Social Media & Shopping Influence for Chinese tourists

Chinese shoppers spendingXiaoyan Mao had not yet collected her luggage after landing at Charles de Gaulle Airport from Shanghai recently. But she and a friend were already mapping out a game plan for the three days they would spend in Paris before continuing a 10-day European blitz with additional stops in Switzerland, Italy and Germany.
Their to-do list included visiting the Louvre and the Eiffel Tower. But what were they looking forward to most on their first trip to the region?
Ms. Mao, 28, a sales manager, smiled broadly. “Chanel,” she said. “Prada.”
Tourists like Ms. Mao are part of a growing wave of newly affluent Chinese taking advantage of more direct flights to the shopping capitals of Europe. The Lunar New Year holiday is now underway, a time when a big part of the 110 million Chinese expected to travel abroad this year will be packing their bags — and their wallets — for luxury expeditions.
And purveyors of European luxury brands, anticipating the arrival of this important clientele, stand ready to embrace it, whether by offering guided tours, in Mandarin, of flagship showrooms; providing backstage access to couture runway shows; or engaging in a variety of other flourishes tailored for the Chinese tourist-shopper.
Storied European brands like Burberry, Hermès and Dior can be bought in high-end shops and shopping malls of major Chinese cities, of course. But for reasons including higher taxes in China and lower prices in Europe, Chinese consumers, who buy more luxury products than shoppers of any other nationality, prefer to do their buying abroad. Of the more than $80 billion in Chinese purchases of personal luxury goods last year, two-thirds were made outside China.
Flagging demand in China itself was a factor cited last week by the Paris-based LVMH Moët Hennessy Louis Vuitton, the world’s largest luxury goods group, for the company’s flat profit last year. That is all the more reason the company and many of its peers are starting to plow more money into European showcases and shift investments away from the Chinese mainland.
Last year, for example, Louis Vuitton opened a three-store, 10,000-square-foot “townhouse,” complete with spinning glass elevator, atop a Selfridges department store on Oxford Street in London.
“There is a major shift happening now with brands,” said Manelik Sfez, head of marketing for Global Blue, a tax-refund company in Geneva that tracks luxury purchases. “They are starting to reconsider their whole structure and the ways they market themselves.”
In catering to the Chinese shopper, some European makers of luxury goods seek to leverage their brands’ heritage and savoir-faire by conducting tours of their landmark European stores — or even setting up museums in them, as Vuitton has done with its “Espace Culturel” on the Champs-Élysées in Paris. Others organize invitation-only demonstrations of the craftsmanship that goes into the products, which companies and analysts say holds a particular appeal for Chinese visitors.

Gieves & Hawkes, the 240-year-old London tailor, for example, lures Chinese groups away from the bustle of Bond Street to its store at 1 Savile Row, which houses an extensive archive of royal and military regalia dating to the 18th century. The visit, which is translated by a Mandarin-speaking guide, includes a stop in the store’s bespoke workshop, where the company still hand-sews 1,000 suits a year.
“In terms of seeing all the components of a luxury brand, it is very immersive,” said Simon Baker, marketing director for the company, which has more than 100 stores in China. “Our Chinese guests are looking to learn what being dressed by a Savile Row tailor is all about, and why it is more luxurious and prestigious.”
The Italian design house Ermenegildo Zegna works with boutique travel agencies, and hotels favored by affluent Chinese, to offer V.I.P. tickets and backstage passes to its European fashion shows.
Zegna has also followed brands like Louis Vuitton and Burberry, already active on the social media platform Sina Weibo, in creating an official account on the wildly popular mobile messaging service Weixin — known outside China as WeChat . So has Harrods, the London department store, which counts Chinese visitors as its largest foreign customer group.
Such efforts are part of the image burnishing that analysts say is as important in marketing to these visiting consumers as selling individual wares.
A Chinese tourist who returns home with a memorable experience to share can be a powerful ambassador for a brand, said Philip Guarino, co-founder of the consulting firm Emerging Market Luxury Advisors.
“You are dealing with a demographic, not a geography, so you need to think in nongeographic terms,” Mr. Guarino said. “Some brands have 150 store locations in China alone,” he said. “But their cash registers are in Europe and the United States.”
Just how dependent the European luxury sector has become on Chinese visitors became starkly evident late last year. In October, China passed a consumer-protection law prohibiting travel agencies from subsidizing group tours to Europe by including mandatory stops at high-end department stores like Galeries Lafayette in Paris or La Rinascente in Milan.
Beijing considered the practice — whereby mass-market agencies used commissions from retailers to offset deeply discounted package tours — to be misleading. Mr. Sfez, of Global Blue, estimated that before the law changed, such captive buying represented roughly 40 percent of all Chinese luxury purchases in Europe.
The law had a striking effect on Chinese tourists’ luxury spending in the fourth quarter, halving sales growth across the European Union to 9.5 percent compared with growth rates of 20 percent or more in the preceding three quarters of last year.
But analysts do not expect a reversal of the broader trend, because higher prices in China compel so many Chinese to prefer shopping overseas. Luxury handbags, which might sell for $1,000 to $5,000, cost on average nearly a third less in Europe than in mainland China, according to Renaissance Capital, a Russian investment bank. Markups by Western brands are common in China, where foreign companies must navigate a thicket of red tape to do business and pay high rents for premium retailing space.
The price gap is further widened by China’s high taxes on consumers. On top of an import duty of 10 percent, Beijing levies a value-added tax of 17 percent and sales taxes that can range from 5 percent to 20 percent, depending on the item. Some other Chinese cities add taxes as well.
Foreign visitors to the European Union who spend more than 175 euros, or $236, in the same store on the same day, meanwhile, are entitled to a rebate on the value-added tax, which in most member states hovers around 20 percent.
Chinese consumers’ embrace of the Internet and social media platforms like Sina Weibo has also increased access to information about luxury goods abroad, allowing them to comparison shop before they even board a plane. Applications like Weixin let people share their foreign shopping experiences in real time, check prices and send photos as they weigh their purchases — or even take orders on behalf of friends back home.
Digital travel magazines, such as the Shanghai Travelers’ Club, have also their Sina Weibo page and publish a curated content about little known luxury brands, as well as tips on how to purchase a private jet or a private island.
Armed with these digital tools, a growing number of Chinese travelers, particularly younger ones, are forgoing the classic group tours and venturing abroad independently. That trend, with the ban on commission-subsidized tours, is driving more tourists to explore beyond the big European flagship stores in the fanciest districts, analysts said.
It also exposes entrenched legacy brands to intense competition in China from increasingly popular rivals like Bottega Veneta of Italy or Mulberry of Britain.
That means the bigger design and fashion houses will need to be more nimble than ever in adapting to the changing habits of their Chinese clientele, according to Federica Levato, a luxury analyst in Milan at the management consultants Bain & Company.
“If they don’t catch up quickly, they will become less competitive,” Ms. Levato said. “Just as they anticipate fashion trends, they now have to anticipate changes in consumer behavior.”

