as signage in Mandarin and a simplified, translated menu at restaurants, and build your Chinese offering from there. We offer China Ready Training through our partners at Capela China. One day workshops for up to 10 people can get your business ready to accept and welcome Chinese guests and help you navigate the cultural challenges of working with China.

Rice and the new wave of Chinese food tourism

Chinese restaurants continue to be attractive to Chinese tourists but those offering other cuisines stand a better chance of attracting the new wave of Chinese food tourists if there’s upfront information in Chinese. Offering rice as an accompaniment to any cuisine will make the Chinese feel ‘at home’ too. The big sellers at the seafood restaurants in Brighton we work with are the risottos, the seafood spaghettis, oysters, and the huge, shareable, seafood platters including lobster, crab and other shellfish. Sharing is the norm and, as a rule, hot food trumps cold.

Communal dining is important to the Chinese, and deft cultural touches such as according the highest respect to the oldest person in the party – which might seem counter-intuitive when the most fluent English speaker is younger – is the kind of attention to detail which garners positive reviews on Chinese social media sites.

It’s easier for the Chinese to shop if they can pay

The Chinese don’t use Western credit cards and don’t want to carry large amounts of cash, so try to offer the most popular Chinese payment options: China Union Pay, Alipay and WeChat Wallet. These online payment platforms are ubiquitous in China and savvy overseas destinations and retailers, including Harrods and Body Shop in London, are reaping the rewards of early adoption.

Adapt to changing Chinese tourism trends

It’s not just one big group market. Independent travel is on the rise and self-drive, Airbnb and caravanning are seeing increasing take-up too. Chinese millennials are a force to be reckoned with and this group of digital natives, in particular, are self-assured and confident about making their own travel arrangements.

Make sure your website and destination information is available to the Chinese – and not just in straight translation but in formats, design and wording which meet Chinese needs. Destination websites should also be hosted in Hong Kong or mainland China so they can be viewed in China. Remember that Google is banned in China, so if your website is packed with Google features, such as Google maps, it won’t upload easily in China. These functions need to be stripped out.

Experiential travel is on the up for Chinese tourists, with heritage products and experiences finding favour for their novelty as well as their WOW factor for social media. Some of Washington State’s most popular products are rural experiences including fishing and spending time in nature, and visitors to Japan are shunning shopping in favour of hot springs and sand baths. What authentic heritage experiences and products can you highlight to the Chinese?

Make it easy for the Chinese to recommend you

Make WiFi as widely available as possible so that your Chinese visitors can share their experiences in real time on social media. And make sure you monitor and respond to comments on social media review sites such as Mafengwo and DaoDao. This will give you invaluable insight into what the Chinese like and don’t like about your destination and its hotels, attractions and restaurants.

Lobby for easy access to your country

Make visas easy to buy and widely available in China to individual travellers. Better still, make visas purchasable on arrival, or allow accredited tour companies to process visa applications in advance for group travellers. Precisely this change last year saw South Africa grow its Chinese visitors by +53%.

Introduce a multi-year, multiple entry visa. Australia is trailing a 10-year multiple entry visa for Chinese visitors as part of a package of China-Australia Tourism Year initiatives in 2017.  Don’t get left behind; if it’s difficult for the Chinese to enter your country, lobby your government for easier access. The sheer size of the Chinese tourism opportunity is reason enough for more open entrance policies.

Don’t forget the Chinese who are already here

The Chinese value overseas education highly and, in particular, the USA and the UK. There are over 130,000 Chinese students studying in the UK, all of whom see this experience as an investment in their future and are keen to explore. They also have access to important social networks both in the UK and back home in China. To tap into these networks, China Travel Outbound has launched a new Student VIP Travel programme, making connections with the Presidents of the Chinese Student Societies of the UK’s universities and inviting these important influencers to experience our clients’ products.

Put Chinese-friendliness at the heart of your strategy

Don’t be half-hearted about attracting the Chinese market. It’s the biggest outbound tourism market in the world and it’s growing the fastest too. But you need to invest and be committed to get a return – and it requires special, expert attention from professionals with thorough knowledge of China and its travel market.

