The year of the rooster is off to a solid start.
Retailers and observers here said they are optimistic about Chinese spending over the Lunar New Year Holiday period, which kicks off Friday and runs through next week. Chinese travel abroad- especially to other Asian countries- is on track to break another record. Meanwhile, Chinese consumers who travel within their own country- a large segment of the population considering the family-focused nature of the holiday- appear to be doing more shopping.
“I think Chinese New Year 2017 is going to be by far our record Chinese New Year in China,” said Cartier China ceo Renaud Litre, who added that the French jewelry and watch brand is anticipating a double-digit jump on sales compared to the holiday period last year.
Litre said the jeweler is doing brisk business in China in part thanks to its move to harmonize prices and reduce discrepancies between prices in China and other markets. Several other brands have done the same- notably Chanel. Despite China’s still relatively high import tariffs, Cartier’s retail prices in China are only about five to eight percent higher than in Europe, he explained.
Litre also said Cartier China is expecting to see the continuation of a trend that started to take root last year with more and more Chinese consumers traveling within China to cities like Beijing, Shanghai and Guangzhou and doing their shopping there.
“There is a bit of a rebalancing between domestic and overseas consumption,” he said.
Erwan Rambourg, HSBC managing director, head of Asia consumer and retail research, also noted a rebound in luxury spending in Mainland China.
“A lot of consumption is reverting back to the Mainland. China right now is actually booming for luxury which sounds surprising,” he said.
To be sure, Chinese consumers are traveling abroad in record numbers- international flight bookings for the holiday period are up about 9.8 percent over last year according to ForwardKeys. Thailand, Japan and Taiwan are the top three destinations for the holiday period while flight bookings to Europe are up 68.5 percent, the travel intelligence firm said. But despite that surge in international travel, observers here noted that Chinese tourists are spending more on lifestyle pursuits and experiences than on apparel and accessories.
CBRE executives noted that Chinese travelers are heading to a place like Japan to take in hot springs, tea ceremonies and try new restaurants rather than just shop. They are becoming more adventurous and want to try new things, he observed.
“Increasingly countries that offer this sort of wide scope of experiences beyond just…luxury and retailing purchases are more appealing to Chinese tourists,” said Joel Stephen, senior director of advisory and transaction services at CBRE Asia. “The Chinese are getting a lot more comfortable and experienced with international travel so it’s increasingly less about escorted tour groups…We’re starting to see more confident, younger demographics traveling to new markets as well as more independent travel.”
Philippe Schaus, chief executive officer of duty-free retailer DFS Group, noted a similar trend.
“We continue to see a growing sophistication and curiosity among Chinese travelers,” he said. “They seek individual experiences that include cultural or inspirational discoveries, as well as quality retail and entertainment.”
Rebecca Tibbott, head of retailer representation at CBRE China, said she expects overall overseas spending over the holiday period to increase “slightly”. She said areas like cosmetics and active wear should perform well.
CBRE expects that Chinese tourists will continue to flock to European countries like the United Kingdom, Finland and Switzerland. ForwardKeys said the top five European destinations for the upcoming holiday are Spain, the United Kingdom, Italy, Germany and France.
The overall retail market in Hong Kong continues to suffer as Chinese tourists bypass it in favor of other destinations but department store retailer Lane Crawford said it is seeing signs of improvement.
“We’re reporting positive performance, particularly from the contribution of mainland China customers in recent months as frequency of new arrivals over the last quarters are up,” said Lane Crawford president Andrew Keith, noting customer interest in ready to wear, lifestyle items and Asian skin care products. “We have been welcoming customers back whom we’ve not seen in Hong Kong for some time, as well as new customers. These are top end, high-spending customers and we’re recording high-value transactions at a rate not seen since 2015.”
Jiang Qiong Er, artistic director and chief executive officer of Hermes-backed Chinese luxury lifestyle brand Shang Xia, also voiced an upbeat forecast. She said January sales are up 25 percent on last year but stressed that sales figures are still small for the brand- she declined to disclose them.
Gift items bearing traditional Chinese symbols representing concepts like luck, longevity and health are selling well, she offered.
“People, they all love that,” she said.