How merchants can adapt their payment offerings to better capitalise on the incoming surge of Chinese commerce

Eva Zhang ,UK CEO, Alipay

 

As China joins many other countries and regions in putting travel restrictions behind it, the recovery of tourism industries across the world are set to receive a further boost from the country, for both inbound and outbound tourism.

Historically, Chinese tourists have been a big spending force when abroad, including in Europe. Retail, experiences and services have all benefitted from Chinese travel, but after a dormant period, it’s possible that many European merchants aren’t equipped to provide one of the most important services travellers value when making purchases – a payment system they know and use.

What came before

UN World Tourism Organisation data reveals that 155 million Chinese tourists travelled abroad in 2019, spending $255 billion between them, streets ahead of the next biggest spenders. International departures had been on a consistent upwards trajectory, up from 117 million in 2014 with annual increases. Expenditure also rose every year between 2014 and 2018, only dipping slightly in the year before COVID-19.

Although China’s large population is a factor here, the desire of its citizens to venture abroad is a bigger driver. A January 2021 McKinsey survey revealed that 43% of Chinese people wanted their next holiday to be abroad, and it’s likely that this sentiment will have remained or even grown in the intervening years. This is backed up by figures from ING, showing that in November last year 42% were eager to travel.

And when Chinese tourists did travel in the past, they spent their money mainly on food and beverage (18%), cultural activity and entertainment (12%), transport (11%) and accommodation (10%). Crucially for many European brands, they also purchased $105bn worth of luxury goods.

Recovery gathering pace

Restrictions imposed across the world during the COVID-19 pandemic saw Chinese tourism all but disappear, with outbound travel hitting just 20.3 million trips in 2020 and none at all in 2021 according to the UNWTO, with visits to Europe also dropping off significantly over the same period.

But this is now changing. Data from Alipay shows that the average spending of Chinese tourists using the payment platform overseas doubled in the first quarter of 2023 compared with pre-pandemic levels in the same period in 2019.

France was in the top five destinations, and while it’s natural that travellers will initially go closer to home, the signs for Europe this year are strong. Already nearly back at pre-pandemic levels, the European tourism industry stands to benefit from the resurgence of Chinese travel – in fact, Alipay data shows that average spending of Chinese tourists in the 2022 Christmas period in France, Germany, Italy, Spain, and the UK was more than double compared to the same time in 2019.

The question, though, is whether the industry is ready to handle this continued surge.

Preparing to capitalise

When people travel abroad, especially over the distance from China to Europe, they are met with unfamiliarity. Of course, new experiences are a key reason to go on holiday, but there are some things people want to keep the same – the biggest one is how they can pay, in a secure and easy way. In particular, for China’s digital- and mobile-native travellers, being able to use the wallets they pay with at home is a big consideration, and many will prioritise going to places where they know they will have a seamless experience.

Given that support for mobile-first platforms is not as widespread as the likes of debit and credit cards in Europe, there is a big opportunity for merchants to differentiate themselves from competitors and attract discerning Chinese tourists (and the now growing majority of Asian consumers) who put a premium on familiarity with their money. Partnering with the right payments provider with the ability to offer payment methods that are tailored to these consumers is key to unlocking footfall and spend. What’s more, being able to offer recognisable, trusted and convenient names will be a big win for businesses if they are to gain momentum with the influx of Chinese consumers and those across Asia.

This means providing a service that tourists can access when at home, but also increasingly when overseas during their travels. These platforms often also give them the opportunity to be in consumers’ minds before the trip and long after they have returned home. Built-in marketing, and the ability to communicate directly with customers and give them an online shopping journey, means that the potential for sales has significantly greater shelf life than those using the ‘traditional’ sales funnel.

For instance, consumers in Asia have a greater tendency to engage with promotions like discount codes and personalised ads than other regions, so the ability to tailor offerings ahead of a visit could help to entice and excite holidaymakers before they arrive, helping to move a digital engagement with a brand to a physical one.

Overall, it’s looking beyond the ‘traditional’ and truly appreciating what consumers want which will bring merchants access to a wider pool of customers. With Chinese tourists eager to return to Europe, those who get ahead of the curve and ensure they can deliver this will prosper most.

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