The lingering effects of the pandemic are no longer hindering the growth of China’s inbound and outbound tourism market. In the third quarter of 2024, the revenue generated from Chinese tourists traveling abroad reached 82% of the pre-pandemic (2019) levels.
The consistent popularity of domestic tourism in the past year also made major travel retail destinations abroad more eager to attract Chinese travel shoppers their way. However, the changing preferences and consumption patterns of local travelers aren’t as simple as you think.
If foreign businesses want to capitalize on the growing demand for retail tourism, they must understand the evolving needs of this consumer group and the digital ecosystem they use for travel planning.
Read along as we share in-depth insights on China travel retail market and discuss how foreign businesses can leverage the country’s highly engaged digital marketing platforms.
What does “Travel Retail” mean in China?
“Travel Retail” refers to the sales of goods and services to Chinese consumers within transportation hubs such as airports, railway stations, and border crossings worldwide.
Over the years, mandatory prior reporting and prolonged layover periods in airports have a joint venture into fueling the duty-free travel retail market.
Beyond these categories, the travel retail trend also refers to how Chinese tourists make “shopping” the sole purpose of their overseas trips. This creates many business opportunities for foreign brands and helps them gain new customers and potential sales from this consumer segment.
Source: Jing Dailly
How big is the Chinese travel retail market?
The noticeable scale of massive international travel consumption from Chinese consumers started around 2019 when the country recorded high air traffic of 155 million outbound trips. Looking at the previous data, it’s three times larger than the travel records from 2010.
Of course, the Chinese travel retail market was not immune to the effects of the decline in international travel in 2020. However, the segment bounced back and recorded 60.7 million outbound trips in the first quarter of 2024. Consumer spending has also seen a 57.8% year-on-year increase, reaching over $124 billion.
The rise of domestic travelers led the profitable industry to shift focus to local duty-free shops, which achieved an annual growth of 66.8%.
As more customers return to traveling in and out of the country, the travel retail market growth within the forecast period of 2023-2028 is expected to reach around $64.23 Billion. This major share insight proves that China is still one of the industry leaders in the travel retail sector.
7 Shopping Tourism Trends in China’s Travel Retail Market
The travel retail market in China includes ever-evolving consumer dynamics. From the profound influence of Generation Z to the top social media channels transforming the landscape, here are some trends foreign businesses must take note of to attract Chinese travel shoppers.
1. China’s Gen-Z tourists are reshaping the travel retail market
As discussed in the TR Consumer Forum, 66% of Chinese travelers going abroad were aged 34 or below. So, if you haven’t been paying attention to China’s Gen Z tourists, now is the time to start.
Like their global peers, China’s Gen Z emphasizes individuality and self-expression. They expect brands to be socially and environmentally responsible. Gen Zers also strongly value their national identity and prefer brands that integrate domestic elements into their products.
This is a significant shift from older generations, like Chinese Millennials, who view foreign premium brands and luxury goods merely as symbols of higher quality and social status
Source: SCMP
Because of these preferences, foreign brands aiming to attract Chinese shoppers in the travel retail market must make an extra effort to demonstrate a deep understanding of the local business scene. Your strategy may involve providing transparent supply chains, fair trade labels, charitable donations, and community involvement.
2. New Travelers Plan Their Trips Using Different Platforms
It’s no secret that social media plays a vital role in travel planning, especially with super apps offering dynamic features that allow users to do everything without leaving their platform.
However, modern consumers are not particularly focused on one application when planning overseas trips or creating travel shopping checklists.
Beyond seeking recommendations and reviews on Little Red Book, Douyin, or WeChat, these travelers also look at online travel agencies (OTAs) for packaged deals, discounts, and service upgrades to make their plans more convenient and enjoyable.
Source: Dragon Trail International
These tourists are also technologically adept, so it’s only natural that they extend their research on local search engine platforms before booking a flight or planning to purchase goods only available in specific destinations.
Your brand’s visibility on search engines adds to the credibility of your products and services. Appearing on top of organic search results makes your offerings more likely to reach the most engaged audiences and active buyers.
Although the new generation of online shoppers tends to prefer organic user-generated content over paid digital ads, Chinese traveling consumers are not exactly dismissive of these campaigns.
The precise audience-targeting features of most local advertising platforms can help brands reach more Chinese duty-free shoppers as soon as they arrive at their destination. This evokes spontaneous purchasing patterns instead of the typical product discovery cycle.
3. Peak Chinese travel retail consumption during national holidays
Notably, the Lunar New Year and National Day Golden Week are prime periods of heightened leisure travel activity in China. Given that almost everyone is given week-long vacations during these events, it’s unsurprisingly the season when the retail travel market generates the most revenue.