The rewards are considerable. By marketing differently to the Chinese, Las Vegas has grown a whole new audience of Chinese millennials not interested in casinos, benefiting other tourist attractions as Chinese visitors spend on dining, shopping and leisure activities instead. High-end Chinese tourists visiting Perth in Western Australia are spending up to AU$10,000 on a week’s luxury travel in the state.

Are you ready to start your journey to attract the Chinese to your destination?

 

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5 ways to attract more Chinese shoppers

Recent research showed that the Chinese make up one third of all global tax-free shopping spend, and the Chinese tourist’s average holiday spending budget is ¥16.702 (£1,900). These figures once again remind travel and tourism businesses that the Chinese constitute an extremely lucrative market for retail. And it’s also a market which is predicted to grow to 200 million by 2020.

In 2014 the total overseas spend by Chinese tourists was over ¥1 trillion (£100 billion). The key factors driving Chinese overseas purchases, which we looked at in Part 1 of this blog, are a history of fakes and poor quality goods, a limited range and much higher prices. This trend shows no signs of slowing. Here’s the 5 ways to make your how retail offering Chinese-friendly and attract this cash-splashing segment.

Make sure you’re big in Beijing (and Shanghai, and Chengdu, and Guangzhou …)

81% of all Chinese overseas tourists plan to shop in their destination and they’re researching their options before they travel, so it’s essential to promote your brand in China. There are various routes to attracting the interest of Chinese tourists before departure, and they’re best used in combination to maximise your impact. PR to key consumer and trade media is essential, and inviting bloggers to visit can garner good coverage too.

Key Opinion Leaders (KOLs) and celebrities are very influential in China and an endorsement, or ideally a visit, can place your offering into the social media streams of millions of Chinese. And choosing the right KOL is essential. While The Plough at Cadsden in Buckinghamshire can hardly find space for its Chinese visitors thanks to President Li Xinping and David Cameron’s beer and fish & chips pitstop last year, most brands are going to have to work a lot harder to raise their profile in China. The rise of internet celebrities such as Ling Ling, who by some accounts earns more than top Chinese actor Fan Bingbing, is just one aspect of a complex market for the unaware. There are even internet celebrity incubators. A specialist agency is vital to identify the KOL who will fit your brand and appeal to your target market; we knew Chinese rock band Miserable Faith were the right celebrities to promote our client Hard Rock Cafe – a simple lunch resulted in postings on Weibo which reached over 3 million.

So make sure you’ve done extensive research – or work with an expert agency – to find the right celebrity or KOL for your brand, use PR to consumer and trade media, and cultivate relevant Chinese bloggers.

Cash isn’t king

The Chinese don’t have access to Visa and Mastercard credit cards and have tended to pay in cash overseas – a natural spend inhibitor given concerns about the safety of carrying too much money in a foreign land. Hence the need for merchants to accept payment by China Union Pay, the bank card most widely used by the Chinese, is well-established. If you want to be included on a Chinese itinerary, you really ought to accept China Union Pay; Harrods has over 100 Union Pay terminals throughout the store.

The need to accept Union Pay is so well-established, in fact, that the world of Chinese payments is moving on. 99% of all Chinese online shoppers use mobile payment apps. In China these days even small retailers such as food stalls accept payment by mobile app. And Chinese outbound tourists increasingly wish to use the same payment methods overseas as they do at home.

The spread of Alibaba’s payments platform Alipay into Europe is designed to do just that; allow Chinese tourists to pay overseas using a familiar payment method. Alipay is increasingly available at European airports, luxury retailers and other places with high visitation by Chinese tourists. Intercontinental Hotels Group (IHG) recently signed a global partnership deal to accept payment by Alipay at all its hotels and through all digital and offline channels – not surprising when you realise that China is now IHG’s 2nd largest market globally. WeChat Pay is smaller than Alipay but still widely-trusted and used, and both payment channels are already spreading into Japan.

So make payment easy for the Chinese by accepting China Union Pay, and if you’re a big retail outlet, think about Alipay and WeChat Pay too. Making this change could give you a valuable return. The first US shopping complex to accept China Union Pay soon became the site of Union Pay’s single largest transaction ever. Which was a 6 figure sum.

Welcome the Chinese in Chinese

Making the Chinese feel welcome could bring great rewards. If your destination or tourist attraction is Chinese-friendly, it’s far more likely to feature in a group itinerary, make it into the Chinese media, or appear in an independent traveller’s plans. Communications and signage in Chinese and a dual language website – not just translated but localised so it makes cultural sense to the Chinese – will all contribute to raising brand awareness and making Chinese visitors feel welcome. And Mandarin onsite signage is vital for that all-important selfie.

