Chinese shoppers are changing the face of retail

Chinese shoppers Gucci - China Elite FocusWen Zhong, a 28-year-old from Shanghai has already been to France and the Netherlands . He is now flying from Schiphol airport in Amsterdam to his final stop, Finland, where he hopes to see the Northern Lights (“very exclusive”). Mr Wen is typical of a new wave of Chinese tourists: young, affluent and travelling independently, rather than on a “20-cities-in ten-days” bus tour like those that brought his predecessors. Such tours still appeal to most Chinese tourists on their first trip further afield than Hong Kong, Macau or Taiwan. But a third are now organising their own travel, spending more and staying longer in each of their destinations.
Nearly one in ten international tourists worldwide is now Chinese, with 97.3m outward-bound journeys from the country last year, of which around half were for leisure. Chinese tourists spend most in total ($129 billion in 2013, followed by Americans at $86 billion) and per tax-free transaction ($1,130 compared with $494 by Russians). More than 80% say that shopping is vital to their plans, compared with 56% of Middle Eastern tourists and 48% of Russians. They are expected to buy more luxury goods next year while abroad than tourists from all other countries combined.
The dizzying pace of growth is expected to continue. Only around 5% of China’s population now own passports, and most of those who travel go to Hong Kong or Macau. But increased affluence, a trend towards longer holidays, fewer visa conditions and growing numbers of repeat travellers mean that every year more will take foreign trips, and more will venture farther. By 2020 the number of foreign trips made from China will double, predicts Aaron Fischer of CLSA, an investment firm, and spending by Chinese tourists abroad will triple.

Shops, hotels and other tourist businesses are scrambling to profit from the new arrivals. Schiphol, which has direct flights to seven Chinese cities, hands out presents in the arrivals hall around Chinese New Year and has a free translation app to point Chinese travellers to its luxury shops, all of which accept Chinese currency and Union Pay (China’s main credit card). Benno Leeser, the boss of Gassan Diamonds, a Dutch jewellery chain with 14 outlets in the airport, travels to China every year to schmooze with the travel agents who bring him his best customers.

Advertisement Banner Gervois Hotel Rating - May 2017 featuring Pierre GervoisNew destinations are trying to work out how to get themselves on the itinerary. After direct airline connections, the next step is to make getting a visa easier or, better still, to bring in a visa-waiver scheme. In 2013 Chinese citizens could visit just 44 other countries without a pre-arranged visa; Taiwanese citizens could visit 130, and Americans and Britons over 170. In 2010 the European Tour Operators Association found that a quarter of Chinese who had hoped to visit Europe for leisure had abandoned their plans because of visa delays. Britain, which is outside the European Schengen free-travel area, requires its own visa—the main reason it gets just a ninth of the Chinese tourists France does.
America has started to interview Chinese visa-applicants online and allows them to pick up their visas at any of 900 bank branches, rather than the American embassy. It saw a 22% increase in Chinese visitors last year. But places with visa-waiver schemes, like the Maldives, are really thriving: last year the number of Chinese visitors to the islands increased by 45% and reached nearly a third of the 1.1m total. A boom in Chinese honeymoons helps. Beach resorts are also popular with “6+1s”—young couples travelling with one child and two sets of parents. Parents and children do adventure activities; grandparents, who are less likely to speak English, go to evening shows and cannot get lost.

