Key takeaways:

• Protests in Hong Kong and relaxed visa regulations made Japan the no. 1 destination for Mainland Chinese tourists during Golden Week.
• The UK failed to attract China’s top spenders, but the country’s adoption of Chinese payment systems like Alipay has proved successful.

Millions of Chinese travel and shop during Golden Week, the October holiday period that celebrates the founding of the People’s Republic of China. Despite the Sino-American trade war and slowing economic expansion, spending over this year’s holiday continued to grow at a steady clip: domestic tourists spent 650 billion yuan (almost £71 billion), an increase of 8.5 per cent over last year.

Shopping was a big priority for many of the 7 million Chinese who travelled abroad between 1 October and 7 October. “When they plan, they are… methodically incorporating shopping trips,” says Liz Flora, editor of Asia Pacific Research at L2. But even as luxury brands vie for the attention of vacationing Chinese, changes in consumption patterns and new government policies have spurred cross-border e-commerce’s growth.

Domestic consumption is on the rise

The number of Chinese tourists travelling domestically during Golden Week 2019 jumped 7.81 per cent year-over-year. Data: Ministry of Culture and Tourism.

© Paul Jeong

Growth in outbound tourism was flat over last year, but domestic tourism rose 8 per cent, with 782 million Chinese visitors choosing to travel at home. Many Chinese are rediscovering internal provinces like Qinghai and Gansu, says Tianbing Zhang, consumer products and retail sector leader for Deloitte Asia Pacific. This year’s Golden Week marked 70 years of the People’s Republic, so travellers were also encouraged to visit landmarks like a Shanghai museum commemorating the Communist Party’s first national congress.

Many Chinese holidayers headed online to shop. Sales for products imported from destinations including Japan, the US and South Korea increased by 53 per cent over the same period last year on Alibaba’s Tmall International. Government policies to ease cross-border e-commerce and spur domestic consumption are having an effect.

Politics favour Japan and Singapore

Destinations like Japan and Singapore benefited from political tensions between the mainland, Hong Kong and Taiwan, becoming the first and third most popular destinations for Chinese tourists during Golden Week 2019. Data: CTrip.

Japan has always been a popular destination with Chinese travellers, and the East Asian country received an extra boost this year from the ongoing protests in Hong Kong and the recent visa ban on independent travellers visiting Taiwan. Both Hong Kong and Taiwan fell off the top 10 list of preferred outbound destinations for Chinese, according to CTrip, a major travel provider. Japan was the top outbound destination, where Chinese visitors spent more than 10,000 RMB (£1,100) on average during the holiday. Japan’s popularity has been spiking since it loosened visa restrictions on Chinese tourists in 2017, says Veronica Wang, Greater China office partner at strategy consultants OC&C.

Singapore, a Mandarin-speaking country with luxury shopping options comparable to Hong Kong, also indirectly benefited from political tensions in the region. It was the third most popular destination this year, up from fifth place in 2018.

Italy attracts high spenders while the UK continues to struggle

France, Italy and Spain all saw an increase in Chinese tourist spending on tax-free purchases over Golden Week 2019, while the UK and Germany couldn’t contrast a downward trend. Data: Planet.

Sixty-nine thousand Chinese tourists visited the UK in the first quarter of 2019, but the country struggled to attract high spenders over Golden Week. The average transaction value in the country was just €523, the lowest among top European destinations like Italy, Spain, France and Germany. Overall Chinese spending in the UK dropped by 9 per cent, according to payment provider Planet, which tracks tax-free purchases.

Adopting China’s digital ecosystem pays off

The number of Chinese tourists travelling abroad during Golden Week 2019 grew only 0.86 per cent year-over-year. Data: Ministry of Culture and Tourism.

© Paul Jeong

About 54 per cent of Chinese transactions go through third-party payment providers like Wechat Pay and Alipay. These payment systems allow shoppers to cut out bank transaction and cash exchange fees, simplifying spending abroad. International retailers that have adopted these systems can also provide Chinese shoppers with specific promotions and services. For instance, all nine branches of Japan’s Daimaru department store allow customers using Alipay’s Ant Credit to pay by instalments, according to Daxue Consulting.

One Western country further ahead of the pack is the UK, which has more than tripled the number of merchants offering Alipay year-on-year; transaction volumes there also increased 70 per cent during this Golden Week over the year-ago period.

“We have seen a lot of brands working with Alipay, because Alipay is not only a payment method, but it also functions as a discovery tool when users arrive at their destinations,” says L2’s Flora, adding that users can use it to discover what shops and brands offer Alipay. Chinese tourists are known for extensively researching their destinations, including shopping locations and stock availability, so brands can make the most of this tendency by partnering up with payment providers and travel apps like CTrip and Alibaba’s Fliggy to offer discounts, cash-back and pre-tail purchases that Chinese shoppers buy online at home and collect abroad.