LONDON — Catch them if you can.
China’s consumer is on the move, and despite the threat of a full-blown trade war with the U.S. and the wobbly yuan, the nation’s denizens haven’t given up on travel: Right now, they’re hopping around Asia and going to where they can get the best deal — and they’re shopping on the Mainland, too.
The number of acquisitive travelers is set to grow, according to a bullish report from Euromonitor International and a host of industry bodies that believe China’s consumer dragon will continue to swoop across the world, devouring fashion, beauty and luxury goods despite any short-term macroeconomic fears.
After inking an e-commerce joint venture with Richemont last month, Alibaba chief executive officer Daniel Zhang said Chinese consumers will account for nearly half of the global luxury market by 2025, and he wants Alibaba to meet their desires.
The Chinese shopped with gusto in the first half of the year, with travel retail in Asian tourist hotspots such as Hong Kong and Korea boosting Burberry’s first-half wholesale sales. They rose 10 percent at constant exchange to 254 million pounds.
In the March-to-September period, Burberry saw overall Chinese spend increase in the low-single digits, fueled by travelers, while the Asia-Pacific region rose by a mid-single digit percentage.
Hermès, which has been opening more shops in Mainland China and has just unveiled an e-commerce site for the country, said Asia put in a strong performance in the fiscal third quarter. Kering said that in the same period Mainland China posted its strongest quarterly growth so far this year.
The Richemont-Alibaba deal, which will take Net-a-porter’s and Mr Porter’s services to Mainland China and to the traveling Chinese, is aimed at responding to the projected growth in demand. Richemont chairman Johann Rupert argued that Chinese customers “at home and abroad” are an increasingly important group for Richemont and for the broader luxury industry.
Asia Pacific was Richemont’s most lucrative region in the first half, generating 37 percent of sales. In the six months to September, sales increased by 20 percent at constant exchange to 2.55 billion euros.
The new joint venture foresees web sites on Tmall’s Luxury Pavilion and mobile apps for Net-a-porter and Mr Porter, allowing China’s 131 million foreign travelers to access those sites wherever they are in the world.
Richemont has long believed in the power of the Chinese tourist. In 2017, the company took a 5 percent stake in Dufry just days after Rupert touted the growing importance of travel retail and the power of China.
“The Chinese are a highly, highly cultured people and they will travel increasingly. I am optimistic. Many will have more free time, and that will be spent on cultural experiences,” Rupert said.
Since then, the company has been stepping up its collaboration with Dufry and continuing to roll out stores. Some 50 percent of Richemont’s overall business comes from tourists and the brand said last week it continues to have a strong business in Asia with DFS.
According to a report about the future of department stores published earlier this week by retail architecture firm Sybarite and GlobalData, Chinese travelers are expected to remain a key driving force in the European luxury market, too.
Chinese international travel has tripled in the past 10 years to 130 million trips in 2017 with affluent and increasingly adventurous consumers setting the pace of travel retail, hotels and hospitality, the report said.
Although the Chinese have been favoring Asia of late, that doesn’t mean they’re shunning Europe. This year, the Chinese accounted for the largest tourist spend by far in the U.K. — 23 percent — according to Euromonitor. By comparison, the U.S. made up 13 percent, the Middle East 12 percent and Germany 6 percent.
“Chinese consumers are very often influenced by fluctuations in currency, but they continue to shop,” said Burberry ceo Marco Gobbetti during the first-half results presentation earlier this month.
“It is not as if they stop shopping. They may shop less in London and more in Hong Kong or in Seoul. We think the fundamentals are still strong in China.” Burberry tracks Chinese consumption from a variety of angles, examining spending in China and abroad.
The Chinese have been coming in droves to the U.K., with arrivals to the country increasing by 58 percent since 2014. An additional 46 percent growth is expected in the next five years as the U.K. works to loosen its visitor visa requirements.
It’s no surprise that Fendi plans to install Chinese New Year product in its first travel retail shop, which opened in October at Heathrow Terminal 4.
The brand has unveiled a kiosk pop-up in front of its permanent space at the airport, which will remain open for three months. It will stock items from the Fendirama range aimed at holiday travelers, and at the start of 2019 will also feature spring items and a special Chinese New Year range.
In a report last month, Erwan Rambourg of HSBC acknowledged market fears about Chinese consumer confidence and tensions around tariffs and trade. He believes investors are expecting that luxury demand will take a hit similar to what happened in August 2015 when the yuan fell and equity markets halved in Asia. The subsequent terrorist attacks in Europe dampened travel-related demand.
Rambourg believes much of that worry is unfounded thanks to a younger and wealthy Chinese “selfie generation” that loves to shop. These privileged only children, he wrote, will not only support underlying growth, they are also open to discovery and to being “recruited” by the brands with new products and in-store experiences.
According to a survey in September by China Luxury Advisors (CLA), Millennials are truly changing the nature of the Chinese outbound travel market: They take more trips per year than the average traveler and they tend to travel with friends rather than in organized groups.
While they are buying the big brands they’re also looking beyond them, which is contributing to a shift in the tourism landscape. CLA also highlighted an uptick in their demand for prestige beauty products, which it believes will “underpin international retail demand from Chinese travelers.”
Nars hopped right on that trend earlier this summer with a Lip Gallery at duty-free shopping centers in Bangkok. Aimed squarely at Chinese Millennial female travelers, the experience involved an app that allowed women to try on lip colors virtually before their trip, and then redeem a free lip makeover at the duty-free space in Bangkok.
Chinese travel and Asia-Pacific growth are only set to continue: According to a new report from Euromonitor titled “Megatrends Shaping the Future of Travel,” China is forecast to overtake the U.S. and Germany to become the largest source of outbound departures by 2030 due to the strong influence of GDP per capita and the growth in high-income households.
The country will also be the largest inbound market by 2030, and domestic tourism in China is becoming big business, Euromonitor said. The latter saw 4.7 billion trips in 2018, a number that is forecast to reach 6.7 billion by 2023.
The report said that from a domestic point of view, China’s “all-for-one” tourism program, which launched in 2017, shows the country is changing tack, and looking at conservation, diversity of cultures and the natural environment as important aspects of a cohesive tourism offering.
“At the same time, it sees tourism as a way to boost rural economies,” Euromonitor said.
The organization pointed to the Amanyangyun Resort in Shanghai, which was born from the idea to save and preserve 50 Ming and Qing dynasty villas and more than 10,000 camphor trees as part of a major conservation project.
The resort has one of the largest spas in Shanghai, offering traditional healing practices and aims to embrace the local history and heritage, providing a more immersive experience to its consumers.
Positive geopolitical developments and sporting events have boosted Asia Pacific’s attractiveness overall, Euromonitor said, with the next Summer Olympics set to be held in Tokyo, the next Winter Games in Beijing, China, and PyeongChang, South Korea, previously the host of the 2018 Winter Olympics.