The explosive economic growth of China has inexorably changed the world we inhabit. In the last decade China experienced GDP development figures of around 10.5 percent per annum, which has facilitated its rise to become the world’s second largest economy. China, whose growth is being powered by its huge manufacturing sector, will also produce 100 million outbound tourists by 2020. Nevertheless, although Chinese products are usually cheaper than those made in other countries, its tourists are keener to spend as much as possible with $48 billion being spent in overseas destinations. These new tourists’, emanating from China’s burgeoning upper and middle classes are now forming crucial, modern elements in the luxury holiday and retail markets.
The effect of wealthy Chinese tourists on the global luxury and holiday markets is naturally great to the vast volumes of people coming. 2.4 million Chinese tourists visited Europe alone in 2010, with many more preferring to travel closer to home in Asia. Along with the increase in numbers there is also an increase in the overall consumption by Chinese tourists in Europe, with spending up by around 99 percent in 2010 when compared to the same period in 2009. Of course not every Chinese tourist is buying luxury items and staying in 5* hotels, but the impact of those who are, is certainly being felt. Retailers now see Chinese tourist as big spenders who are want to take their favourite brands back home. As a consequence luxury manufacturers and retailers are seeing a surge in demand largely driven by orders from the Chinese at home and abroad. Bain & Company has predicted that global luxury good sales will increase by 8 percent driven by renewed demand from department stores, in part due to the prevalence of the tourist market to those stores. Moreover, it is not just their favourite brands that Chinese consumers are eyeing up. The CBRE estimates that 10 percent of residential property sales in London this year will be conducted by buyers from mainland China.
However, it is not just luxury goods that are attracting the Chinese abroad. Exotic luxury destinations, once the haunts of mainly Western tourist are now seeing Chinese tourists as their main visitor demographic. The Maldives welcomed over 65,000 Chinese tourists out of a total of 392,000 visitors in the first 5 months of 2011, an increase of 56.7 percent from the same period in 2010. Sri Lanka too has also seen its number of Chinese visitors’ rise, with an increase of 83.8 percent in the first 6 months of 2011 compared to 2010.
Principally, the numbers and expenditure of Chinese tourists has a direct correlation with Chinese breakneck economic growth. As the country develops economically then more Chinese are becoming financially active, which is of great importance when considering China’s size. Furthermore, with Chinese growth still strong despite the financial crisis, many Chinese tourists are merely replacing those from other countries who have chosen to stay at home in order to tighten their belts. However, there are other factors outside the mere increase in income and demand that help to answer why increasing numbers of Chinese see the West as a place to travel and spend. Western destinations are far more reliable for luxury brands, both in terms of quality and price. Chinese import tariffs are considerably high on imported luxury goods, which has meant a flourishing counterfeit market, as demonstrated by the recent fake Apple store. Overall, the change in market will have a considerable impact in how hospitality and retail businesses are run if they want to attract this lucrative marketing stream.
