International retailers waiting for the US$264Billion Chinese spending by 2019

Young Chinese shoppers - China Elite Focus

Book your holiday now, before a wave of 174 million Chinese tourists snap up the best bargains.

Already the most prolific spenders globally, the number of Chinese outbound tourists is tipped to soar further as the millennial generation spreads its wings.

Here are the numbers: 174 million Chinese tourists are tipped to spend $264 billion by 2019 compared with the 109 million who spent $164 billion in 2014, according to a new analysis by Bank of America Merrill Lynch. To put that in perspective, there were just 10 million Chinese outbound tourists in 2000.

How much is $264 billion? It’s about the size of Finland’s economy and bigger than Greece’s.

“China-mania spread globally in the past few years, akin to when the Japanese started travelling some 30 years ago, when the world went into frenzy then, pandering to Japanese customers’ needs,” the analysts wrote. “In our view, this is going to be bigger and will last longer given China’s population of 1.3 billion vs Japan’s population of 127 million.”

Millennials, or 25- to 34- year olds, are expected to make up the bulk of Chinese tourists at 35% of the total, followed by 15- to 24- year olds accounting for around 27%.

“Chinese travelers now massively prefer to shop overseas. Buying a luxury product in Mainland China is seen as “Uncool” and shows that you can’t afford to travel to New York city, Paris or London to buy at the original brand ‘s flagship store” says Pierre Gervois, Publisher of the New York City based Shanghai Travelers’ Club magazine.

Only about 5% of China’s 1.3 billion populace are thought to hold passports, meaning the potential for outbound tourism is vast.Gervois Rating Banner 01

The projected boom could be good news for the global economy. The Chinese are the world’s biggest consumers of luxury goods, with half of that spending done overseas. Chinese visitors to the U.S. have risen more than 10% since 2009, the fastest pace for a destination outside of Asia. Australia, France and Italy are also popular.

Asian markets stand to benefit, with the biggest uptick tipped for Japan, South Korea and Southeast Asia, according to the research led by Billy Ng in Hong Kong.

Source: Chinese tourists Blog / Bloomberg / Bank of America

Chinese credit card China Union Pay plans aggressive expansion overseas to better serve Chinese travelers

China Union Pay

UnionPay International announced plans to expand its overseas presence Friday, with the company’s services already available in 148 countries and regions outside mainland China.
Beijinger Yin Nan said her experiences in the South Korea this week were no different from at home. Up to 80% of her spending, such as flight tickets, hotels and shopping, was paid through UnionPay.
“It’s very convenient because I don’t have to worry about exchanging a large amount of local currency,” she said.
“However, I do carry some cash for little souvenirs or street snacks,” she said.

The company already has a heavy presence in South Korea since entering the market in 2005, with more than 10 million UnionPay cards issued in cooperation with local banks.
“South Korea is one of the easiest markets in terms of using the UnionPay card,” the company said in an e-mail interview with Xinhua.

“Apart from Chinese users, an increasing number of people from countries such as Japan and Mongolia and China’s Hong Kong and Macao SARs are using UnionPay cards,” the company said.Gervois Rating Banner 01
In Hong Kong and Macao, almost all ATMs and businesses accept UnionPay cards. Nearly 20 million UnionPay cards have been issued in the two areas as well.
The Asia-Pacific region may be the market stronghold but UnionPay has also become a big international bankcard brand too. In Europe and North America, UnionPay covers most of the tour sites frequented by Chinese travelers.
“With respect to the global trend in the payment sector, we will continue to expand our coverage… meanwhile, we will also improve services so that more foreign nationals adopt our products,” the company said.

According to the Shanghai Travelers’ Club magazine, a travel publication for China’s richest “Even Chinese billionaires use their China Union Pay card to buy million dollars worth of jewelry in Paris or New York”.

Chinese travelers made more than 110 million overseas trips 2014, compared to less than 9 million in 1998.

