Pt. 4/5 : Two Views Of The Chinese Consumer.
Having looked at some of the behavioural context of consumers inside China, let’s see how this changes when they travel…
Better to travel 10,000 miles than read 10,000 books.
What are Chinese travellers looking for?
Authentic and unique experiences
Something they can talk about
Smaller, higher-end tours
Self-guided adventures
As the Chinese proverb goes, “it’s better to travel 10,000 miles than read 10,000 books.” Travel has always been culturally important for the Chinese. When travelling, they are less price-driven, and look for more authentic and unique experiences, something that they can show off to friends (such as the best of British), especially when travelling with kids…
And this increasing desire for experience, is driving a change in travel product choice. For Golden Week 2020, among the overall hotel bookings through Ctrip’s pre-sale, 4 and 5 star hotels accounted for nearly half of sales, becoming the most popular choice.
Consumers are becoming more sophisticated and discerning.
Domestically 60% of Chinese prefer self-guided excursions.
80% of Tier 1 travellers prefer self-guided (food) tours.
Yet as they travel more, consumers are becoming more sophisticated and discerning about how they plan trips. For domestic travel, over 60% of Chinese say they now prefer self-guided excursions instead of the large package tours popular a decade ago. This is especially true for Tier 1 travellers - 80% said they prefer self-guided food tours. When Chinese travellers do book packaged tours, they are moving away from the predictability and low prices of large group tours in favour of smaller, higher-end tours and self-guided adventures.
McKinsey, in their 2020 China Consumer Report, states that, “Chinese consumers are becoming more sophisticated travellers: seeking more enjoyable experiences in their lives, consumers are booking lots of trips. Spending by urban Chinese on travel between 2014 and 2018 outpaced GDP growth, increasing by 14 percent CAGR versus 7 percent.”
So, this means hotel and travel brands, and retailers for that matter, should focus on improving their product offerings and services across all their channels for a better and more consistent brand experience to attract and satisfy Chinese guests.
What about shopping, I hear you ask?
Shopping will still be part of the itinerary, and when travelling shoppers will be looking for more niche or boutique brands, locally produced artisanal products, or country exclusive styles of luxury products, rather than shopping for “traditional” luxury products that they can find anywhere in the world, or at home…
This notion is reinforced by the explosion of Hainan duty free during the pandemic. With international travel restricted, coupled with a tripling of the annual limit of duty-free shopping for domestic visitors, Hainan has seen exponential growth in duty-free sales. Hainan's duty-free sales hit 7.2 billion dollars from July 1, 2020, to June 30, 2021, surging 226% YOY, Haikou Customs said on Saturday. Duty-free shops in Hainan received more than 6.2 million customers, and sold over 60 million duty-free items, up 102% and 211% year on year, respectively.
Cheap exchange rates and tax-refunds no longer make for an attractive holiday destination.
According to a McKinsey survey, more than 60% indicated they would return to Hainan for duty free shopping even after international travel resumes. Moreover, an impressive 95% of recent travellers have taken advantage of the new rules allowing online post-travel duty free purchases, or are looking to do so in future.
This indicates that Hainan is likely to play an increasingly significant role in capturing Chinese luxury spending even after international travel resumes for these deep-pocketed shoppers. So, cheap exchange rates and tax-refunds no longer make for an attractive holiday destination.
How to make your brand stand out and special enough so they want to brag about it on their WeChat Moments, for example, is the key to attracting Chinese consumers. Brands that are new to China should start with building their online presence, introducing their brand stories.
Unless you are a well-known brand, it is almost impossible to succeed in the market without any social presence, because the first thing customers will do when they come across a new brand is to check online for information and reviews rather than listening to the instore salesperson.