China’s economic rise has spawned a boom within the country and has spurred cascading effects globally. One sector that has seen particularly phenomenal growth, and is likely to push innovation beyond China’s boarders, is tourism. Affluent Chinese travellers are packing their bags now more than ever and meeting their needs demands new market approaches.
According to the World Trade Organization, China’s staggering tourism spend of US$128.6 billion in 2013 topped global rankings. Another startling revelation in this statistic is a whopping 24 per cent growth in annual spend. While these trends are worldwide, the impact on countries closer to China is far greater. Chinese visitors to South Korea constituted 51 per cent of the nation’s total tourist arrivals in July 2014. In Hong Kong the rate is as high as 80 per cent.
These travellers impact three broad sectors in the economies they visit: travel/hospitality, general retail and luxury. It’s simply logical for hospitality and retail to benefit from Chinese travellers, but the price difference of luxury goods sold in China versus abroad is the chief incentive for Chinese consumers to buy luxury goods overseas. According to the World Luxury Association, during the Chinese New Year period from 20 January 2013 to 20 February 2013, Chinese consumers spent as much as US$8.5 billion on luxury goods abroad, up by 18 per cent over the previous year. Apart from the snob value of buying luxury goods aboard, the plethora of brand choices as well as the luxury shopping experience makes buying outside China easier.
|See all of our annual CHINA INNOVATION features|
Similar to the explosive growth in tourists from the Mainland, e-commerce in the region is also growing at a considerable pace. Global brands are ramping up their online presence across the region. However, many of these online forays are rudimentary at best, with a few notable exceptions that have been successful. A critical winning factor for e-commerce in Asia-Pacific is understanding Chinese travellers and delighting them with rich customer experiences.
The offline world comprehends this dynamic better as compared to the online domain. We see this manifest in Mandarin-speaking concierge services at hotels, Chinese directions at duty free malls in Seoul or the acceptance of China Union Pay cards at Singapore retailers.
To bring about a similar personalized brand experience online, three factors are critical: content, context and communication.
From a content perspective, translation of English content to simplified Chinese is simply inadequate. Localized content, which appeals to online shoppers and inspires a call to action to buy, is critical. While an English language site gives brand credibility and aids brand equity, localized content helps conversion and sales.
The second essential dimension to understand is the context in which Mainland tourists travel. Knowing the popularity of mobile devices with travellers, the first step is a mobile-optimized site. Targeted mobile apps that understand the context is the next step. For a hotel chain, that may mean having offline access to ground transportation from the airport. Or for a retailer, offline maps to help navigate from the hotel to the store.
Unlike in the US, APAC apps should be designed for Android first while, iOS (Apple) apps can follow. Several luxury retailers in the region accept China Union Pay at their physical points-of-sale. However, if you check out their online cart, only logos for Visa, MasterCard and Amex appear. A definite must in the payment context is accepting both China Union Pay and Alipay.
Understanding context also means recognising that Asian cultures often value thinking, traveling and buying in groups. They buy for themselves and for friends and families back home. Therefore, online commerce with flexible fulfilment is worth investing in. Long queues outside luxury stores in Hong Kong, or Seoul’s duty free malls, are a familiar site for Chinese tourists. If they had an online buying option (even from outside the country) for pick-up in store or delivery to hotels, it could redefine the consumer experience. An added feature would be gift lists, which friends could manage, thus leaving the tourist with more ‘me’ time in the new country.
Innovating customer communications with Chinese tourist has the power to convert brand enthusiasts into brand loyalists. A key part of the strategy would be to have a contact centre with Mandarin-speaking agents who can help with online hotel bookings or assist with retail checkouts.
With more than 400 million active users, WeChat is an example of a communications tool brands outside China should learn to leverage. Unlike western-world apps, WeChat is more than just chat—it has social, e-commerce, games and several other tools all served in one neat package. Brands can communicate to their fans, offer exclusive promotions, enable store locators, manage product reviews and even have dedicated customer service.
It is no secret that the Chinese traveller is changing the commerce landscape, what is crucial for innovation however is the need for brand owners to master the art of marketing and selling in the digital realm as much in the offline world. And the earlier realization of this, greater the outcomes will be.