Between a visit at the shopping mall and at their real estate agent, Chinese tourists create growth in the U.S.

Chinese Dad in car - China Elite FocusThe number of Chinese tourists traveling the globe has increased significantly for the last ten years, making them the largest group of travelers in the world. Now, thanks in part to a recent agreement between the U.S. and China to extend visas for short-term business travelers, tourists and students, the U.S. could see an increase in Chinese travelers in the near future.

This trend is supported by research from the latest Chinese International Travel Monitor (CITM) from which reveals the U.S. is the second most popular destination for Chinese travelers to visit in the next 12 months (behind France), with popular U.S. landmarks like the Grand Canyon and the Statue of Liberty topping travel wish lists.
The CITM research also identifies that, while cities in Asia Pacific remain the most popular (82 percent of Chinese travelers have visited in the past 12 months), visitors to Europe and America have increased with a year over year growth of 25 percent and 11 percent, respectively. These destinations were particularly popular with millennial travelers, with 42 percent visiting Europe and 29 percent visiting America in the past 12 months.

“The CITM reveals that the United States is one of the top five countries Chinese travelers visit the most,” said Josh Belkin, vice president and GM of the brand. “With tens of thousands of places to stay across the U.S., like distinctive boutiques, spacious vacation rentals and familiar chains, our site and mobile app have the perfect places for Chinese travelers of all ages and lifestyles.”

In 2016, there were 122 million outbound Chinese tourists – four percent more than in 2015 and a massive 74 percent more than in 2011, when the first CITM was published. China is already the largest source of international travelers for many countries – despite the fact only 10 percent of the population had passports in 2016.

“Chinese travelers in the United States tend to be more affluent than those who choose other destinations”, said Pierre Gervois, CEO of China Elite Focus Magazines LLC and Founder of the STC magazine, a luxury travel digital publication in Chinese Mandarin. “Real Estate investment in the United States is now the #1 real reason – and rarely stated in surveys – for affluent and wealthy Chinese outbound travelers, as they have acquired for $100 billion in U.S. Real Estate in 2016”

Source: Chinese Tourists in America Blog / CITM


Chinese wealthy consumers’ new trends

Luxury goods marketers in China received some good news last month. After the country’s annual policy planning meeting, Minister of Commerce Chen Deming announced that Beijing would soon reduce tariffs and cut red tape on luxury goods imports. The decisions are in line with other policies that will stimulate domestic consumption and, the government hopes, will chip away at the globally contentious trade surplus that China enjoys.

The Chinese market for luxury products has been booming recently. In 2010, sales across categories such as jewelry, leather goods, and upmarket ready-to-wear clothing rose by 20% to reach $12.4 billion. By 2015, luxury goods sales will touch $27 billion — around 20% of global sales — making China the world’s largest luxury market.

There’s enormous potential in China, but marketers still face stiff challenges. Luxury consumers, although they’re relative newbies, are becoming more discerning and demanding, and marketers will have to change in order to appeal to a more confident and sophisticated Chinese consumer. Here are four insights from a survey of 1,500 luxury consumers we recently conducted:

Quality counts. Better quality is the reason to buy luxury goods, said 50% of the consumers we surveyed — up from 36% in 2008. Quality and craftsmanship are the top two considerations when making purchase decisions about ready-to-wear clothing, leather goods, jewelry, and watches. Smart companies have already realized this. A few months ago, Hermes held an exclusive exhibition in Shanghai, dubbed Leather Forever, which included a live show of Hermes’ bag manufacturing process accompanied by displays of raw materials used. Louis Vuitton stores deploy specialists who educate Chinese shoppers about the company’s heritage and how it crafts leather goods by hand.

The real thing. China is a haven for low-priced knockoffs, but luxury consumers are shunning the fake stuff. Just 12% of consumers said they would purchase fake jewelry, down sharply from the 31% who confessed they would do so two years ago. Some told us they would be embarrassed if someone noticed they were carrying a fake while others said they derived satisfaction from knowing that things they bought had appreciated even if they couldn’t be resold. One lady, for instance, was delighted to see the Chanel handbag she bought in 2008 for RMB 25,900 ($3,700) sell for RMB 30,800 in 2010 ($4,500).

Subtlety is chic. A growing number of buyers are shunning overt displays of wealth in favor of subtle ones. Contrary to popular impression, more than half of China’s luxury shoppers say they want less showy fashion — up from 32% in 2008. In fact, 41%, compared with 45% in Japan and 27% in the U.S., say that showing off luxury goods suggests poor taste. A maker of luxury watches told us that it had shifted from selling only flashy diamond-encrusted watches in China to more classic designs as well.

Service matters. The importance of service has shot up from 17% in 2008 to 30% in 2010. Two out of three consumers said they were disappointed with the indifferent attitudes and poor service of salespeople in China. In addition to training staff to be more courteous and patient, luxury marketers should re-examine how they define roles and compensation. For example, Louis Vuitton doesn’t tie the compensation of in-store specialists to sales, thereby ensuring that they concentrate on their task of communicating the brand’s heritage to shoppers.

Max Magni is the head of McKinsey & Company’s consumer practice in Greater China, and Yuval Atsmon is a partner in the firm’s Shanghai office.