The next step is to tailor language, products and services to the Chinese market. Printemps, a shop in Paris, has a dedicated entrance for Chinese tour groups; Harrods in London has 100 Union Pay terminals scattered throughout the store. Both are recruiting Mandarin-speaking staff and have Chinese-language websites and maps. Hotels increase their appeal by offering Chinese television channels, menus with pictures, and congee (Chinese porridge) for breakfast. Such details are seen as a sign of respect.
Appealing to the new Chinese horde means tapping into their love of a good romantic tale, says John Kester of the UN World Tourism Organisation. Thailand saw the number of Chinese visitors triple after a blockbuster film, “Lost in Thailand”, inspired a generation to come and sample Thai beer. Mauritius is hoping that “Five Minutes to Tomorrow”, a romance due out later this year featuring Liu Shishi, a popular actress, and partly filmed on the island, will bring it a similar bonanza.
Advertisement Tower - Gervois Hotel Rating May 2017 featuring Pierre GervoisThe new generation of Chinese luxury travelers don’t rely anymore on old fashioned Chinese outbound travel agencies: They prefer to carefully select their destination and hotels with the help of specialized luxury travel magazines, such as the Shanghai Travelers’ Club magazine of Luxury Hotels of America, both published by the fast growing publishing company China Elite Focus Magazines. “We opened a new office in New York City last year” said Pierre Gervois, the Publisher. “Our editorial team is based in Shanghai, and our sales office is now in the United States, to be closer to our advertisers, mostly luxury brands who want to use our media portfolio to reach directly independent Chinese travelers”
The toughest step is getting noticed by Chinese would-be travellers, says Frank Budde of the Boston Consulting Group and co-author of “Winning the Next Billion Asian Travellers”. Nearly half of China’s population is now online, and two-thirds of those planning to travel use online material when preparing their itinerary. Since they use different search engines and social-media platforms from everywhere else, success largely depends on being blogged about on these platforms. Here, destinations can make their own luck. Tourism New Zealand’s decision to host the fairy-tale wedding of Yao Chen, an actress with 66m followers on Weibo, China’s equivalent of Twitter, in Queenstown in 2012 was rewarded with 40m posts and comments on discussion forums, 7,000 news articles—and a surge in interest from Chinese lovebirds.

Source: The Economist

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Harrods boss criticises Chinese visa proposals for the UK

harrods Chinese tourists - China Elite FocusThe boss of Harrods, the prestigious London department store, has warned that proposals by the Coalition to simplify visa applications for Chinese tourists are “smoke and mirrors”.
UK retailers have pressed the Government to overhaul the Chinese visa system because of concerns that the UK is missing out on spending to other European countries.
However, Michael Ward, the managing director of Harrods, said that measures unveiled by George Osborne, the Chancellor, during a trade mission to Beijing are likely to have little impact.
Speaking at a breakfast for the chief executives of luxury brands organised by trade body Walpole, Mr Ward said the Chancellor’s proposals were “smoke and mirrors” and would not help wealthy tourists travelling independently.
Business leaders have warned that the UK is losing £1.2bn of sales each year because Chinese visitors are put off by the complex visa process. Tourists travelling to Europe from China must apply for a separate UK visa alongside the Schengen visa system, which is cheaper and allows Chinese tourists to visit more than 25 other countries in the EU including France.
In October, Mr Osborne introduced a new pilot scheme that will allow tourists to secure a UK visa by only submitting the EU’s Schengen visa.
However, the scheme only applies to selected Chinese travel agents and Mr Ward said the proposal will “do nothing” because the government in China is clamping down on tour groups.
As part of a corruption crackdown, Chinese authorities have passed a law restricting tour groups because of concerns that the tour guides were taking bribes to take visitors to certain places.
Mr Ward said that regulations should boost the UK, but that it means the visa proposals will have minimal impact.
The Harrods boss said that most of the company’s Chinese shoppers were young consumers travelling independently of tour groups. “The Chinese consumers are very young, aged 20 to 25,” he added.
Giles English, the co-founder of watchmaker Bremont, also called for the Government to streamline the visa process for Chinese visitors.
“Anything that makes it easier is only going to help us all,” Mr English said.
The UK China Visa Alliance, which has led calls for the system to be reformed, has calculated that only 6pc of Chinese visitors to Europe obtain two visas, while 85pc obtain only a Schengen visa and just 9pc get a UK visa.
“Chinese tourists oftenly hesitate to choose London as a luxury shopping destination because of the complexity to have a visa for the UK” said Pierre Gervois, Publisher of the Shanghai Travelers’ Club magazine, a luxury travel magazine for affluent Chinese tourists. Mr Gervois added “London luxury retailers should be more proactive in lobbying the UK government for a simpler visa process for independent Chinese travelers willing to go to the UK”.

Mandarin speaking sales associates are not enough to attract Chinese affluent shoppers: A good digital strategy is more efficient.

