The international ascent of the Chinese consumer has been both fast and of immense scale. In recent years, we have observed – sometimes with our mouths open in awe – this powerful group of spenders sweep into overseas markets and swallow up huge amounts of merchandise. All of this activity has driven their spending – relative to global retail sales growth – to grow quickly, rising from a reported USD $129 billion in 2013 to USD $229 billion in 2015. Such huge numbers for the demographic known for “buying out the shop” should come as little surprise, but what we may not realise is that the way Chinese consumers are spending is changing: they are increasingly wanting cultural and historical experiences over shopping.
Breaking old habits
A study from market research company GFK revealed that long-time favourite shopping destinations like Hong Kong and Macau are losing appeal as Chinese consumers are no longer just driven by a good deal. As more of them come to value the experience of the trip itself, it is the experience abroad that has become the ultimate luxury good rather than a handbag or pair of shoes.
At the same time, we cannot ignore the fact that once abroad in well-developed markets, Chinese consumers are often impressed by the competitive prices and wide product selection they see, not to mention the quality level of service they receive. This excites them and encourages them to make the most of their opportunity overseas to buy as they please.
Charting a new course
As the reasons for travel change, places further afield than Hong Kong and Macau – such as Thailand, South Korea, and Japan – are quickly gaining traction with Chinese travellers. They now comprise the dominant if not top tourist group for most countries within Asia Pacific, the fastest-growing and most-visited region in the world, according to the 2016 MasterCard Asia Pacific Destinations Index. Meanwhile, globally, the US and the UK continue to be highly popular with Chinese tourists.
Fact or fiction?
Another study from Oliver Wyman works to dispel the myth that Chinese consumers only go abroad to shop. Sightseeing was actually recorded as the prime motivation for many trips, with shopping taking on secondary importance. This will be true for a greater number of people as more Chinese consumers find themselves in excess of material merchandise.
What it all comes down to
Chinese consumers may be changing their ways, but some of their old habits are still going strong. The study by Oliver Wyman reaffirmed just how much Chinese consumers love duty-free, spending a third of their money overseas in this area. Cosmetics are the most popular buy, given that prices for these goods remain exponentially greater back home. Thus, so long as prices in China continue to be mismatched with those overseas, we can expect duty-free shopping to remain a significant part of the overseas experience in the future. Shopping might not be the focal point of a trip overseas for many Chinese travellers anymore, but until prices, product selection, and service levels in China improve to the standard that Chinese consumers are experiencing abroad, overseas shopping will still be an important driver of local retail sales across several countries.
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