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Chinese travelers turning away from luxury goods as spending habits shift

11/28/2018| 4:19:07 PM| 中文

New figures suggest the Chinese traveler’s passion for luxury goods is being replaced as the items lose their shine as a status symbol.

Figures from the Chinese Outbound Tourism Research Institute (COTRI) show that the number of Chinese travelers is still on the rise, with the Chinese making 43 million border crossings worldwide in the third quarter of 2018.

But the organisation says shifts in personal priorities and domestic culture are set to take their toll on how these travelers spend their money. As travelling becomes more prevalent among Chinese residents, traditional luxury goods no longer hold the allure or status they once did.

Big spenders

The loss of Chinese spending would be a blow for both the duty-free industry and retail worldwide. Figures from the United Nations World Tourism Organisation showed that spending by Chinese tourists currently accounts for 21% of all tourism spending globally.

In 2017, that spending hit USD 115 billion according to the China Tourism Agency and online travel agency Ctrip.

But COTRI’s findings need not ring alarm bells for too many, as the report’s findings suggest a shift in how travelers are spending, with more of a focus on experience and uniqueness.

“The more experienced travelers become, the less they tend to simply grab expensive branded goods and the more they become interested in experiences and seeking out engagement with the local culture,” a COTRI spokesperson told DFNI.

Shift in focus

“As an increasing share of the Chinese population is able to travel overseas, access for overseas-bought luxury goods are no longer a signifier of sophistication and ‘typical’ brand names no longer generate the bragging power they previously did."

“Instead, more experienced travelers look to invest in experience-based products and locally-sourced goods as a means of signifying their status as a cosmopolitan global consumer.”

The shift is in line with current trends in the travel retail market, as more and more brands and retailers are looking to create one-off items and stores, which reflect both sense of place and a retail experience for travelers.

The ongoing anti-corruption measures in China are also putting a dampener on luxury shopping, according to COTRI. The drive to reduce corruption in government has led to “a reduction in spending on presents to officials and other more conspicuous purchases”, the organisation said.

Key destinations

The figures in the report show 20 million arrivals in the third quarter of 2018 took place in the Greater China region, meaning that 53% – or 23 million – took place in the wider world.

The US and UK have seen a fall in the number of Chinese arrivals during the period, but Nepal stands out as the biggest winner, with a 77% year-on-year increase in Chinese arrivals. The country is currently on course to surpass the record annual arrivals high of 123,000, which was achieved in 2014 before the earthquake and recent political instability.

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TAGS: Chinese tourists | outbound tourism | COTRI
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