Outbound tourism from China is slowly recovering post-Covid, but the tourists that are coming back are not necessarily spending and behaving the way that they used to. With the Lunar New Year (known in China as Spring Festival) peak travel period approaching, how should UK companies prepare for the return of the Chinese tourist?
Pre-Covid, China’s international tourism spend, at £225 billion, was the most of any country in the world – almost double that of the USA, whose citizens collectively spent £117 billion in 2019. Much of that spending went to China’s Asian neighbours, with Thailand, Japan and Vietnam making up the top three foreign travel destinations for Chinese travellers.
Nevertheless, over the past decade, the UK has also been high on the agenda for China’s growing middle classes, with 1.01 million visiting in 2019, attracted by the UK’s history and culture, as well as its shopping and leisure facilities.
Things, of course, came to an abrupt halt during the pandemic as global travel was put on hold. In 2021, less than 20,000 Chinese visitors came to the UK, as restrictions from both sides were put in place and flight routes were cancelled. This figure crept up to just 46,986 in 2022, according to Visit Britain.
However, since China re-opened earlier this year, flights between the UK and China have recovered to 70% of pre-pandemic levels, with airlines like Hainan Airlines offering direct flights between major Chinese cities and major UK hubs like London and Manchester. The recovery may be happening slower than people had hoped, but the fact is that Chinese tourists are now coming back to the UK – especially since Beijing started to allow group travel again – with research by the New West End Company (NWEC) revealing that visitor numbers in September 2023 were only 2% lower than in September 2019.
However, it seems that the tourists that are coming back are spending much less than they used to. The same research by NWEC found that Chinese tourists in the West End were spending 58% less than they were before the pandemic.
This is in part due to the Covid hangover and a global economic downturn, but many have also blamed it on the British government scrapping tax-free shopping in early 2021, which the Association for International Retail (AIR) has estimated will lead to an annual loss of £750 million from Chinese tourists alone. Tourists might still be keen to come to the UK for culture and experiences, but they are doing their luxury shopping in Europe or even at home in Hainan.
Nevertheless, many are betting on spending recovering during the approaching Lunar New Year peak travel season. Although most of China’s Covid restrictions had been lifted by Chinese New Year 2023, flights were still few and far between, and most people hadn’t had time to make travel plans, making this year the first year of true ‘recovery’.
“I’m pretty confident that numbers will get back up to pre-Covid numbers,” says Champa Selim, Deputy Director of Greater China and South East Asia at Bicester Village, commenting on the prospects for Chinese New Year. “Although things can happen quickly to impact China-UK relationships.”
Lunar New Year used to be a time to spend at home with family, but in recent decades, many Chinese people have been using the week off work as an opportunity to travel. But it is not just short-term holidaymakers that will be hitting the UK during Lunar New Year. Many Chinese expats spend the holiday in Britain, especially the 150,000 Chinese students studying in the UK. Creating culturally-sensitive campaigns that resonate with these consumers at this time of year can boost both sales and brand recognition.
Companies looking to understand what the holiday means to the tourism market will have a chance to do so at an upcoming CBBC event on November 30 in partnership with Hainan Airlines, according to Celine Tang, CBBC’s Retail & e-Commerce Sector Lead.
“Attending events during this festive period, especially like this one in collaboration with Hainan Airlines, offers a unique opportunity to engage with and understand this vital market,” says Tang. “Such partnerships are not just about advertising, but celebrating and participating in a rich cultural exchange that Chinese New Year epitomises. It’s an occasion where the significance of cultural understanding and sensitivity comes to the forefront, crucial for any brand looking to make a meaningful connection with this audience.”
Brands that want to succeed in China increasingly need to consider cultural and experiential factors, and not just at Lunar New Year. The new generation of Chinese consumers are seeking “experiences” when shopping or even eschewing spending on tangible items for spending on things like concerts, health and wellness services, and travel.
To tap into these changing habits, UK brands could consider creating partnerships with local tourist attractions, or coming up with branded events series (e.g., the fitness events hosted by Lululemon). On a more basic level, giving affluent shoppers top-notch service (including localised service offerings such as Mandarin-speaking staff and Chinese payment options) and creating a warm and inviting atmosphere can also go a long way.
Positive experiences can translate into spending and brand loyalty that lasts long after the New Year holiday.
All in all, it is important to recognise that the demands and expectations of the young, affluent consumers who make up over 50% of the Chinese tourists visiting the UK are changing. Whether it is moving away from big labels to smaller, “quiet luxury” brands, or preferring to find product information on social media, UK brands need to stay on top of trends to get the most out of the return of Chinese tourists in 2024 and beyond.
