How to market to Chinese tourists: the 30,000-foot view
Travel trends from China show a steadily growing consumer market. Chinese tourists spent more than $261 billion on overseas travel in 2016, and 2017 saw outbound travel from China increase to 130.5M trips overseas (a 7% increase from the previous year).
These increases in travel and spending correspond to the developing Chinese economy and rising disposable income, particularly among families and young professionals, and to shifts in policy that make it easier and more convenient for citizens to exit the country. This has led to the rise of the fully independent traveller (or FIT) - someone who researches and plans their own itinerary - even as participation in group tours and specialization of theme tours both increase.
The European Tourism Commission dedicated 2018 as the “EU-China Tourism Year,” with the intention of driving visitors to both destinations, increasing investment in tourism, and encouraging cultural exchange. Retailers around the globe can take this as a signal that it’s time to craft solid strategies for reaching this market — and leverage a wealth of publicly available research to do so. Below, you’ll find some key insights to begin shaping your approach.
Chinese tourism is a global business opportunity
We are just at the beginning of capturing the opportunity presented by Chinese tourists. President Xi Jinping has set a goal of increasing outbound trips from China to 700 million over the next five years. Currently ranked first worldwide in overseas travel spending, according to the United Nations, China has a growing population with more disposable income and affinity towards travel. However, Chinese tourists are using their native digital apps in Mandarin and are still subject to the "Great Firewall" even when they're abroad, which means no Google. This presents some distinct challenges for businesses looking to serve this massive customer base.
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The Chinese market is not a monolith
Understanding the segmentation of the Chinese market is essential for effectively tailoring your products, messages, and strategies. Economists and marketers typically classify Chinese cities and regions on a tier system based on population density and gross domestic product (GDP) figures.
Tier one regions like Beijing and Shanghai have populations of more than 15 million and GDP of more than $300 billion. Tourists from these areas have the highest disposable income, thus they have more opportunities to travel and more access to technology and information. These consumers tend to seek cultural experiences and high-end retail items more so than those from other regions.
Tier two regions, primarily in central China, have populations of 3-15 million people and GDP of $68-299 billion. Tourists from these areas are more price-sensitive than those from Tier 1 regions. They are also more likely to travel with an organized tour group than independently, and to travel to Southeast Asian countries as opposed to Western destinations.
Tier 3 regions in western China possess developing economies, with populations of 150,000-3 million and GDP of $18-67 billion. Travellers from these regions are more likely to be travelling on business or to focus on the value of multi-destination packages.
Chinese tourists demand a sophisticated mobile approach.
According to eMarketer, 2018 will see Chinese consumers spend more time on their digital devices than watching TV for the first time (an average of 2 hours and 39 minutes per day). A survey by Coresight Research indicates that 72% of Chinese tourists use online resources to plan their trips and 98% rely on their mobile phones while abroad to keep in touch and do research on the go. Chinese digital services provide a wide array of touchpoints along the traveller’s journey — from the inspiration to plan a trip, through research, point of departure, in-flight, point of arrival, and destination.
Chinese platforms create seamless experiences for Chinese travellers abroad
Among its wide array of offerings, Baidu delivers location-based services to Chinese tourists both at home and abroad, including maps, reviews, and bookings. In 2017, the Sydney Airport launched indoor Baidu Maps in their international terminal, which helps visitors navigate to departure gates, information desks, restaurants, and retailers — and provides those restaurants and retailers with opportunities to push personalized messaging directly to users and drive more foot traffic.
Mobile payment is enormously popular in China, and Nielsen has reported that 65% of Chinese tourists have used mobile payment overseas and that 91% would spend more overseas if mobile payments were accepted. The number of stores accepting Alipay in Japan nearly doubled in 2017, and WeChat Pay recently announced aggressive expansion plans for the United States.
Most business leaders in the West have heard of the “Great Firewall.” You probably know that Google, Facebook, Twitter, Youtube and the New York Times are not available in China without a VPN. You may also know that China has a set of tools such as WeChat, Toutiao (news aggregation), and Douyin (short video-sharing), such that Chinese netizens do not necessarily feel deprived without these Western platforms. However, you may not know that the Great Firewall also extends to Chinese as they travel abroad. Google and Facebook are still blocked on Chinese mobile services providers as Chinese people roam the world. That means that Chinese people are getting directions from Baidu Map, planning trips using Mafengwo, and looking up shopping and restaurant locations on Dianping (and being served offers while they are at it). If you are planning on reaching Chinese travellers, preparing a targeted ad campaign on Google Adwords would be a waste of money and effort. Inside or outside of China, many don’t use, and may have never heard of, Google.
China is truly AI-first
The large digital-native population in China provides enormous amounts of user data for artificial intelligence to learn from — which means it’s likely to “evolve” even faster than AI elsewhere. Baidu’s DuerOS is a device-agnostic, conversational bot platform with both voice and facial recognition capabilities. WeChat, China’s most popular messaging app, hosts TravelFlan, an AI-driven chatbot that makes travel recommendations based on user needs and preferences. As artificial intelligence gets smarter and provides more personalized answers and recommendations to users, the most effective way to reach motivated consumers is controlling the facts about your business that populate AI-powered services.
If brand leaders assess that Chinese tourists are an important part of their customer portfolio, then understanding and treating Chinese customers as a separate and special case is the key part of their success.
Franklin Yao is the managing director, Greater China, at Yext, a digital knowledge management platform, and founding partner of the SmithStreetSolutions consultancy in Shanghai.