Source: New York Times

Chinese travelers spend US$102 billion on international travel in 2012

China has overtaken Germany and the USA as the world’s biggest spenders on travel, with Chinese travelers spending US$102 billion on international travel in 2012, an increase of over 40% on 2011.
The second annual Chinese International Travel Monitor released today reveals significant insights into the changing behaviours of Chinese travelers and how the global hotel industry is adapting.
Surveying more than 3,000 Chinese international travelers and more than 1,500 hoteliers around the world, the report found 75 percent of hoteliers globally say Chinese travelers now account forChinese shoppers- Louis Vuitton- Chinese tourists Blog up to five percent of their business and 45 percent say they have experienced an increase in Chinese guests over last year, with the greatest increases coming in APAC (61 percent). Hoteliers see China as a positive growth market over the next three years with one in 10 expecting to see an increase of more than 50 percent and almost half (47 percent) anticipating an 11-50 percent rise.
According to the report the majority of overseas Chinese travel (96 percent) has been for leisure purposes, while just over half (52 percent) have also visited other countries for business or education.

Top 10 destinations interested in traveling to in next 12 months %
Australia 39%
France 33%
New Zealand 27%
USA 26%
Switzerland 25%
Singapore  23%
Hong Kong 21%
Taiwan 20%
UK 19%
Canada 19%

In a growing trend, nearly two thirds (62 percent) of Chinese travelers say they prefer to travel independently and not as part of a group. This development has been confirmed by the hoteliers surveyed, who say 70 percent of Chinese guests now travel independently, compared with a much more even split in 2012.
Other changes in behaviour noted by Singapore hoteliers included Chinese travelers spending more money, increasingly speaking more English and over all being less sensitive to price.

Johan Svanstrom, Managing Director of Hotels.com Asia Pacific, said, “The 2013 Chinese International Travel Monitor (CITM) shows the move to independent travel identified in the CITM last year is now preferred by the majority of Chinese travelers. While in-roads have been made in this area, governments will have to take this into account when organising their visa application infrastructure and processes.”
In addition, the CITM highlights areas for continued improvement for accommodation providers. The ability to accept Chinese payment methods is seen as the single most important offering from hotels and over a quarter (26 percent) of Chinese travelers feel this is a key area for improvement.
Three quarters (75 percent) of Chinese travelers say hoteliers need to improve the provision of translated items, such as welcome literature, websites, TV programs and newspapers, while almost half (42 percent) say that they would like more Mandarin speaking staff in hotels.

