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Chinese Golden Week 2020 was a domestic affair

Chinese Golden Week 2020 was a domestic affair



Golden Week is often the biggest week for tourism for Chinese nationals. With international travel significantly depressed due to travel restrictions, Chinese nationals have chosen to take their holidays much closer to home this year. We explore what this means for European retailers.

A double holiday 

One of China's most prominent shopping seasons has just taken place. The seven day period of national holiday, known as Golden Week, began on the first day of October. This time of year is often the biggest week for tourism for Chinese nationals with many people taking time off to reunite with families and to travel; both domestically and internationally. This year Golden Week coincided with the Mid-Autumn Festival creating a "double holiday" that extended the celebrations.

 

The ongoing pandemic has significantly changed things this year. Many markets, such as China, are seeing a shift from international travel and spend to domestic. This has been driven both by travel restrictions as well as governments - who will benefit from the increased taxation revenues from domestic spending. 

 

Impact on European retail

 

European retailers would have welcomed the windfall from Chinese shoppers often associated with this time of year. However, with international travel from China significantly depressed due to travel restrictions, Chinese nationals have chosen to take their holidays much closer to home.

 

"China recorded 637 million domestic tourists over the weeklong national holiday in October, which generated revenue of 466.6 billion yuan ($69.8 billion), reaching 79 percent of last year's level [1]." This represents a significant increase in travel since May, where only 115 million trips were made during the Labor Day holiday[2]; albeit a slightly shorter holiday period.

 

Domestic air travel in China had returned to pre-COVID-19 levels by the end of August 2020. Travel analytics company ForwardKeys expects a full recovery to 2019 levels in terms of traveller volumes by the end of September.

Bookings to Sanya (Hainan) were already up 26 percent year-on-year

Destinations like Macau and Hainan are set to profit this year.  Out of all the top destinations from online travel agency Qunar.com - based on hotel bookings over the holiday - a sun-soaked shopping trip in Hainan looks be the most popular [3]. Read more about China's Hawaiian Island in June's Planet Intelligence. Bookings to Sanya – the city at the southern end of Hainan – were already up 26 percent year-on-year according to Ponti. On top of this, Fliggy - Alibaba’s travel service app, offered buy-one-get-one-free plane tickets to Macau ahead of Golden Week; a promotion estimated to be worth 10 billion RMB ($1.5 billion).

 

Chinese expats in Europe

 

In 2019 we saw significant spend in Europe from source markets such as South East Asia and China, with the two calendar weeks that contained Golden Week accounting for five percent of all Chinese national Tax Free Shopping Sales in Europe – 2.5% per week. This was a significant jump, considering the average week contributes approximately 1.9% of sales. These two weeks are normally the two highest Tax Free Shopping weeks for the most important market in the world.

Luxury brands can develop brand equity with expat Chinese audiences.

This year’s shift to domestic travel will have an impact for many European retailers. Whilst Chinese shoppers are travelling more domestically, many expats reside in Europe. The estimated population of Chinese in Europe exceeds 2.15 million, which is driven by the expansion of new channels of migration, especially student migration [4]. Many of these Chinese expats would prefer to use standard payment methods such as Alipay and WeChat Pay, which are also useful marketing tool for brands. Luxury brands can develop brand equity with expat Chinese audiences in this way. 

 

With domestic travel increasing in popularity, will the desire to travel internationally wain? Every indication would suggest that amongst Chinese nationals - in particular the young growing middle class - there is a huge propensity to return to European cities, the home of luxury brands, rich with culture and heritage. Merchants and tourist boards need to consider how they prepare to welcome back international shoppers. Part of this is ensuring that shoppers feel safe. At Planet we support our Merchant partners connect with Chinese customers by providing marketing solutions to reach shoppers. When they do return we ensure Merchants can prove a touchless full stack payment solution that accepts digital wallets such at Alipay and WeChat Pay so customers feel secure spending.

 

Sources

[1] https://www.wsj.com/articles/chinas-tourist-spots-are-full-but-wallets-are-still-light-11602069306

[2] https://www.voguebusiness.com/consumers/golden-week-2020-hainan-macau-luxury-consumers

[3] https://jingdaily.com/what-brands-need-to-know-about-golden-week-2020/

[4] http://www.culturaldiplomacy.org/academy/index.php?chinese-diaspora

See the latest edition of Planet Intelligence

September report 2020
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