The big chill of Chinese tourism

Despite the reopening of chinese borders, Europe will have to wait until the second half of 2023, or even the beginning of 2024, to see a real mass return of chinese tourists. «If the pandemic situation continues to develop quietly, we will return to 2019 traffic levels already in autumn», Erika Andreetta, Emea fashion & luxury leader and partner at Pwc Italy, told MFF. In fact, a mix of factors would still keep chinese from coming to Europe, although something is starting to move.

«The latest February 2023 payment data from Planet retail show an increase in tax-free sales to chinese consumers in Europe of almost 31% compared to january, with an increase in the average transaction value from 1,195 to 1,415 euros», the expert pointed out. Furthermore, data showed that «China has returned to second place, following the US, in the ranking of the ten source markets for tax-free purchases in Europe», Andreetta added.

However, there would still be no significant increase in tourists around the corner, with shopping capitals such as Paris and Milan that are waiting to see once again the flow of tourists experienced in 2019, a record-breaking year for chinese outbound tourism. At that time, there were 166 million outbound trips from China, 10 million of them to Europe, and 234 billion total outbound spending outside domestic borders, including 11.2 billion in our continent. Although, in fact, as reported by Global blue and Gusto collective, 92% of chinese luxury shoppers plan to travel abroad in 2023 and 90% plan to buy as much or even more than pre-Covid-19 period on this occasion, it would still be too early for Europe due to a number of obstacles.

These include the acceleration of the visa process (which in Italy, according to the Italian national tourist board – Enit, in the first two months of the year reached 30% of 2019 levels, when the country was Europe’s top destination with over 3 million arrivals and 5.4 million presence) and the re-hiring of native tourist staff. In addition, there are more direct flights, with China’s current air capacity standing at 22% of what was in 2019, with an estimated recovery to 50%-75% by the end of the year.

The increase in domestic shopping during the pandemic is also to be considered, which could lead to a redistribution of shopping locations. «Cities such as Chengdu, Guangzhou, Shenzhen, or Hainan’s duty-free platform are attracting significant flows of domestic tourists who find shopping temples not only in Shanghai and Beijing», Erika Andreetta said.

«The fact that in recent years brands have developed the direct channel, with e-commerce and physical stores, therefore improving the in-store experience to the same levels as Western stores, no longer limits Chinese spending at home».

Coupled with this figure is the spending of the super-rich, also called very important clients – Vic, which will balance the slight decline in spending by the middle classes for whom luxury is becoming even more premium, favoring well-known global and historical brands. According to the expert, «the importance of offering a unique experience to high-spending clients is becoming more and more important. These super-rich will continue to prefer cities such as London, Paris, New York, and Milan for their purchases, over the middle class who may travel less abroad». Against this backdrop, Planet retail data on Chinese travelers’ destinations in Europe in recent weeks sees France leading the way with 49% of total duty-free sales, with Paris being an absolute favorite shopping destination, followed by Italy (15%), and Germany (12.2%). Finally, the health factor still plays an important role.

«Right now, chinese travelers are prioritizing short-haul trips abroad so as to limit the risks of being stranded abroad in the event of a new pandemic wave. Macau, Hong Kong, South Korea, and Japan are the favorite destinations, with the luxury brands most entrenched in these countries performing very well», Andreetta added. All this does not mean, however, that the attractiveness of Europe, Italy and France in particular, has faded. «If the pandemic situation continues to develop quietly, we can return already in the fall to the traffic levels we witnessed in 2019», Erika Andreetta pointed out.

«However, we have to consider that, compared to the pre-Covid-19 situation, Italy is penalized compared to Paris and London due to the scarcity of direct flights from China, the favorites of Chinese tourists. The infrastructure factor will play an important role in the coming years to attract Chinese tourists who will find in domestic destinations an offer that is being enriched with luxury hotels and new infrastructure», the expert concluded. (all rights reserved)