Editor’s note: China does love it’s superlatives, the latest being that it spends the most money abroad. This article, translated from the China Economic Weekly, reveals the extent to which Chinese tourists love to shop, and the factors which have contributed to the growing numbers of Mainland tourists abroad.
Shopping while abroad has become very important to Chinese tourists. According to the World Tourism Organization, nearly 100 million Chinese people traveled abroad in 2013. With these numbers, China has become the nation with the largest number of outbound tourists. Chinese tourists spent a whopping 102 billion USD in 2013. This number is more than what United States tourists and German tourists spent while abroad combined. This puts China at the top spot in the rankings of amount of money spent by tourists while overseas.
Photo: bigbirdz
Tourism and the Rise of the Middle Class
Ten years ago, China only held one percent of the world’s outbound tourism consumption. Now, the World Tourism Organization predicts that China will hold 20 percent by 2023. This means that within the next ten years, China’s number of outbound tourists may double again.
Data collected from various sources also helps paint a picture of the state of Chinese overseas tourism. In 2013, the international hotel booking site Hotels.com, did a survey of 3000 Chinese tourists and 1500 hotels. The survey showed that Chinese tourists are no longer exclusively wealthy because of the rapid growth of China’s middle class. The number of Chinese middle class tourists has continuously increased over the last few years.
China’s number of outbound tourists and tourist spending are both ranked first in the world. China’s middle class continues to increase. This, on many levels, is good news. It shows that Chinese people are becoming rich and have more leisure time than before. However, the high spending by outbound Chinese tourists has many worried that the result will be a long-term sustained spending deficit.
China’s Service Trade Deficit
Statistics from the Ministry of Commerce show that from 1995 to 2013, China’s services trade has experienced a 19 year deficit and that the deficit is only growing. In 2013, it reached a record high. The service trade import and export industry is worth a reported 539. 64 billion USD with half of the industry within the United States. The service trade deficit, for China, has now reached 118.4 billion USD
Tourism is the leading industry in the service sector. Huo Jianguo, head of the Ministry of International Trade and Economic Cooperation, stated that China’s deficit in the service trade is caused by the high number of outbound tourists and tourist spending.
The World Tourism Organization recently released data that shows that in 2013, Chinese outbound tourists spent 102 billion USD. In the same year, China’s service trade deficit was 118. 46 billion USD. The two numbers are comparable- it seems like much of China’s service trade deficit comes from outbound tourist spending.
Spending on Luxury Goods
Trips abroad to buy luxury goods is one of the main causes behind the China’s growing service trade deficit.
Well-known online travel platform TravelZoo released data showing that mainland Chinese tourists mainly travel to Hong Kong, Europe, the United States and South Korea to purchase luxury goods. In 2013, 64.6 percent of Chinese tourists in Hong Kong purchased luxury goods and 46 percent did so while traveling in Europe. In the same year, 33.4 percent of Chinese tourists to the United States purchased luxury goods and 19.3 percent did so in South Korea. In contrast, only 12 percent of Chinese people purchased luxury goods within China in the same year.
The main reason why Chinese middle class tourists prefer to travel overseas to buy luxury goods, is because of large differences in price between luxury items at home and abroad. Insiders have pointed out that China often has the highest prices for luxury goods. These price differences and the pricing strategies of different luxury brands have played a large role in creating a service trade deficit.
Most of the pricing for luxury goods and the luxury market lies in the hands of foreign investors. Whether the price for a certain luxury item or brand is high or low depends on the brand itself, as well as factors including venue rental, logistics, and advertising. In China, because of the reasons mentioned above, the price tag is often higher than in a developed country. Because of this, tourists can often save a lot of money if they choose to buy their luxury goods while abroad.
Source: China Economic Weekly
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Keywords: China luxury goods Chinese people shopping abroad
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@laowai the Chinese word nongmin 农民 does not perfectly translate to farmer and can describe either people who make a living farming or uneducated, uncivilized peasants. So when used as an insult it means peasants. So it really puzzled me for awhile when people who say "farmer" as if that was a bad thing but it's just the other meaning of that Chinese word.
Oct 07, 2014 20:35 Report Abuse
Interesting how they talk about the middle class here. I would describe it more as middle income, to be middle class there should be some class and that is often lacking. All people want to buy luxury goods for here is to show off how much money they have to gain face. How does that translate into class?
Oct 07, 2014 10:10 Report Abuse
Places I had described as "only good for shopping and nothing else" by Chinese people: Hong Kong, Singapore Taipei, Jeju Island, New York, Paris, Vienna and Guam.
Oct 07, 2014 09:30 Report Abuse
That's what a Chinese girl told me when I asked what she thought of Jeju after she came back "The shopping was great, nothing else to do there!"
Oct 07, 2014 17:17 Report Abuse
"Most of the pricing for luxury goods and the luxury market lies in the hands of foreign investors. Whether the price for a certain luxury item or brand is high or low depends on the brand itself, as well as factors including venue rental, logistics, and advertising. In China, because of the reasons mentioned above, the price tag is often higher than in a developed country." What a bunch of BS. The article conveniently fails to mention the main reason that luxury goods are more expensive in China - the luxury tax from the government. So just ignore the facts and blame foreign investors for ripping off the Chinese. Typical logic. Yes, it's true that some brands increase their prices for the Chinese market but this article doesn't even mention the tax! Rubbish.
Oct 07, 2014 09:28 Report Abuse
That's because Chinese made goods are crap. Also a lot of the 'imported' stuff sold in China are counterfeit. China has no standards and no rule of law. Other countries have rule of law. HK is a shining example of what mainland could be if they had standards and if leaders were accountable to the people. Which is exactly why they're trying to smoother HK in the crib.
Oct 07, 2014 08:12 Report Abuse
Travelling is a way to get imported things less the high import taxes paid in China. So yes they buy a lot for them, their family, friends, neighbors, barber, boss, to sell on taobao, the principal at their kids school, their wife, their mistess(es). It all adds up.
Oct 07, 2014 00:32 Report Abuse
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