Highlighting a disconnect between the desires of Chinese travelers and provisions made by hoteliers, a quarter (25 percent) of hoteliers say they offer cultural awareness training to staff but only one in ten (11 percent) offer welcome materials in Mandarin. Additionally, globally, just over half (56 percent) of hotels have invested less than $10,000 in developing programmes and products specifically catering to Chinese guests over the past 12 months.
When it comes to researching and booking travel, personal recommendation plays an increasingly vital role, with almost a third (30 percent) of Chinese travelers saying they rely on advice from family and friends, followed by online travel booking and review sites.

Pierre Gervois, CEO & Publisher of China Elite Focus, said “Hoteliers realize now that it’s very important to advertise in specialized travel magazines, segmented by country (for example Luxury Hotels of America), or by activity (for example VIP Golf USA)”.
“The new generation of Chinese travelers trust these specialized travel magazines in Chinese language much more that a recommendation made by a travel agent or a generalist travel website. Even if Chinese guests will do the booking through booking engines, such as CTRIP, they will make their choice of hotel by reading specialized magazines and social media networks, and then, go to a booking engine.”, Mr Gervois added.

More than a quarter of Chinese travelers (27 percent) use social media to help them make decisions on holiday destinations, with this figure rising to 33 per cent among younger travelers under 35.
These insights highlight the need for hoteliers to adapt their marketing strategies, with a particular focus on online and social media channels, to attract Chinese travelers. While the CITM shows hoteliers are making positive steps towards catering to an increasingly mobile and savvy Chinese travel market, it also shows the need for the global hotel industry to adapt facilities and services to more extensively cater to the world’s largest market of travelers.
In addition, programmes being implemented by many governments and tourism authorities to attract and facilitate for Chinese travelers are a positive step in the right direction, but the pace of growth in the volume of Chinese travelers appears to be outstripping the pace of change in the hotel industry.

According to the China Tourism Academy “Chinese tourists are expected to spend $55 billion abroad in 2011″

More mainland tourists are expected to spend money on overseas travel this year, according to a report released to the national tourism authority of China.

The Annual Report of China Outbound Tourism Development 2011, released by the China Tourism Academy, estimates that mainland tourists will make 65 million trips to foreign countries as well as Hong Kong, Macao and Taiwan this year, up from 57.39 million in 2010.

They are expected to spend $55 billion overseas, up from $48 billion a year earlier, the report said.

Since 2009, mainland travelers have been the fourth-biggest spenders among tourists in the world. They follow just behind travelers from Germany, the United States and the United Kingdom, said Ma Yiliang, a researcher at the academy’s international tourism development institute and a compiler of the report.

“The main reason for this (ranking) is that mainland tourists prefer to shop during their trips,” he said.

The academy surveyed more than 2,000 tourists in six big cities last year, and found 26.85 percent of the respondents said they spend more money on shopping than on food, hotel rooms or other expenses.

The survey also showed that 76 percent of the money mainland tourists spent in Hong Kong in 2010 went to shopping. For those who visited Macao, the number for shopping expenditures was 63 percent and it was 50 percent for those who went to Taiwan.

Hong Kong and Macao are the two overseas destinations most popular among mainland tour groups. Japan and South Korea occupied the two next highest places in the ranking.

In one change in the list, Taiwan overtook Vietnam this past year and became the fifth most popular destination for mainland tourists, receiving 1.66 million of them. The number is expected to continue rising, largely because tourism authorities across the Straits plan to let individual tourists from Beijing and Shanghai visit Taiwan without joining tour groups. The change could come as soon as July, insiders say.

The US attracted 1.08 million mainland tourists last year, making it the seventh most popular destination on the list. Russia, meanwhile, managed to occupy the No 10 spot in the ranking by attracting 710,900 mainland tourists in 2010. It and the US are the only two destinations among the top 10 that are not Asian countries.

But despite researchers’ optimism for the tourism industry this year, industry insiders see things differently.

Zhong Hui, general manager of Beijing-based China Environment International Travel Service Co Ltd, said 2011 “began with bad luck”, alluding to the unrest in North Africa and the Middle East, flooding in Australia and the earthquake and tsunami that hit Japan, which is still contending with a nuclear emergency.

“My company has suffered big losses, after tour groups to Egypt, Australia and Japan were canceled,” he said.

Xu Daoming, general manager of the marketing department of China Travel Service, said: “There will be no tour groups heading to Japan before June or even later.”

Fei Fei, from Chongqing municipality, said the company she works for has canceled a plan to take employees to tour Japan this year in response to fears about the ongoing nuclear emergency. She was instead offered a trip to Taiwan island, South Korea or Thailand’s Phuket island. Settling on one will be “a difficult choice to make”.

Dai Bin, head of the tourism academy, said it may take travelers some time to overcome their radiation fears enough to visit Japan.

But Dai believed that despite the recent disasters, the number of mainland tourists going to places outside the mainland will continue to increase.

The latest official figures show that 16 million mainland tourists visited overseas destinations in the first quarter of this year, up 16 percent from the same period last year.

With 100 million people expected to travel overseas by 2020, China now contains the largest native population of tourists in Asia.

Source: China Daily