TFWA CHINA’S CENTURY CONFERENCE 2019


TFWA: APAC sales +14.7% in 9m, but moderation in Chinese spending expected


Alain Maingreaud used his first presentation as TFWA President to reiterate that Asia Pacific remains the growth engine for the global DF&TR industry. But he also warned of a slight moderation in Chinese spend, and discussed the ‘mixed blessings’ of the Daigou business. Charlotte Turner reports from China.


T


his year’s TFWA China’s Century Conference coincided with the National People’s


Congress, during which the nation’s Premier, Li Keqiang revealed GDP has risen by 6.6% in 2018. However, due to numerous influencing factors, his forecast for GDP growth in 2019 was more conservative at 6-6.5%. Of course, the highly publicised trade dispute with the US certainly has a part to play in the country’s economic outlook, but is by no means wholly to blame. Headlines from the congress


unintentionally, yet inevitably, influenced the mood of delegates attending March’s TFWA China’s Century Conference in Hainan province and sparked a debate surrounding a perceived slowdown in spend by Chinese travellers. TFWA President Alain Maingreaud


addressed this in his opening remarks on day one, when he revealed that more than 7.6bn tourists visited Hainan island in 2018, an increase of +12% on the previous year. He referred back to 2008/2009


when a financial crisis in Europe and the US was thankfully offset by growth in a ‘vibrant China, which kept the global economy ticking over’. “The rise in China’s GDP has


moderated since then, raising concerns that progress of only 6.6% in 2018, might be a sign of serious problems,” said Maingreaud. “However, China today is


growing from a much larger base… I think it’s important to keep a sense of proportion.” To bolster his argument, he


pointed out that DF&TR retail sales in Asia Pacific grew by 14.7% in the first nine months of 2018; outpacing


MARCH 2019


Charles Chen, President, CDFG told TRBusiness that sales in some categories such as beauty have leaped by 60-70% in recent years. Source: TFWA.


global growth of +9.9%. China itself achieved DF&TR sales growth of +23.3% to nearly $5.8bn in 2017 [Source: Generation Research].


High double-digit growth It is fair to say that many believe the slowdown in Chinese spend has not been significant, including CDFG President, Charles Chen, who told delegates during a Q&A session that the company was still experiencing high double-digit growth. “If you talk to many of the brands


here, you will discover that they are actually very happy with their sales [with CDFG at least]… Beauty sales have increased more than 30% at our Beijing and Shanghai airport stores in the last three years.” After his presentation, Chen told


TRBusiness that CDFG’s sales in some categories, particularly popular colour cosmetics, had jumped by 60-70% in the last couple of years, notably at the airports. During the latter part of Maingreaud’s presentation, he said Chinese outbound travel was continuing to accelerate in 2019. This is even more encouraging when we know for a fact that Chinese outbound travellers spend more than anyone else, with


$257.7bn recorded in 2017, according to the World Tourism Organization. This is almost twice the figure spent by the next highest-spending nationality (American travellers). Maingreaud conceded a small, but


significant, part of overseas spending relates to the Daigou phenomenon of traders buying duty free goods for resale back in China. “This activity is something of a


mixed blessing,” he said. “On the plus side, Daigou has certainly driven sales in some markets, such as South Korea. On the other hand, the sharp discounts have negatively affected retailer profitability and we must ask ourselves whether this kind of business is compatible with an industry connected with and directly engaging travellers in luxury customer experiences.” «


”We must ask ourselves whether [the Daigou business] is compatible with our industry, which is directly engaging travellers in luxury customer experiences.”


Alain Maingreaud, TFWA President TRBUSINESS 21


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