Posted On 2015/07/24 By In Behavior, Chinese Perspective, News, China Outbound, Face, Research, Family, Food, Health, Holidays, Language With 807 Views

Understanding the Chinese Traveler

According to Bomoda, a consumer intelligence company, the Chinese are the No. 1 foreign spender on luxury goods in the United States, and they spend more per capita than any other nationality. Chinese consumers accounted for 45 percent of worldwide spending on luxury goods last year, with 76 percent of that happening outside of China.

The Chinese are traveling in impressive numbers, too: There were 100 million Chinese outbound tourists worldwide last year, despite only 6 percent of the Chinese population having visas. And with visa restrictions being recently loosened by President Obama (not to mention the recent effect of anti-corruption laws in China), Chinese travel to the U.S. increased by more than 20 percent in 2014, and growth is expected to increase even more in 2015.

Brian Buchwald, the co-founder and CEO of Bomoda (and former executive vice president at NBC Universal), said he identified an opportunity for U.S. companies with the Chinese population back in 2011 when he had dinner with a friend and his Chinese wife who were living in London.

“The wife said, ‘There are so many Chinese tourists flooding London, walking around with bags of cash looking for ways to spend it,’” Buchwald said. “I thought, we were just coming out of a recession, but there was a whole group of people traveling the world spending tons of money.”

But it’s one thing for travel agents and U.S. companies to identify an opportunity for a lucrative and rewarding relationship; it’s quite another to capitalize on this opportunity. That’s where understanding the Chinese people comes in, and that’s where Bomoda hopes to be of service as an expert consultant.

The Chinese Tourist

So, who is this Chinese tourist? What does the Chinese tourist like? Are the younger generations much different from the older generations?

First of all, businesses in New York City appear to be in luck. According to Buchwald, NYC has become a major hotspot for Chinese tourists.

“Paris, London and German cities have always been traditional destinations (for Chinese), but New York has now become one of the preeminent destinations,” Buchwald said. Another good sign for the U.S. travel industry and beyond, Buchwald said, is that, “the Chinese consumer wants to travel, they are traveling and they are very aspirational as far as their desire for Western brands and Western goods.”

But there are some distinct differences between the Chinese traveler and the American traveler that need to be understood by travel professionals and American businesses.

For one, if you thought Americans are addicted to social media and the Internet, you haven’t seen anything yet. Buchwald said that over 90 percent of Chinese luxury consumers use WeChat—China’s biggest social media platform—at least twice a week. Oh yeah, and 98 percent of them own a smartphone.

This may be due to the fact that Chinese luxury consumers are, on average, 20 years younger than their Western counterparts, Buchwald said.

It also brings forth another challenge for American travel agents and businesses: How do you cater to the average luxury consumer who is 40-50 years old while also catering to Chinese millennials?

The Bomoda Blueprint (put together from surveys, data collection and more) found that the businesses that are most attractive to the Chinese consumer are the ones that have a “consistent message” that doesn’t waver, Buchwald said. Chanel, Tiffany and Co., Michael Kors and various surfing brands have had success with the Chinese consumer using this approach. And while it helps to have strong brand-name recognition and a well-known campaign slogan in that case, it doesn’t mean the approach changes for newer or lesser-known luxury brands.

“Where you don’t want to be is middle of the road,” Buchwald said. “If you’re in the middle of the road, you’re going to get run over. You want to either be building yourself out as a luxury lifestyle brand or you want to focus on very specific types of consumers.”

Speaking of types of consumers, it’s important to note that the younger Chinese generations are much different from the older generations, Buchwald added.

Older generations generally don’t speak much English at all, and they’re generally more traditional about culture and habits. They tend to travel in tour groups and go to more traditional, tourist-heavy locations (such as 5th Avenue in NYC).

On the contrary, the younger generations are “much more independent, they may know a bit of English, they’re much more digitally oriented and they’re much more willing to travel to new locations (such as SoHo),” Buchwald said. They are more in line with American millennials (perhaps even more progressive). They are independent. They are exploratory. They are much more likely to stay in a boutique hotel than the traditional box hotel. They are much more apt to create their own itinerary or crowdsource their itinerary via other Chinese consumers on a mobile app (creating another challenge for travel agents). They are foodies. And, last but not least, they have a lot of money in their pockets.

Buchwald said Bomoda groups the Chinese consumer into four different “waves:” the first wave (students and ex-pats who travel to the U.S.), the second wave (those who live in major Chinese cities and travel based on recommendations from the first wave), the third wave (residents in major Chinese cities who don’t travel, but buy U.S. products based on recommendations from Chinese travelers) and the fourth wave (residents in smaller Chinese cities who travel to bigger Chinese cities and then hear about American products).

Perhaps the most important thing to understand about catering to the Chinese consumer is that the first wave—those who actually travel to the U.S.—is the most important group for the American economy. Students and ex-pats can have wide-ranging influence throughout China. Their message gets passed to the other three waves in some form or another. That means agencies and brands that impress Chinese travelers can conceivably have a wide reach across China without needing to invest in advertising in the country. It’s the domino effect.

But how long will this Chinese travel surge last? Well, let’s just say it isn’t going away anytime soon.

“I think in the next 20 to 50 years the Chinese consumer is going to be incredibly important to Western economies,” Buchwald said.

Learn more in our Global Ready China Seminars


Article: Travel Pulse  / Image: IamNotUnique

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David Lee, educated in Denmark, China and the UK, gained extensive work experience with NGOs (Int"l Red Cross and UNESCO) as well as in the fields of training and education. He is part of BMG's China office and supports services like translation, localization, market research and analysis as well as social media planning and management. David also has in-depth insight into the Chinese travel, shopping and luxury market, paired with creativity, business acumen and a passion for Social Media.

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