Chinese tourists- China Elite FocusOver two-thirds of luxury spending by mainland Chinese was made overseas in 2013, an increase from 2012, according to the China Luxury Market Study from consultancy firm Bain & Company released on Monday.
Chinese shoppers often wait for trips abroad, plan shopping sprees to Hong Kong or get friends or specialist “daigou” agencies to bring back luxury items from overseas because they are often cheaper due to China’s high import taxes.
“Sometimes I’ll go to a China store and look online for details about things I’ve liked, or try something on for size I’ve seen online. But when it comes to actually buying it I’ll always get a friend to bring it back from abroad,” said Fang.
China is the number one luxury spender worldwide, making up 29 percent of total global luxury spend this year, according to the Bain report. So Chinese consumers – wherever they may be – are a key battleground for firms from LVMH Moet Hennessy Louis Vuitton SA and Gucci owner Kering Holland NV to trench coat maker Burberry Group PLC , cosmetics giant L’Oreal SA and Cartier watchmaker Compagnie Financiere Richemont SA .
Chinese luxury spending slowed at home in the wake of a crackdown on corruption and shows of wealth, prompting warnings of a sales slowdown from liquor maker Pernod Ricard SA and Volkswagen-owned Bentley Motors and Lamborghini.
Luxury brand store openings dropped significantly in 2013, according to Bain, which estimated China’s luxury market will grow two percent this year versus seven percent a year earlier.

On London’s Bond Street and Fifth Avenue in New York, luxury stores have been getting ready to welcome Chinese shoppers, boosting China know-how ahead of peak seasons such as the week-long Lunar New Year beginning January 31, 2014.
London’s Harrods department store is planning a themed display for the festival, with special products and menus designed for the occasion, it said.
Chinese visitors spent 300 million pounds ($488.34 million) in Britain in 2012, while the British government has relaxed visa rules to attract more people from the world’s second-largest economy.
“Having a strategy for Chinese visitors makes a massive difference. Chinese spending in the UK was up 132 percent in the first half of 2013,” said Jeremy Gordon, London-based director of China Business Services, which helps UK firms target Chinese shoppers.
“That’s obviously going to have a massive impact on your bottom line at a time when overall retail sales are not growing at anything like that rate.”
On Fifth Avenue, jeweler Tiffany & Co said it employs Mandarin-speaking staff. Tiffany has seen strong growth in the China market as the allure of diamonds grows, and said last month that sales at its flagship New York store were driven by Chinese and European tourists.
Around 1.5 million Chinese travelers visited the United States in 2012, a more than five-fold increase from 2005, according to the U.S. Department of Commerce.

“Western luxury brands have now fully understood the necessity to have Mandarin speaking sales associates in their New York and London stores, but it’s not enough. The purchase decision is made well before the trip, when future Chinese travelers are checking their luxury travel magazines on their iPad and luxury lifestyle Weibo pages. The irony of this is even if the sales associates do not speak Mandarin, Chinese shoppers will still buy”  said Pierre Gervois, author of “How U.S. Retail, Travel and Hospitality Industries can attract affluent Chinese tourists”
Saks Fifth Avenue, the department store unit of Hudson’s Bay Co , has a Lunar New Year strategy to focus on beauty products, while the flagship store of Macy’s Inc has a visitor centre with Chinese-language material.
Barneys, meanwhile, is launching its first Lunar New Year-themed marketing campaign in 2014. The department store has increased adverts in Chinese magazines and is testing campaigns around Chinese payment system Union Pay, it said.

Luxury firms are also going online to woo Chinese shoppers. Tiffany has a Chinese engagement ring app while Chanel offers an online make-up “classroom”. Italian fashion house Fendi has held talks on China’s Twitter-like Weibo, while Prada SpA and Christian Dior SA have Chinese videos online.
Luxury travel clubs for wealthy Chinese travelers have also their iPad App: The Shanghai Travelers’ Club has its own App, entirely in Chinese Mandarin, and features articles about US$50M private jets, gold plated hand made laptops, or entire private islands for rent for discerning (and rich) Chinese tourists.
Luxury leather goods firm Coach Inc has a U.S.-focused campaign in Mandarin using popular Chinese social media app WeChat. The app, developed by Tencent Holdings Ltd , has 272 million users worldwide.
Coach tailors some of its U.S. products for Chinese shoppers, a spokeswoman said. Chinese are the fast-growing segment of the firm’s North American tourist sales, which make up a fifth of total sales in the region.
“This trend is going to continue because the Chinese are a lot more integrated in the global economy and really informed, especially about price,” said Bruno Lannes, Shanghai-based partner with Bain and lead author of the luxury market report.
“At the end of the day it comes to the same thing: shoppers will either travel or go online to buy abroad.”