Before the Chinese grew to become the world’s largest group of outbound tourists by annual number of border crossings, they were already leading those of other nationalities by overseas expenditure. Driven by their particular shopping habits and patterns, the impact of Chinese international travellers’ spending has had a profound impact on the global luxury goods market.
Accordingly, the fields of Chinese outbound travel and consumption of luxury goods have become strongly intertwined. Data from i2i Group has revealed that, for some key brands and product categories, Chinese outbound travellers are accounting for as much as 50% of global purchases, with as much as 60% to 80% of these sales are taking place outside of China itself.
While the opportunity to acquire high quality goods at prices lower than those offered in China does play an important role in Chinese travellers’ overseas consumption habits, i2i Group’s recent WeChat surveys challenge the frequently-held assumption that this is the sole driving force behind the trend. Although relative affordability of equivalent goods abroad does play an important role in these spending patterns, the study of Chinese consumers revealed that the service, reliability, experience and choice available to them in other destinations were key factors that drove their overseas consumption of luxury goods.
With regards to levels of expenditure, i2i Group revealed that only 28.32% of travellers surveyed spent less than 10,000 RMB (ca. 1,600 USD) per person, per trip on average for all of their travel expenses and shopping combined. While 47.56% fell into the 10,000 and 20,000 RMB (ca. 1,600 and ca. 3,200 USD) bracket, 17.28% of travellers spent between 20,000 and 30,000 RMB (ca. 3,200 and ca. 4,800 USD) and a further 6.84% reported their average per person, per trip total expenditure as being in excess of 30,000 RMB (ca. 4,800 USD). Within these figures, participants revealed that more than 50% of their total travel-related budget was allocated for shopping.
In light of such results, the importance of such high net worth Chinese outbound travellers as a key target audience for luxury brands is beyond question. Nevertheless, many such companies struggle to identify their Chinese customer groups and, on account of China’s demographics, wealth distribution and media environment, find that their conventional marketing approaches that may yield success with North American and European audiences are not typically effective in China. Furthermore, simply identifying ‘outbound travellers’ as a target group has become increasingly difficult. Since the majority of Chinese consumers in this market segment travelling as FITs (75% of those surveyed by i2i), approaching tour operators is no longer an effective means of reaching high net worth Chinese customers.
Nevertheless, the correct reading of the Chinese market and subsequent strategy can pay dividends. For example, the demographic of Chinese consumers spending 10,000 USD on international travel per annum will correlate highly with those that are interested in luxury watches and European sports cars. Discovering and targeting these potential customers, accordingly, requires appropriate strategy and collaboration across the industry, leveraging platforms such as WeChat (used by 94.24% of Chinese while travelling) to connect before, during and after travel.
Reflecting the need to bring together Chinese tour operators with international travel suppliers, the annual China Visitors Summit (CVS) will take place in Europe for the first time this spring. CVS Europe 2018 will be held at the InterContinental Hotel Düsseldorf between May 22nd and May 24th, 2018. For registration and further information regarding the event, please see the COTRI and CVS websites.
To hear Chinese outbound travellers discuss their overseas spending habits as well as gaining an insight into ongoing shopping trends in the market, see the ‘Shopping’ episode of the China Outbound Travel Pulse video series.