Chinese tourists expected to spend $422b overseas by 2020

Retailers are advised to revise their international marketing plans for Chinese tourists, who are projected to spend $229 billion overseas this year and $422 billion by 2020, providing a huge potential market for global brands and retailers, according to a recent report.

This year, around 136 million international passenger journeys - the most in the word - are expected to originate in China, up 16 percent year on year, and the number is estimated to reach approximately 234 million in 2020 despite concerns over China's economic growth, says the report published by Fung Business Intelligence Centre (FBIC), a retail and technology think tank, and China Luxury Advisors (CLA), a consulting firm.

"The Chinese consumer has emerged as the most powerful and motivated in the world, especially in the luxury sector," Deborah Weinswig, head of the Global Retail and Technology team of FBIC, writes in the report, which is based on a survey conducted by FBIC and CLA on more than 1,000 Chinese Internet consumers regarding their travel and spending for the year ending May 21.

The typical Chinese traveler currently spends an average of $1,678 on retail purchases per overseas trip, while the US sees the highest retail spend from Chinese travelers.

In the US, the average retail spend per Chinese traveler is estimated at $2,555 this year, followed by Europe's $2,548, much higher than in closer destinations such as Hong Kong.

"The greater the distance, the more he or she spends," explained Weinswig. "Spending in some high-profile, long-haul destinations, such as the US, will grow at an even faster pace."

However, the impact brought by the growing middle-income travelers cannot be ignored, as more of them gain confidence about traveling independently, according to the retail tech analyst.

Tour groups will make up a diminishing proportion of the total, which means those retailers that have traditionally relied on funneling tour groups to their stores will have to work harder to attract tourist shoppers, she said.

The impact of this coming growth will be felt most keenly by higher-end retailers, and it is imperative for high-end companies to carefully consider their strategy for reaching Chinese travelers, she said.

The luxury goods market has benefitted greatly by the growing affluence in China. An estimated 77 percent of $66 billion of Chinese luxury purchases are made outside China, and the clampdown on corruption is likely to push this number up as domestic luxury demand stagnates, according to the report.

"Active brand management is crucial to capture the global Chinese shopper's attention and projected spend," Sage Brennan, CLA co-founder, said in a press release. "This means that the retailers and brands with the highest consumer awareness will be the long-term winners of the hearts and wallets of the all-powerful Chinese traveling shopper."

A number of retailers and shopping centers in the US have begun marketing to this growing audience by creating Chinese-language websites, launching Chinese New Year campaigns, offering discounts to Chinese tourists and hiring Mandarin-speaking sales staff.

"These retailers and shopping centers are at the forefront of appeal to the next great consumer market," Weinswig said. "No company wishing to remain a vital international force can afford to ignore the Chinese visitor."

liazhu@chinadailyusa.com