5 predictions for outbound Chinese tourists in 2014
Visiting recently with a Land Rover dealer in California, I found myself dragged into the usual ?Do you think China will keep growing so fast next year?? conversation. I get this question constantly from a wide variety of luxury brands?in this case, because the dealer has been astonished to receive ?calls every day from Chinese customers, offering 30 percent over MSRP if we agree to ship their new Range Rover to Beijing,? which they are not permitted to do.
While this could be an enviable situation for luxury brands, it could also potentially wreak havoc on global inventory management and brand perception if they?re not careful.
Just as dealers of flashy SUVs that have attained blockbuster status in China are struggling to keep pace with assertive and dynamic customers, purveyors of products in all luxury segments around the world saw massive market disruptions in 2013, under indefatigable pressure from Chinese consumers.
Before we pontificate about next year, here is a small sampling of notable happenings from a very eventful 2013 in Chinese tourism:
- The number of outbound trips from China continued to increase, boasting more than 18 pecent growth in the first nine months of 2013, despite the constraint of an ongoing corruption crackdown.
- Chinese travelers surpassed their German counterparts to become the world?s biggest traveling spenders, notching more than US$102 billion in 2012 compared to just US$84 billion by German travelers.
- Chinese travelers became the most numerous overseas arrivals at many global airports, including LAX, where they placed fifth just two years previous.
- China?s broad Tourism Law went into effect on October 1, 2013, ushering in momentous changes in tourism operations, and resulting in sudden shifts in traffic, shopping habits and travel preferences.
- As we go to press,?yet another new regulation?has been issued, concerning shopping for Chinese travelers. Keeping abreast of the ever-shifting regulatory environment in China is crucial for any luxury brand manager.
It is always perilous to make sweeping predictions about China, given its recent emergence as a global retail power and the continuing uncertainty about the future of its economic growth model, but our attempt at 2014 Chinese tourism fortune telling follows:
1. Going it alone.?Individual tourism will represent a larger percentage of overall Chinese overseas travel. As the effects of China?s new Tourism Law percolate throughout the industry, the prices of group tours have increased, drastically reducing the cost differential between group and individual travel. We therefore expect to see an increase in independent travelers as Chinese tourists become more comfortable with booking and traveling on their own or with friends and family. We may also see fewer large bus tours as VIP groups shrink, with the average group now smaller than 10 people, in most markets.
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