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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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.

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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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