CHINA: KMPG INSIGHTS


Domestic tourism returns, but China’s economy left frail


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Whilst the world looks on anxiously at the fragile recovery of China’s economy from the devastating impacts of Covid-19, Charlotte Turner asks KMPG how Chinese businesses and travellers will behave differently and how long we can expect to wait before overseas travel resumes.


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ccording to China’s Ministry of Culture and Tourism 115m domestic trips were made


during this year’s extended four-day May Day holiday period; a 40% drop from the 195m recording in 2019. Whilst the decline is dramatic it


is not as steep as many predicted it would be and the duty free & travel retail industry should take at least some comfort that China’s domestic tourism industry has certainly opened up. However, not all provinces can be treated equally, as news of Beijing’s second spike of infections – albeit on a small scale at the time of writing – has forced the capital to cancel more than 1,200 flights to and from the city and railway services have been reduced until at least 9 July. Anson Bailey, Head of Consumer & Retail, ASPAC, for KMPG revealed


during TRBusiness’ first TRConnect webinar in May that China’s GDP slumped -6.8% in the first quarter of this year, while wholesale and retail industry revenue sunk -17.8%. He also revealed that when


international travel does resume, which won’t be for some time, Chinese travellers’ preferences will have changed. “Thailand was the destination


Chinese travellers wanted to visit the most in 2020, followed by Russia and Japan,” said Bailey. “The United States, which had been top of the list, has dropped out of the top ten entirely, following the outbreak.” Bailey has since told TRBusiness


that there has been an up-tick in flight bookings for the end of 2020 (Dec) among Chinese travellers. “We would expect to see an increase in international travel in 2021, but it


KMPG Case study: SMEs in China


Background: Alibaba, one of China’s largest consumer platforms, has rolled out their ‘2020 SpringThunder Initiative’ aimed at helping small and medium enterprises (SMEs) recover and grow during the current health and economic difficulties. The organisation is offering capabilities such as resource support and fast track processing, as well as enhanced financial terms through fee reductions and extended ‘immediate settlement’ services. Why it matters: The two largest consumer platforms in China – Tencent and Alibaba – already served as a primary channel for the majority of China’s SMEs. Since Covid, these platforms have stepped up to provide help to SMEs in their network and, in doing so, have signed millions of new merchants into their e-commerce ecosystems. A similar suite of programs launched by Alibaba during the 2008 financial crisis helped the company reach 40m SMEs. Lesson learned: The online platforms are not just seeing increased volume and demand as people self-isolate and stores remain shut; they are also signing up millions of SMEs and merchants that will help them expand their ecosystem, enrich their customer data and – perhaps most importantly – enhance customer loyalty.


JULY 2020


will be longer than expected with safe travel zones and ‘bubbles’ being set up,” he explained. Bailey spoke at length about the


need for the duty free & travel retail industry to ramp up its e-commerce strategy in the wake of Covid-19. “We can expect to see greater


collaboration with a cross-market approach using digital giants such as Weibo/Alibaba and Tencent,” said Bailey. “Online discounts have helped


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speed up the recovery of Hainan’s duty free market. The luxury island is an epicentre for the Chinese duty free industry and many stores in the area recently resumed business after closing in the wake of the ongoing Coronavirus pandemic.” «


To receive a full digital copy of the July issue, plus 12 monthly print editions and the critically acclaimed TRBusiness Top 10 International Operators Report, please visit


www.trbusiness.com/subscriptions Anson Bailey,


Head of Consumer & Retail, ASPAC, KMPG


TRBUSINESS 29


“Online discounts have helped speed the recovery of Hainan’s duty free market. The luxury island is an epicentre for the Chinese duty free industry and many stores in the area recently resumed business after closing in the wake of the ongoing Coronavirus pandemic.”


Above: Airports in China, such as Hangzhou are reopening for domestic trips, but international traffic is unlikely to return to pre-Covid levels until the end of 2020 or the beginning of 2021.


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