It’s a trend that’s become increasingly apparent in the last two years: Chinese travelers are allocating smaller and smaller portions of their budgets abroad for shopping. That’s not to say that Chinese tourists are not interested in buying luxury goods at lower prices overseas, but overall tourist spending behavior has shifted dramatically. Put simply, “wanderlust” or travel experiences are now more important for attracting Chinese travelers.
The Oliver Wyman consultancy estimates that average spending by Chinese tourists grew last year by 3.5 percent, somewhat low when considering the impact of inflation on spending. Non-shopping expenditure by Chinese tourists is now around 66 percent of total spending, and the share of shopping has dropped by 8 percent since 2015.
It’s important to note that even as shopping becomes less important for individual Chinese travelers abroad, more and more Chinese tourists are going abroad. This means that overall tourist spending, including expenditure on luxury brands, will likely not fall in the long-term, even if per capita spending is reduced.
However, this also means that destinations will need to work harder to market experiences to travelers. Having access to upscale shopping at bargain prices, as compared to China, is not enough of a draw in and of itself.
Much of this drop in spending ties to the rise of younger travelers, who tend to be more independent and eschew tour groups that historically Chinese travelers have preferred. These travelers are often given the moniker “FIT,” which stands for “free independent travelers.” The spending behavior of these tourists tends to be more “experience-oriented.” Cultural goods and services, like local cuisine, are more important to these younger travelers than to their older counterparts.
Arguably more key is the increasing prevalence of middle-class Chinese tourists. The middle class in the Chinese context can be challenging to pin down and ultimately has different connotations in China than in the West. The middle class in China refers to households whose income is between $10,000 and $30,000. It is households like these that are driving outbound Chinese tourism.
However, even if these households are relatively well-off by Chinese standards that still leaves little room for expensive European or North American excursions with price tags in the thousands, let alone for the purchase of expensive luxury goods. This is perhaps the most significant contributing factor in the drop in the percentage of shopping expenditure by Chinese tourists.