Sell to the Chinese, just not in China

‘Sell to the Chinese, just not in China’ is the new motto for the luxury companies. Already 12% sold in the world are sold in China. However, some estimates indicate that half of the luxury products purchased in the world are purchased by Chinese buyers.

Europe is benefitting, as the weak euro makes shopping and traveling on the Continent less expensive. As an example, [tweetable]80% of the budget of the Chinese tourists to Paris is thought to be spent on shopping[/tweetable].

However, they do not only set their sights on luxury. They also spend on clothes, home electronics and gifts for themselves and a wide circle of relatives, friends, co-workers and neighbours back home.

Here is COTRI’s selection of 6 recent stories that explain the scale of the Chinese spending spree on shopping.

1. Massive cruise stop for shopping.

Last month, 4,000 Chinese cruise ship passengers swept through a small Japanese village to buy goods. They reportedly cleared out the shelves of a local shopping centre at Sakaiminato city, Tottori Prefecture.

Although not a typical tour destination, shop owners put up Chinese signs and found Mandarin translators, and ended up selling out shelves of products including eye drops, cosmetic products, rice cookers and vacuum flasks.

2. World leaders of purchasing ‘vanity capital’.

Bank of America Merrill Lynch recently released a research note that shows a growth of the so-called ‘vanity capital’ of about 15.6% a year for the past five years in Greater China. ‘Vanity capital’ refers to the consumption of self-indulgent goods and services aimed at enhancing one’s appearance or status such as jewellery, cars, jets, make up, and health supplements, as well as private schools and clubs.

China may already be the world’s largest consumer of luxury goods—by some estimates, almost half of all luxury purchases were made by Chinese shoppers last year. But, in contrast to the high hopes of China’s economic planners, most of this consumer spending is happening outside of the country.

HSBC said luxury companies have to better cater to Chinese shopping abroad—through improved service, more attentive staff and (at least in France) more shopper-friendly hours.

3. Survey at Melbourne airport says that the Chinese want to buy luxury goods.

As TRBbusiness reports recently, Melbourne International Airport is preparing to introduce ten new luxury boutiques into Terminal 2, reflecting a growing demand for premium brands from its increasingly diverse passenger mix and fast growing Chinese passenger customer base.

The airport managers conducted a research to adapt the shopping offer to the different profiles of passengers. Andrew Gardiner, Executive Retail & Car Parks says that “the reason why we are making these changes is that about a year ago when I first joined Melbourne [from Sydney Airport-Ed] we did customer research and we spoke to 33,000 customers. Based upon that research we started to look at what we were offering our customers and what we were lacking in our retail assortment. We put together a retail master plan looking at each one of the different terminals and the different customers in each one”

4. Siem Reap (Cambodia) cashing in on visitors to the temples

CDF Mall opened its first overseas outlet in Cambodia during the Chinese New Year. The 4,500 square meters shopping centre, the world’s largest duty free mall, funded by Chinese investment, targets Chinese tourists visiting the temples of Angkor Wat.

International tourists are flocking to Seam Reap in large numbers in spite of the suffocating summer heat. Other travel retailer, DFS group, have set its sights on the city of the temple for another 8,000 sq m mall that will house more than 700 luxury brands in 2016.

China is expected to double the number of visitors to Cambodia for 2020.

5. 30% of global duty-free shopping driven by Chinese travellers

Since 2009, the Chinese are the biggest contributors to the global duty free sales. In 2014, the Chinese account for 30% of these purchase.

Growing Chinese tourists’ numbers will lead to further expansion in the coming years. Last year, they spent 163 $ on overseas shopping – duty-free shopping outgrew domestic shopping.

6. Chinese tourists are fuelling a boom in Japan tour buses

The steep increase in Chinese shoppers to Japan has swamped tour companies with service orders. Mitsubishi Fuso Truck and Bus Corp. has received more orders in six months than in the whole 2014 and Hino Motors Ltd. sales of large sized sightseeing buses sore 63% more on the second quarter 2015 from a year earlier.

Foreign visitors during the first six months 2015 rocketed 46% to more than 9 million, led by Chinese arrivals, according to Japan National Tourism Organization. Japan’s inbound tourism is expected to beat their outbound tourism this year for the first time ever.

COTRI has been providing consultancy services and conducting market research in China for international customers since 2004. COTRI follows Chinese travellers and helps companies and destinations to have influence all along the customers journey: from the development of the image of a destination or service within a specific market segment to the decision making, the booking, the actual experiences during the trip and the memories and messages after the trip.

Read more: China Outbound Tourism Market Report

Photo: Chris, flickr