Cultural training will help your onsite team welcome the Chinese and help them make the most of their visit. One of our services, GREAT China Welcome training, backed by Visit Britain, takes just one day and will equip your team to better serve the Chinese, even if becoming fluent in Mandarin takes just a little bit longer. Could you answer a question in Mandarin? If the answer is no, consider having a few key points about your most expensive items available to read in Mandarin. That could clinch a sale which would otherwise walk away to the next store.

Get yourself onto Chinese group itineraries

Legend has it that there was once a time when Chinese tour guides could be encouraged to visit particular places on receipt of a small monetary reward. No more. President Xi Jinping’s anti-corruption crackdown has reached into tourism and legitimate methods are required to get your offering onto Chinese group itineraries. And sadly this is not just a matter of meeting a few Chinese tour operators, liaising by email, agreeing rates et voilà, behold the arrival of many Chinese tour groups.

China’s time-honoured social hierarchy and cultural norms around trust impede speedy relationship-building. The Chinese favour long-term connections and these can’t be developed over just a couple of meetings. Expect to undertake repeated visits to meet your prospective partners or work with a local intermediary who can use their established connections to benefit your business. And don’t forget that ‘yes’ can mean ‘no’. British-Chinese cultural differences are multiple and challenging.

Tailor your brands to the Chinese

Chinese tourists are still eager to snap up luxury fashion in the form of clothes, handbags, sunglasses, watches and jewellery.

Bicester Village’s mix of designer and mid-market shops has proved a hit with the Chinese for whom it is reputedly the 2nd most visited destination in the UK after Buckingham Palace. A mix of high-end designer shops and mid-market brands is a great combination. And there’s a growing segment of Chinese visitors keen to seek out more quirky or original fashion too. New shopping app New Arrival is designed to bring independent overseas designers to the attention of Chinese fashionistas, highlighting shops in popular city destinations within and outside China as well as facilitating in-app purchases. Millennials in particular are making more self-focused decisions than older generations, opening up opportunities for the right smaller or niche brands.

Cosmetics and skincare, cheaper than in China and perfectly portable, are also a popular purchase for Chinese tourists in the UK. Gift purchases are common too, so consider offering bulk discounts and having traditional Chinese red gift envelopes available.

And make sure you offer heritage and quintessentially British and regional goods too. Tell the story of the brand and focus on its heritage, authenticity and quality to boost its appeal to Chinese tourists. For example, traditionally Scottish products such as tartan, whisky and cashmere are popular with Chinese tourists in Edinburgh. For authenticity’s sake, products should ideally be stamped Made in the UK – and certainly not Made in China.

Are you doing enough to attract Chinese shoppers?

So – are you doing enough to get your share of Chinese shoppers’ holiday spending? Are you promoting your offering in China; accepting China Union Pay; welcoming the Chinese in Mandarin; building relationships with the Chinese travel trade; and tailoring your retail offering to Chinese tourists? It might seem like a lot of work but it’s worth it; the Chinese are now in the top 10 inbound markets to the UK by value and their total visits to the UK were up +46% yr/yr to 2015.

To find out more about how you can make your retail outlet more attractive to the Chinese, contact us now for a no obligation chat.

For more news and views on the Chinese tourism scene, please read our other articles and sign up below to receive our newsletters.

 

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Get Ready for Golden Week

 

More than 750 million Chinese expected to travel during October’s Golden Week

Golden Week is the single biggest holiday for the Chinese and last year saw around 750 million people – half of China’s population – hit the road. While many travel domestically, increasing numbers are using this opportunity to fulfil dreams of further-flung travel. At least 4 million Chinese travelled overseas in Golden Week in 2015 and that figure is set to be surpassed this year.

Record Golden Week spend expected in 2016

While we’re probably all relieved not to be jostling for space amongst the 12.5 million Chinese who travelled on China’s railways on just one day of Golden Week last year, the UK is preparing for a bumper week. Golden Week visits by Chinese tourists to London quadrupled in 2015 compared with 2014, and this trend is certain to continue in 2016 thanks to the recent boost in Chinese holidaymakers driven by the beneficial exchange rate. Harrods has been running Golden Week promotions for several years, offering special ‘lucky’ products, increasing its number of Mandarin-speaking staff and highlighting the holiday in its WeChat account.

