Mark Tanner

Why US Brands Should be Interested in China’s Golden Week Tourists

2018/09/26 Mark Tanner
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No holiday period provides a better barometer for the state of tourism and general consumer sentiment in China than the October Golden Week. Unlike Chinese New Year when the majority of Chinese return home to their families, October National Day Holiday is all about leisure travel with around 700 million Chinese going on vacation.

This year’s Golden Week will see nearly seven million Chinese travelling abroad – well up on last year’s six million travellers. Japan is the top choice for the first time, with Thailand second and Hong Kong third.

Japan’s spot at the top of the list provides an interesting takeout for the US and other countries in the midst of a geopolitical spat with China. Many readers probably recall how fast Japan fell out of favour in China due to the Diaoyu Islands dispute in 2012, which saw anti-Japanese protests across China and plummeting sales of everything from Toyotas to trips to Tokyo. With the tone of Chinese state media and social feeds becoming less positive about the US of late, there is a likelihood that sales of some US brands may take a dip as the result of less favourable consumer sentiment, in addition to the tariffs. Yet based on Japan’s return to favour, even if sentiment does change, it won’t be irreversible.

Another interesting takeout from the increase in Golden Week tourists is that Chinese consumers appear as positive as ever. With around 15% growth in tourists heading overseas, consumers remain willing to spend like never before. This is supported by sales of the hockey-puck-calorie-bomb – Moon Cakes – which increased 5-10% on last year, despite Chinese consumers’ pivot to healthy eating. And one of the most important indicators affecting how wealthy Chinese consumers feel – house prices – rose at the fastest pace in two years following six straight months of acceleration.

There are countless theories about how much the trade war will affect China.  One of the common beliefs is that it will be consumers and their domestic buying power who will cushion the economy from a dip in exports. As we have learnt in the past, imploding stock markets have much less effect on consumer sentiment than they do in the US. Many of the indicators and theories that form the foundation in Western economies hold less relevance in China’s unique system.

It is still too early to understand what impact Trump’s tariffs have made on the Chinese economy and the global economy as a result. Nevertheless, Trump is unlikely to be happy about the swathes of unfazed tourists boarding planes next week, a little heavier from their portion of lotus seed paste moon cakes.

For readers in the tourism sector, we hope this Golden Week brings you plenty of good things from China. For our China-based readers, we hope you have a wonderful break and manage to avoid the airports, stations and roads at their worst. China Skinny’s office will be closed over the week and we’ll be back delivering our unrivalled research and strategy services from October 8, and this newsletter from October 10. Go to Page 2 to see this week’s China news and highlights.

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