The number of Chinese traveling abroad has been increasing and they’re taking more trips more frequently. And although they account for a fifth of global tourism spending and are traveling more frequently, Chinese tourists are nonetheless spending less on shopping during their trips. But there is one area in which Chinese travelers are willing to splurge: prestige beauty products. These are just some of the findings of a China Luxury Advisors’ report on Chinese outbound travel habits published last Friday.
The Chinese outbound travel report covers the 12 months from July 2017 to June 2018
The biggest new takeaway from the report is that Chinese travelers are more interested in purchasing high-end international beauty products while abroad. And they’re less likely to spend their cash on those same products in the domestic market.
Much of the report, which covers July 2017 to June 2018, reiterates the data that has been reported over the last year about Chinese tourists. It emphasizes the growing number of tourists, their increasing desire to travel abroad, and their overall spending habits. There isn’t much that would surprise the travel industry about Chinese traveler trends here—the industry is already well aware that Chinese tourists see their mobile phones and apps as a necessity while abroad. But a few points in the survey stand out.
Some key findings in the report include:
- Average spending per trip fell from the previous year
- The average number of trips per person increased
- While group travel remains popular, independent travel is gaining
- As an influencing factor in planning a trip, shopping became less important
- More travelers planned to purchase beauty products abroad
How Chinese travelers spend their money
Luxury consultancy firm China Luxury Advisors notes that while Chinese travelers spend a significant amount of money abroad, their spending per trip has decreased, with many looking to save money for future trips. It found that there was an 18-percent overall decrease in spending per trip, dragged down by a 24-percent decline in average spending on shopping while abroad. Shopping, however, still accounts for the majority of money spent on travel. The consultancy estimates that Chinese travelers spent $174 billion abroad in three major categories: $97.2 billion was spent on shopping, with another $44 billion on sightseeing and entertainment, and $32.7 billion on food and beverage.
Despite a decline in average spending, shopping was still the top expense for Chinese travelers abroad
China Luxury Advisors believes “enhanced cross-border e-commerce options and greater price parity for goods between China and other countries” were contributing factors to the lower spending abroad. There’s also a growing number of Chinese travelers from lower-tier cities who aren’t as affluent as their peers in cities like Shanghai and Beijing and may not be willing to splurge on shopping abroad. This could also be a result of the increased number of trips per person per year and travelers’ growing appetite for experiential travel over material goods. Additionally, the survey found that the ability to use mobile payments such as Alipay and WeChat Pay was the third most important factor for travelers making shopping decisions. Destinations with fewer options for mobile payment acceptance would, therefore, lose out on shopping revenue.
The report adds, however, that while overall spending may have peaked in the last year, Chinese travelers are spending more on prestige beauty products. The beauty sector was tied with apparel retail for the top purchases for travelers. And while the proportion of travelers purchasing beauty products increased to 71.5 percent this year from 66.2 percent in last year’s survey, the figure for apparel declined. The report says: “Some 56 percent of survey respondents who said that they expect to travel again in the coming months plan to increase their overseas spending on luxury beauty, making it the top luxury category for higher overseas spending.” In comparison, 43 percent said they expected to spend more on clothing.
Travel frequency is rising
The number of trips per year crept up in the 12 months from July 2017 to June 2018 to 2.1 per person, up from 2.0 per person in the same period a year prior. This average for all travelers was boosted by millennial travelers (18-39) who took 2.3 trips per person in the year. While the proportion of people who only traveled once during the year increased in 2018 from 2017, the proportion who traveled three or more times increased much more. In 2017, 22.7 percent of Chinese travelers went abroad three or more times, and that figure increased to 27.9 percent this year. More frequent excursions abroad has been a boon for airlines, particularly domestic airlines that have seen record revenues.
The proportion of travelers who have taken three or more overseas trips in the last year increased
And as they take more trips per year, Chinese tourists have also become more independent. Those from lower-tier cities, who are usually less experienced travelers, opt for group tours, while more affluent and experienced travelers are more willing to travel independently.
While it has been reported that Chinese millennials are more adventurous than older generations, the new survey found that younger millennials (18-29) are increasingly traveling with friends. A total of 44 percent of respondents in that age group reported traveling abroad with friends, up from 27 percent the previous year. This generation also prioritizes cuisine and shopping when planning trips, and isn’t as concerned with climate or exchange rates.
The most popular destinations during the 12-month survey were Japan, Thailand, and Singapore, respectively. It was the second consecutive year that Japan topped the list. Meanwhile, Europe grew in popularity. 21 percent of respondents saying they had visited Europe in the past year, up from 16 percent the previous year.
Japan remained the top destination and safety was the top influencing factor when choosing a destination
The most important factor that influences Chinese travelers’ decision to visit a destination was security, followed by tourist attractions and food. Shopping was listed as the eighth most important factor, just ahead of the exchange rate. Last year, 69 percent of respondents said shopping was a factor in choosing a destination compared to 42 percent this year.
Despite the decline in shopping per trip, retailers can take solace in the fact that more Chinese travelers are traveling more frequently. Additional smaller shopping trips throughout the year will continue to boost overall sales, especially if more retailers embrace Chinese mobile payment options.