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Luxury travel from China by Roy Graff

With more and more destinations and travel providers vying for the attention of China`s new wealthy elite, Roy Graff, MD of ChinaContact talks about his keynote speech at the inaugural Asia Luxury Travel Market in Shanghai and the Chinese demand for international luxury travel.

While western luxury travel has entered its 2.0 phase, China is still in phase 0.5beta.

The above analogy with web development was made by Serge Dive, Director of ILTM and ALTM, in Shanghai last month. It referred to the evolution of luxury travel from a relatively niche `craft` to a full-on industry sector.

However, my observations of the demand and supply of luxury travel and tours in China point to a very early stage in luxury tourism development. During my speech at the Asia Luxury Travel Market in Shanghai I focused most of my time on the demand for outbound luxury travel services and the unique features of this market compared to other more established and accessible markets.

While there is understandably a lot of excitement about China and the potential profits from selling to the rising elite class of power players and entrepreneurs, I would caution against rushing in unprepared. Even if you identify your niche market segment within high net-worth individuals above a certain amount of disposable income, by itself that will not provide the demand for your service. Wealthy Chinese consumers think about spending money quite differently than their Western counterparts.

This is deeply linked to the history of economic and social change in China over the last 50 years and will not be shifting towards Western values overnight. If you consider the short number of years that people with money had been able to openly spend it without being labelled `capitalist hoarders` or worse, you will appreciate their reluctance to show extravagance.

Until Deng Xiaoping`s famous utterance that `to be rich is glorious`, private wealth generation was a crime.

Even after that, as Southern China in particular industrialised and prospered, people preferred to stay private about their profits. At the same time – the 80`s and 90`s – the tourism industry in China developed on the back of official government delegations and publicly owned businesses visiting factories or trade-shows. While travelling abroad was a very important status symbol, it did not directly relate to the amount of money you had. Luxury travel therefore was defined as any trip that allowed you to obtain a passport, a foreign visa stamp and a visit to another country.

To enhance the status symbolism that went with tourism, shopping for goods not available in China was critical. This came on top of the cultural significance of showering relatives, friends and colleagues with presents and gave Chinese overseas visitors the reputation as big shoppers of luxury consumer goods and souvenirs. These days almost all luxury goods can be had in China for a comparative rate and Chinese shop closer to home, especially in HKG which they regard as their backyard, frequently hopping over for weekend shopping breaks. This is equivalent to people in London flying over to Milan for their weekend clothes shopping…

Still it is important for Chinese to show off their international visits by shopping for expensive goods that originate in the destination (Burberry and Clarke’s Shoes in Britain, Gucci in Italy and so forth).

Note that the type of goods that they buy, the accommodation they use, are almost always internationally recognised brand names with a strong presence in China. Small boutique labels that may be popular with rich Western customers do not interest Chinese on the whole since they have probably never heard of the brand or know anyone who has bought/used it. Conversely, there are now several international luxury brands of goods that are known only to Chinese because they have focused their marketing efforts there thanks to their connections and market knowledge. Ports Clothing is an example – a Canadian brand which is very popular in China.

When it comes to choosing travel destinations and activities, rich Chinese follow in their friend’s steps and prefer comfort, modern facilities and access to a rich array of activities. Relaxing resorts and spas that offer gold beaches and clear waters do not appeal so much – most Chinese do not like to get a tan or go swimming in the sea. The best sort of holiday would be one packed with exciting activities and planned in advance.

Chinese culture stresses group benefit over individualism and noisy fun over solitude. Wide open spaces often conjure thoughts of loneliness and emptiness while bustling towns and active night life is something to share with friends. As a result, tourism has developed to support groups rather than independent travellers and this is reflected in the government’s policies (independent travel is not classified as tourism in law). What this means in practical terms is that suppliers should offer itineraries that contain a lot of activity and group participation, not putting undue emphasis on individual free time.

Other things to consider when marketing to this segment in China:

  • Those with money often have very little time to travel and will consider frequent short breaks.
  • Being rich means always thinking about making money, so travel will involve business and pleasure.
  • Status is gained through unique experiences within a social circle – offer them something truly unique they can tell their friends about.
  • In a business group, some people may be senior and must be treated accordingly.
  • Children are the ‘little emperors’ of China and need special attention and pampering.
  • Take care to build a reliable brand in China and back it up with on-the ground marketing and operational support.

As part of the efforts to increase understanding of China’s tourism issues among Western travel professionals, the WTM-ChinaContact forum at World Travel Market this November 14th will address many of these topics in greater detail. The format of interactive workshops and practical seminars will provide delegates with useful tools and invaluable tips for accessing the market.

About ChinaContact

ChinaContact is a UK-based China market entry and consultancy business headed by Roy Graff, with a network of partners in China that provide country-wide marketing, PR, sales and product distribution for tourism organisations. They maintain a useful blog of news and updates on China’s tourism sector and a monthly newsletter on China outbound tourism.


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TravelDailyNews Asia-Pacific editorial team has an experience of over 35 years in B2B travel journalism as well as in tourism & hospitality marketing and communications.