Golden Week shopping promotions go global

The Chinese are by far the highest spenders of all tourists and recent research by global tax-free shopping company Global Blue found that the average Chinese holidaymaker’s shopping budget is ¥16,702 (around £1,900). It’s hardly surprising, then, that plenty of other destinations and retailers have a history of bespoke activity to attract the Chinese in Golden Week. Department stores including New York’s Macy’s, Paris’ Galeries Lafayette and Spain’s El Corte Ingles all ran special Golden Week promotions last year. El Corte Ingles partnered with luxury watchmakers to offer exclusive gifts with purchases, and publicised special offers at its flagship Castellana store in Madrid via its WeChat account. South Korea even invented its own holiday, South Korea Black Friday, to encourage Chinese tourists to shop.

Chinese overseas trips continue their unstoppable rise

Golden Week begins with China’s National Day on 1 October, the day the People’s Republic was founded in 1949. And thanks to the PRC’s economic growth and opening up over the past few years, the flow of Chinese travelling overseas continues to grow. There was a +17% increase in overseas trips organised by Chinese travel agencies in Q2 2016 and that period was also the first time that visits by mainland Chinese tourists to non-Chinese overseas destinations exceeded those to ‘Greater China’ (Hong Kong, Macau and Taiwan), underlining the unstoppable trend towards longhaul travel.

To find out more about the Chinese tourism market, read more of our blogs here, or sign up to our newsletter below.

 

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Let’s go … explosive shopping!

Shopping has long been a major motivator for overseas travel by the Chinese, and Bicester Village may be the 2nd most visited place in the UK by Chinese tourists after Buckingham Palace. And since the Chinese are easily the highest overseas spenders of all inbound tourists – making up one-third of all global tax-free shopping spend – it’s clear that there are great rewards for destinations and shopping complexes which attract the Chinese and their yuan. Research by Visit Britain ranks ‘shopping’ in the top 3 activities undertaken by Chinese in the UK and tourists are researching their shopping options before they travel, so it’s important for shops, centres and destinations to market their brands in China.

Explosive Shopping

Short-haul destinations have been fine-tuning their retail offering and services for Chinese visitors for some time. South Korea has 13 tax-free shopping malls mainly targeting Chinese tourists while Tokyo’s Akihabara electronics district has long been a popular stop for Chinese visitors keen to stock up on televisions and rice cookers. The Japanese have even developed a new word for Chinese shoppingBakugai means “explosive shopping” and describes the eager purchasing carried out by Chinese holidaymakers in the Land of the Rising Sun. Tabloid stories of frenzied Chinese shopping abound – with one of the most notorious the (tall?) tale of two Chinese families fighting over the last box of disposable nappies in a Kobe department store.

The Japanese National Tourist Organisation calculates that Chinese visitors in Japan spend 35% more on average than visitors from other countries – and with Chinese visitors numbers to Japan +41% so far in 2016, that adds up to very significant spend in yen. Or yuan.

The rise of Chinese shopping tourism

No less a body than the United Nations World Tourism Organisation has recognised and defined the new concept of “shopping tourism”, describing it as “a growing component of the travel experience, either as a prime motivation or one of the major activities undertaken by tourists at their destinations”. It’s easy to think that the Chinese market was in mind when the UNWTO were deciding on this new category. Recent research by global tax-free shopping company Global Blue found that 81% of all Chinese overseas tourists plan to shop in their destination and their average budget is around ¥16.702 (£1,900).

Designer outlet specialist McArthur Glen is focusing its attention on luring Chinese shoppers into its centres abroad. Its marketing team in China works with trade partners to drive footfall to its overseas outlets, where Chinese shoppers are the single largest international visitor group and make up a third of all international spend. The China team also works closely with the European outlets to carry out cultural training and put other Chinese visitor-friendly measures in place including employing Mandarin-speaking staff and accepting payment methods such as Alipay.

McArthur Glen is clear that WeChat and Weibo are key to connecting with and influencing Chinese consumers before and during their trip. Chinese visits to their European malls increased by +74% in 2015 versus 2014.

