This story was previously published on our sister site, Jing Daily.

The recent headlines proclaiming that Chinese tourists are shopping less abroad may seem alarming, but it’s not all bad news, particularly not for the travel industry and service providers, who are set to welcome a record 7 million outbound Chinese tourists during the upcoming Lunar New Year holiday that begins on February 5th.

While it’s true that as many Chinese tourists aren’t choosing shopping as their primary purpose for travel, it doesn’t mean that they aren’t spending money on travel or spending any less while abroad. It simply indicates that priorities have shifted in terms of where their money is spent.

In a joint report from Alipay and Nielsen, “2018 Trends for Mobile Payment in Chinese Outbound Tourism,” the annual average per person budget for outbound travel is set to rise this year to $6,706 (RMB 45,515) from $6,026 (RMB 40,900) in 2018.

Global consultancy Oliver Wyman noted that shopping accounted for only 32 percent of Chinese tourists’ overall travel budget last year, which was a significant decline from 41 percent in 2016. The survey of 2,000 Chinese travelers found that the average expenditure on shopping totaled $855 (RMB 5,800) in 2017, down from $1,179 (RMB 8,000) in 2016.

Chinese travelers made about 140 million outbound trips in 2018, an increase of 13.5 percent year-on-year, according to China Tourism Academy (CTA), a research institution affiliated with the China National Tourism Administration. The CTA also estimated that those travelers spent over $120 billion in 2018, up from $100 billion the year before. But where did this increase go, if not spent on souvenirs and luxury products?

While luxury companies such as Tiffany & Co. have lamented the decline in Chinese tourist spending, they also note an uptick in sales in Mainland China. Of course, some brands are more optimistic — Burberry, for example, in their latest quarterly financial results, noted that there was an increase in Chinese tourist spending at its shops in the UK, while it also saw a mid-single-digit increase in sales in China during the same quarter.

This likely means that domestic factors are influencing Chinese spending habits. As the Chinese government introduced new regulations concerning luxury goods purchased abroad, fewer travelers may be willing to bring back expensive items from their overseas holidays. In addition, the government has also been promoting domestic consumption, and luxury brands have made an effort to close the price gap between goods sold in China and abroad. This has all led to fewer reasons to seek shopping opportunities overseas in an effort to save money.

This doesn’t mean that Chinese tourists aren’t shopping while on vacation. There are still shoppers who seek out unique items that are unavailable in China — some luxury brands have noticed this trend and offer special items at their retail locations, in other countries. Meanwhile, according the Nielsen report, retailers that have adopted mobile payment options, such as Alipay and WeChat Pay, have reported improved sales.

Also, according to the Nielsen report, the top factor influencing shopping decisions was the discount offered, followed by the type of product and quality. Price was the third most important factor for the second consecutive year. The shopping locations have even grown more diverse, expanding beyond duty-free shops and retail outlets to convenience stores, cosmetics shops, and gift shops. The implication is that Chinese travelers are more savvy shoppers than they used to be — they know what’s available at home and the comparable prices.

Besides spending less on luxury products abroad, it has been previously reported that Chinese tourists are spending less per trip but traveling more frequently. For less affluent travelers, this means that the experience of travel is the main expense — and those travelers are seeking more experiences at destinations. This experiential trend is particularly true with respect to younger Chinese travelers, who seek out experiences they can share with travel partners or on social media.

And while some claim that Chinese tourists aren’t quite enthusiastic about shopping overseas, the Nielsen report indicates that 24.6 percent of expenditures abroad are still attributed to shopping, a proportion that exceeds even accommodation expenses. So, Chinese tourist shopping may be slowing, but it’s still a major market, which will likely remain strong as more and more Chinese travel overseas.

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Shopping & Duty-Free