THE CHINA REPORT


conference that this group will rise to 800m by 2025. Her insightful presentation


revealed some key characteristics of China’s middle class, including the fact that these individuals are urban-educated, mostly white- collar workers who allocate a third of their income to ‘discretionary spending’. Because of this disposable cash, almost 90% of them own their homes. She moved on to the topic of


Chinese millennials (many of whom can be described as ‘middle class’). “Chinese millennials are the


centre of attention within single- child families and have grown up not knowing the hardships of previous generations,” she said. “Parents and grandparents spoil their children and grandchildren, often funding their travel and buying them gifts.” She also revealed that Chinese


millennials have no student loan debt and no housing expenses, making them ‘free spenders’; those who prefer not to save and spend a large proportion of their income on shopping instead. She also says that the Chinese are


often conflicted between their own culture and ‘western sophistication’, trying desperately to align the two worlds in their lifestyle choices. Wang also describes Chinese millennials as possessing narcissistic tendencies, which also makes them predisposed to shop. From his research, Professor Dai


Bin, President of the China Tourism Academy would appear to agree with


Wang, and confirms that the Chinese government is investing significant sums in the country’s tourism industry, with a view to tapping into millennials’ predisposition to travel and shop. Government policy initiatives


include an increase in the number of tax free and tax refundable stores; increase of offshore-duty free shopping quota in Hainan Province; 72-hour visa-free transit at major port cities; introduction of ‘Gifts from Beijing’ and ‘Must- buy list programmes’ and finally, improving the quality and enhancing the power and impact of ‘made-in China’ products.


Over $108bn spent in 2016 According to Dai Bin, in 2016, 122m Chinese outbound tourists spent $108.8bn with a per capita spend of $900. However, interestingly, outbound tourists only make up 3% of the total number of Chinese tourists, while their overseas spending makes up 16% of total tourism spending. Chinese tourist spending contributes 13% to the global tourism revenue. “Shopping has always been a


crucial part of international tourist consumption and China’s outbound tourism is a case in point,” says Bin. He also says that outbound tourist


shopping has become more ‘rational’ in the past two years, shifting from ‘high-speed growth’ to ‘steady growth’. This stood at 9.0% in 2015; the first below-double-digit rate for ten years. Growth in 2016 slumped further to 4.3%; a new historical low.


“With more mature consumers, easier payment facilities, tax refunding and logistics, department stores, boutique stores, franchised stores, factory outlets or even convenience stores, competition becomes even stronger for DF&TR stores.”


Professor Dai Bin, President of China Tourism Academy


Dai Bin therefore foresees some


challenges ahead for bricks and mortar stores outside of China, which have previously been popular with Chinese travellers. “Overseas offline tourism


shopping may decrease due to the online shopping craze and China’s domestic consumption drive and possible tariff/non-tariff measures,” adds Dai Bin. “With more mature consumers,


easier payment facilities, tax refunding and logistics, department stores, boutique stores, franchised stores, factory outlets or even convenience stores, competition becomes even stronger for DF&TR stores.” «


M1nd-set: 47% of Chinese travellers visit duty free shops outside of China


According to a recent m1nd-set/APTRA study into the duty free purchasing behaviour of Chinese travellers, duty free is a ‘very important part of the journey’ for those travelling outside China, with 47% visiting a store during their trip. Consequently, this


CEO and Founder of m1nd-set, Peter Mohn.


MAY 2017


translates into a high shopper-to-buyer conversion rate of 59% – compared to the global average of 52% – and means that 28% of all Chinese


travellers actually make purchases. Amongst Chinese duty free store visitors


from 2nd and 3rd tier cities, skincare is the most visited category (49%), followed very closely by make-up, perfumes and souvenirs. Clothing sits in fifth place with 35%. Interestingly, from the share of total


duty free spend, buyers allocated 21% for jewellery & watches, representing the biggest share of spending. This was followed in a second and third place by clothing with 16% and alcohol with 15% of the total spend. Tobacco, souvenirs, confectionery and toys represent the


lowest shares. Another important factor to consider


is how Chinese travellers like to plan purchases with exactly two thirds of these international travellers planning their duty free visits in advance. “Nevertheless, not all of them planned


their purchase to the same extent,” says m1nd-set. “Twenty nine percent planned to buy something in the category without specific ideas; one quarter planned to buy something and had some idea of what type of product wanted; 11% planned to buy a specific brand and 7% planned to buy a specific product.”


TRBUSINESS 85


Above: China Duty Free Group has become a force to be reckoned with in China as it also sets it sights overseas.


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