In the USA, luxury shopping destinations are also fighting hard for Chinese business, not least because the US Department of Commerce estimates the average shopping spend of Chinese tourists at US$6,000. California’s “global shopping destination” South Coast Plaza has dual language website, advertising and signage, employs Mandarin-speaking concierges and has traditional Chinese red gift envelopes available. In 2012 it became the first US shopping complex to accept China Union Pay and soon after was the site of Union’s Pay single largest transaction ever, a 6 figure sum – an event which prompted a visit (and presumably a thank you) from Union Pay’s CEO.

Why is shopping such an important part of the Chinese holiday experience?

Imported goods in China tend to be perceived as superior to local goods. This tendency began with a lack of quality in early Chinese manufacturing and has been fuelled in recent years by scandals ranging from lead paint in children’s toys to melamine-contaminated baby milk. Imported goods are also subject to high taxes in China so their purchase overseas is cheaper – as well as being status-enhancing. The range of goods on offer outside China is usually wider too, making purchases that bit more tempting.

And it can be hard to be sure that your luxury purchase – indeed, any purchase – in China is genuine. Recently Alibaba has strengthened its efforts to remove counterfeits from its shopping websites Taobao and Tmall, promising to work closely with global brands and even announcing the launch of a new online system to track and remove fakes in early July. These highly publicised efforts are partly designed to counter Alibaba’s reputation as a haven for fake goods, a belief not helped by owner Jack Ma’s comments in June that ‘fake’ luxury goods made in Chinese factories have ‘better quality’ and ‘a better price than the real product’.

While Alibaba’s policies will apply mainly to fakes badged as luxury goods, the unwary may still be caught out by items which appear almost identical to branded luxury products but use a different (sometimes similar) name.

So to avoid fakes and poor quality goods, to choose from a wider range and buy at a keener price … the Chinese are eager to buy goods outside China.

What do the Chinese buy?

Luxury goods are still a favourite overseas purchase of the Chinese. Jewellery, fashion, watches, handbags and cosmetics are all bought in significant volumes. In fact, in 2015, the total overseas spend by Chinese on luxury goods was as high as the domestic spend at US$50 billion – hardly surprising when you realise that many luxury goods are half the price overseas as they are at home. But it’s not just about luxury. Heritage and quintessentially British items are also popular. Traditional British brands are always a draw and (toy) sheep fly off the shelves at Stonehenge – as long as there aren’t any ‘Made in China’ stamps in sight.

Encouraging Chinese shoppers to choose your destination or shopping centre

Global Blue’s research shows that the average overseas Chinese tourist plans and researches their trip almost 3 months in advance, with 43% consulting travel, shopping and fashion websites and 38% using brand channels on social media. And the perception of a country or a destination as good for shopping can be a significant factor in destination choice: 80% of Chinese visitors to Madrid cite shopping as a major motivation.

This makes clear the need to reach out to tourists before their departure from China and ideally before their travel plans are set. To influence Chinese tourists’ choice of destination it’s necessary to establish a presence in Chinese social media and with influencers in China itself. WeChat and Weibo accounts are essential and it’s also worth having a presence on Weibo’s specialised travel portal on which consumers subscribe to receive updates on destinations. Outreach and promotion to Chinese media, celebrities and Key Opinion Leaders are also vital, and it’s important to use specialist Chinese insight to select the right Chinese influencers.

Your website should be in Chinese but it’s not as simple as just translating it – it’s important that the website is localised so that its content and format is appropriate to local cultural sensibilities.

Welcoming Chinese visitors

Adapting your destination or shopping complex to better welcome Chinese will pay off in higher spend and (later) in recommendations, both in person and especially in Chinese social media. Dual-language signage and Mandarin-speaking staff make the Chinese tourist feel welcome, and China Welcome Training can instill an understanding of Chinese culture. Make sure you offer Chinese payment methods such as China Union Pay, Alipay and WeChat Wallet, and offer free Wifi for the use of mobile payment services – and so your Chinese visitors can carry out quick price comparisons to see just how much money they are saving by buying their goods overseas.

According to Trip Advisor, 41% of Chinese tourists will take an extra suitcase on a trip just to accommodate their purchases. If you are keen to ensure your goods are in that suitcase, contact us now to find out how we can help you boost your presence in China.

 

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