If you work in the luxury shops popular with Chinese tourists, you have probably noticed that lately, more Chinese tourists speak at least some English, that they are becoming more selective in their shopping, but that they are spending less money, not more!
So what is going on and how can it be good if they spend less?
The arrival numbers keep climbing and are projected to continue at this pace through 2020. TUI assumes that the numbers will quadruple from 2010 to 2020 for Europe, VisitBritain projects triple the numbers for the same period. Euromonitor data shows the same pattern. Projected spending also shows remarkable growth … well, not so much! Divide the spending by arrivals to get spending per capita, and that’s not looking so good anymore. In fact, the Euromonitor numbers indicate a decline of as much of a third through 2016. It is not obvious at first glance because the pace of growth of arrivals is so high that it keeps the total spending on a healthy rise.
The good part is that, unlike the first wave of Chinese tourists for most of whom their trip to Europe was a once in a lifetime event and done almost exclusively in group tours, the second wave is far more likely to visit again … and again in the future and more likely doing so individually. Over time, they will have easily outspent their predecessors. In itself, it is not an unusual pattern from emerging countries, I see the same phenomena from Thailand for example. The Chinese difference was that the source of wealth of the first wave was mainly from assets or influence, rarely from wages, which created this huge bubble of spending by a relatively small number of arrivals, relative to what is coming in the future that is! The second wave, overall, has a higher education and higher than average income, but fewer assets. So while they spend less on each trip, they will travel more frequently, thus spend more in the end.
Where will they go?
Group tours typically all go to the same few places. In France, we should really talk about Paris as for most group tourists, it will be the only French city they will ever see. They all shop in the same flagship designer stores on Champs Elysees with an afternoon run at Galeries Lafayette. In contrast, the second wave often travel independently and spreads out further into the city, even far into France. Instead of Galleries Lafayette, they have discovered Le Printemps or Le Bon Marche, instead of Champs Elysees, they do their designer shopping with the Parisians on Avenue Montaigne.
On their future travel, they spread out to the six corners of France (yes six, that is why they call France l'Hexagone!). The Bordeaux region is popular (wine!) as is the French Riviera (very curious about Monaco and Cannes). And this is very good for the tourism business as their spending is spreading out of Paris. They may still buy the same designer brands in Cannes, but there is a local commercial benefit that was practically nil with the first wave. Beside, with the predicted growth of arrivals, there is no way they could squeeze in any more Chinese tourists in a Champs Elysees flagship store than they do now!