Attracting affluent Chinese shoppers to New York City

At the 5th avenue Cartier Flagship store, a Chinese customer in Gucci flip flops, Abercrombie & Fitch T-shirt and a Niuyue Mag Cap on his head is buying three gold “Tank” watches incrusted with diamonds “One for me, one for my wife, and one for my daughter, who is studying in Chicago”, he says with a big smile. “I’m also platinum member of the Shanghai Travelers’ Club”, he added ,“that gives me a VIP welcome in most of luxury stores here”.
Cultural training is imperative for New York-based luxury flagship store employees to build trust among affluent Chinese tourists and creating a custom experience for this group of travelers will help marketers gain brand loyalists, experts say.
Many luxury brands are focusing marketing efforts to Chinese consumers back at home, but with a rising wave of Chinese tourists coming to New York, it is important that brands cater to this group. Luxury marketers need to be more proactive to reach Chinese travelers by training employees and partnering with high-end travel services.
shanghai-travelers-club-shopping-in-nyc“New York flagships should be more aggressive in inviting and giving a fabulous experience to Chinese tourists,” said Milton Pedraza, CEO of the Luxury Institute, New York. “The city seems to be behind in attracting and nurturing Chinese consumers.
“New York has been slow to appeal to Chinese tourists, even though there is such as large Chinese population in the city,” he said.
“Retailers need to create personal, emotional connections with these consumers by nurturing them and caring for them, which will create a lasting impression.”
In the capital cities of European countries, luxury flagship stores get 50 percent of their value from Chinese tourists, per Mr. Pedraza.
Europeans have been smart in the way they care for Chinese tourists, who tend to buy in volume on shopping trips.
Meanwhile, the United States has not been as open to tourists in its efforts and may have suffered, given the economic times.

According to Pierre Gervois, author of “How U.S. Retail, Travel and Hospitality Industries Can Attract Affluent Chinese Tourists”, “The U.S. travel and tourism industry has understood the financial power of the new generation of affluent Chinese inbound tourists, and how it can give a boost to the country’s economy, but needs to improve the way Chinese visitors are welcomed and understand better the intercultural issues of marketing”
In the past, European tourists were key for New York-based retailers, but tourism from Europe is on the decline. Travelers from China are now the largest group of tourists in New York, and Indian tourists are another group to look out for in the next decade.
To get Chinese consumers into New York flagship stores, luxury brands should partner with high-end hotels, tour operators and restaurants to keep the brand top-of-mind, according to Mr. Pedraza.
But the marketing strategy for luxury retailers also starts in China, when affluent Chinese travelers are planning their NYC shopping trip, and use Chinese social media networks such as Niuyue Mag, with 200,000 registered members, giving shopping tips and specific insights to Chinese shoppers.
Also airports, limos and hotel concierges play a major role in influencing affluent Chinese tourists since these are all stops on the journey to New York.

“There is no question that luxury brands should be using print and their Web sites to attract tourists to their New York stores by showing the experience that they can expect,” Mr. Pedraza said.
“The travel industry is also a huge opportunity,” he said. “Luxury brands have to romance travel agents to get on the map within the travel industry.”
“Brands need to do a better job at creating these partnerships with travel-oriented brands.”
Once in-store, affluent Chinese tourists will need to be made comfortable. To do so, New York flagship stores should start by training their staff on the Chinese culture and traditions.
Stores should have, at minimum, Mandarin-speaking employees and may also want to train in other dialects from Asia.
“Employees should be well-educated in relationship building, not just to process tourist transactions, but to develop longtime relationships with the brand,” Mr. Pedraza said.
“There are luxury brand stores in Shanghai, Beijing and Hong Kong, so these tourist transactions are not a one-shot deal,” he said. “They can also be relationship building.”
Luxury retailers should be aware of the Chinese holiday calendar to understand buying habits during certain holidays and target Chinese consumers for in-store gift buying, per Ken Morris, principal at Boston Retail Partners, Boston.
The holiday calendar may also hint at the time when Chinese tourists are more likely to travel.
Training sales associates on cultural greetings can quickly build trust with incoming tourists and encourage foot traffic.
Stores should also offer in-store shipping options so that Chinese consumers can ship items home. This will eliminate the need to pay sales tax and leave the customer more room in their luggage, per Mr. Morris.
“Not only is the size of the luxury market in China significant, but it continues to grow with a burgeoning middle class aspiring to own luxury brands to demonstrate their wealth,” Mr. Morris said.
“New York is a unique, international city where tourists can readily find bilingual associates,” he said. “By focusing on hiring multilingual staff, a retailer has the opportunity to offer exceptional customer service and make the customer comfortable shopping in the store.”
Source: Luxury Daily