Global Chinese Travellers: The Next Great Retail Market

Retail spend from overseas Chinese visitors will double to US$422 billion by 2020, says Fung Business Intelligence Centre

September 22, 2015

GLOBAL CHINESE TRAVELERS:

THE NEXT GREAT RETAIL MARKET

Retail spend from overseas Chinese visitors will double to US$422 billion by 2020, says Fung Business Intelligence Centre

Global Retail & Technology report

NEW YORK (September 22, 2015) – Retailers, revise your international marketing plans now: already the world’s number one outbound visitor, China’s travelers will spend over $200 billion overseas for the first time this year. More importantly, that sum will more than double by 2020, providing a huge potential market for global brands and retailers, says “Global Chinese Shoppers: The $200 Billion Opportunity,” a just-released report from Fung Business Intelligence Centre (FBIC) Global Retail & Technology and consulting firm China Luxury Advisors (CLA). 

     A rising middle class, growing numbers of Chinese students attending schools overseas and currency fluctuations have boosted overseas travel among Chinese, with 234 million projected to travel globally in 2020. Increasingly, these travelers will go farther afield, to the United States and Europe. The result: Total overseas spending of Chinese tourists, which is expected to jump 23 percent in 2015 to US$229 billion, will reach US$422 billion by 2020.

     “The Chinese consumer has emerged as the most powerful and motivated in the world, especially in the luxury sector,” writes Deborah Weinswig, FBIC Executive Director-Head of Global Retail & Technology. “The retailers and brands with the highest consumer awareness will be the long-term winners of the hearts and wallets of the all-powerful traveling consumer.”

     The report analyzes the results of a proprietary survey commissioned by FBIC Global Retail & Technology and China Luxury Advisors of more than 1,000 Chinese internet consumers regarding their travel and spending for the year ending May 21, 2015, and combines that data with economic and tourism growth projections. 

     Hong Kong is the most popular destination for Chinese travelers, with 12.9 percent of the respondents visiting the city in the period covered by the survey. Europe was visited by 7 percent, and the United States by 3 percent. Nearly all (99 percent) of travelers reported making a retail purchase, with the average total expenditure coming to $1,678. But the farther they traveled, the more they spent: Chinese visitors to the United States spent $2,555 each, while those touring Europe spent $2,548. Clothing, footwear and accessories were the most popular category for purchasing (56 percent) followed closely by fragrances and beauty products (52 percent).

     Combined with forecasts of increasing overseas travel in the next few years, FBIC advises that retailers carefully evaluate their e-commerce and in-store strategies for middle-income as well as luxury consumers.

     “With middle-class incomes rising, millions of Chinese are poised to take their first overseas trips, joining group tours and visiting the world’s biggest cities and most popular destinations,” Weinswig writes. “Meanwhile, the number of experienced overseas travelers will continue to increase as Chinese travelers take their second, third and fourth trips overseas. … As purchasing patterns evolve, retailers and brands need to evaluate their Chinese consumer strategy from a global standpoint. Investment in brand building with Chinese consumers can produce gains on a global basis, not just in China.”

     “Active brand management is crucial to capture the global Chinese shopper’s attention and projected spend,” adds CLA co-founder Sage Brennan. “This means that the retailers and brands with the highest consumer awareness will be the long-term winners of the hearts and wallets of the all-powerful Chinese traveling shopper.” 

     A number of retailers and shopping centers have already begun marketing to this new audience. Spain’s El Corte Inglés department store reconfigured its ground floor to incorporate international brands including Hermès, Dior and Bulgari, local luxury brand Loewe, and Spanish gourmet products that appeal to the Chinese consumer, created a Chinese language website and executes annual Chinese New Year campaigns. Los Angeles’ luxury Beverly Center mall launched a China Ready program in 2013 that includes special discounts and offers, Mandarin-speaking staff members; and outreach to Chinese students in the area. The Bicester Village outlet shopping center outside London has created a website in Mandarin, among several foreign languages, and offers instant tax refunds and other services geared to international shoppers. 

     “These retailers and shopping centers are at the forefront of appeal to the next great consumer market,” Weinswig says. “No company wishing to remain a vital international force can afford to ignore the Chinese visitor.” 

     The full report can be found here. Recent reports issued by FBIC include: “The Middle Aisles Exodus: U.S. Shoppers Flee to Healthier, More Natural Foods,” “Global Department Store Retailing,” “The Disruptor Series: Retail in the New Connected World,” and “A Booming Opportunity: Profiting from a Graying America.” All of FBIC’s reports and analyses can be found at 

www.fbicgroup.com and www.deborahweinswig.com.

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About China Luxury Advisors

China Luxury Advisors is a boutique consultancy that helps brands, retailers, tourism organizations and destinations to increase their business with Chinese customers. Visit www.chinaluxuryadvisors.com for more information.

About Fung Business Intelligence Centre Global Retail & Technology

The Fung Business Intelligence Centre (FBIC) Global Retail & Technology research team, based in New York, London and Hong Kong, is a think tank that follows emerging retail and tech trends, specializing in the ways retail and technology intersect, and building collaborative communities. 

The team, led by Deborah Weinswig, former top Wall Street and retail tech analyst and startup advisor, publishes ongoing thematic and global market research on topics such as the Internet of Things, digital payments, omnichannel retail, luxury and fashion trends and disruptive technologies. More information can be found at www.fbicgroup.com

 

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