While most festivities within the country attract more domestic travelers, the May Day holiday is specifically anticipated to boost sales due to the surge in outbound travelers from China to international destinations. Because of this, brands must prepare to engage with a travel-ready audience as early as the first half of 2025.
Hainan Duty-Free Shopping Mall. Source: DaoInsights
4. The shifting demand for duty-free goods and shops
While the biggest winner of the Chinese retail travel market has long been Hainan Free Trade Port, the demand for duty-free products has long been shifted and now comes from different sources.
Initially, the sudden surge of interest in Hainan’s duty-free market between 2020 and 2021 mainly stemmed from lifting travel restrictions and the eagerness of Chinese tourists to book overseas trips again.
Hainan province is still a hotspot for inbound and outbound travelers purchasing luxury goods. However, favorable visa options in Asian countries like Malaysia have led Chinese tourists to consider more budget-friendly retail options abroad.
The dwindling demand for local marketplaces, where major global brands are often present, is a golden opportunity for small-to-medium foreign duty-free operators and overseas shopping malls to attract Chinese travel shoppers.
5. The changing views on luxury goods among Chinese female tourists
Beyond the changing views of Chinese travel consumers on the local duty-free market, it’s also worth noting that most female tourists no longer seek luxury goods as a symbol of wealth or status.
Instead, they buy these products to feel joy or reward their hard work and achievements. With more disposable income and financial independence, these expensive purchases during their trips represent their taste and individuality outside their role in the household or society.
Since Chinese women are often the primary decision-makers for most household purchases, this change in consumption preferences signals a shift in the dynamic of how these customers plan their retail travel plans.
Source: Finn Partners’ Latest Report on China’s Women In Charge
6. The growing influence of super apps
The outbound travel restrictions during the pandemic have made the Chinese market rely on digital channels to gain access to foreign goods available in duty-free shops.
Thanks to the rapid rise of digital technology in China, offline duty-free business owners quickly managed to bridge the gap between local consumers and foreign brands despite the dominance of domestic tourism during that period.
Today, China’s most popular domestic platforms have evolved into super apps. Gone were the days when social media apps were solely for community-building and engagement. With the changing needs of modern consumers, these social networking sites also serve as cross-border e-commerce channels.
With these changes, duty-free retailers and other travel-related businesses can shorten the consumer journey of their target audience and unify their digital marketing campaigns accordingly.
7. The convenience of mobile payments
For Chinese individuals new to traveling, creating a welcoming atmosphere with recognizable payment methods and signage in their language becomes crucial for their comfort when visiting international duty-free shops.
Overcoming the payment hurdle is significant, especially when targeting Chinese consumers. Always remember that these travelers prefer to settle duty-free purchases through domestic e-wallet services like WeChat Pay and AliPay.
In addition to conveniently paying duty-free charges, Chinese tourists also use these payment methods to take advantage of loyalty programs and discounts launched by the brands they buy from.
How do traveling Chinese consumers differ from other shoppers?
Chinese consumers are highly inclined to share their shopping experiences online, a trend particularly prominent among Generation Z. This consumer group highly regards the opinions of their peers, and 62.8% of Chinese Gen Z express their willingness to share favored products on the Internet.
Additionally, 53% acknowledge discovering brand-new brands through social channels. Because of this, offline stores abroad are now eager to invest in building an extensive social media presence in China by utilizing platforms like WeChat Moments, Xiaohongshu, Douyin, etc.
Furthermore, a distinctive e-commerce phenomenon among local consumers is the concept of ‘community group buying’ or CGB. It’s a prevalent trend in the travel retail industry as it facilitates collective purchasing via platforms (WeChat mini-programs or Pinduoduo) to pool orders and access bulk discounts.
Ready To Dominate The Chinese Travel Retail Industry? Get In Touch With Us Today!
The changing consumer behavior and traveling appetite in China is a challenge many foreign brands must learn to overcome to thrive in the travel retail industry. With the continued market dominance of Gen Z tourists and their omnichannel approach to travel planning, marketers must learn how to maximize their reach on the country’s unique digital landscape.
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At Sekkei Digital Group, we understand the intricacies of the Chinese retail travel market – including the ever-changing consumer behavior and the shifting market dynamics that define it. Leveraging our extensive knowledge in this specialized field, we can assist you in tapping into your brand’s potential and establishing a commanding presence as a frontrunner in the industry.
Whether you need to create compelling advertising campaigns, utilize social media platforms, or work with KOLs, we have the digital solutions you need. Contact us today, and let us help you navigate the intricacies of the Chinese retail travel scene.
References:
Fastdata: China’s Outbound Tourism Industry Development Report 2024