By: Vanessa Foden, Chief of Staff to the VP and GM of the Retail Solutions Division at Intel Corporation
How U.S. Retailers Can Snag More Revenue from Chinese Tourists
Most major retailers have started to embrace the opportunities generated by the booming Chinese tourism market. Visiting Chinese consumers also present opportunities for small to mid-sized retailers. Are your retail customers ready? In this article, I will discuss the size of this opportunity and what resellers can do to help their tier 2 and tier 3 retail customers prepare for this opportunity.
Chinese are the World Leading Travelers
The Chinese are already the world’s leading travelers numbering some 145 million in 2017, according to the China Outbound Tourism Research Institute (COTRI). Overseas trips by Chinese residents have grown by over 1000 percent since the year 2000. And because less than ten percent of the Chinese currently have a passport, this is likely just a prelude of things to come. COTRI predicts that overseas trips by the country’s residents will increase to more than 400 million by 2030—making China responsible for nearly a quarter of all international tourism travel.
Chinese Trust Social Media More Than Official Websites
The Chinese travel at fairly set times—Lunar New Year, the summer months and October Golden Week (around October 1) are the most popular—but they are likely to make their plans at the last minute, often after scouring reviews and comments on social media sites via their phones.
A 2016 study by WorldPay found that more than half of Chinese travelers booked their holidays within a few weeks of travel and are four times as likely to complete their transaction on a mobile phone.
To appeal to Chinese tourists, getting Mandarin content on your website is a necessary first step, but essentially table stakes. Experts such as Wolfgang Georg Arlt, director of COTRI, advise getting to know China’s social media.
“Whatever you put on your official website, whatever you write in magazines, the Chinese will see it as propaganda and the Chinese are very much used to receiving propaganda instead of information from their own media. So, who do they trust? They trust their friends.”
The main social media platform in China is WeChat, the messaging app that is used by more than 1 billion people and which also offers a range of travel-oriented services for booking trips, checking ratings, and sharing photos. WeChat also operates the popular WeChat Pay mobile payment service.
Live streaming of travel destinations has also become popular among Chinese travelers. The online travel agency Tuniu and the online travel platform Qunar have embraced livestreaming and have aired many hours of videos and live broadcasts about the experiences of Chinese tourists.
Shopping Represents a Bigger Portion of the Chinese Travel Budget
Shopping is a big part of the Chinese vacation experience. According to a study by Nielsen, Chinese tourists allocate 25% of their travel spend to shopping vs. 15% for your typical non-Chinese tourist—a nearly $300 difference. That’s why in England, while Buckingham Palace is the No.1 attraction for Chinese tourists, Bicester Village, a vast shopping center on the outskirts of Oxfordshire, comes in second. The UN World Tourist Organization 2018 Highlight Report noted that Chinese tourists as a group out spent visitors from the No. 2 and No. 3 nations (U.S. and Germany, respectively) combined in 2017.
The Importance of Frictionless Payments to the Chinese Tourist
It is critical to understand that in China paying for things with a phone is becoming the rule, not the exception. While China has long had the UnionPay credit card (and made it difficult for Visa, Mastercard or American Express to gain a foothold), cash remained a popular payment option until the recent dramatic growth of mobile payments.
A merchant in China can set up an account with one of the mobile payment providers (Alipay and WeChat Pay are the leaders, with the UnionPay mobile a distant third), print out a unique QR code and start collecting payment. (Or the merchant can use a device to scan the QR code of the person trying to make the payment).
While the Chinese request for frictionless payments stems at least in part from force of habit, there is no question it’s an application ideally suited to today’s traveler: no need to translations, no need to calculate change, no need to exchange foreign currencies, no need to wait for an SMS code or rely on a faulty internet line to verify that a credit card transaction has gone through, and no need to go home with a pocketful of foreign coins. The exchange rate is better and travelers can take advantage of discounts and marketing promotions specifically targeted to them.
For merchants, the benefits are equally as clear: beyond facilitating a seamless transaction, mobile payment platforms are a way to connect directly to a new and highly motivated set of potential buyers and communicate options and offers before, during and after their engagement with the retailer.
Who is Building a Mobile Infrastructure for Chinese Travelers in the U.S.
Given the projections for the huge growth in travel by its users, it’s no surprise both Alipay and WeChat Pay are actively recruiting U.S. merchants and setting up partnerships to handle the growth in transactions. (For the record, both platforms say they are currently focused on meeting the needs of Chinese travelers and not seeking to become a mobile wallet for domestic users outside of China.)
Alipay has partnered with First Data for payment processing, enabling First Data’s merchants to be able to market to Chinese tourists. Alipay also has an alliance with Verifone so that Alipay QR codes can be scanned by Verifone devices.
WeChat Pay is seeking to leverage the dominant role that WeChat messaging has in China. When Hawaii’s tourism board decided to make its Gohawaii.com website more Chinese friendly, it added a Mandarin option and a scannable WeChat QR code on its front page.
Right now, WeChat Pay can be used across 25 countries and handles transactions in over a dozen currencies. Like Alipay, the app must be tied to a Chinese bank account but recently WeChat Pay made it possible to link international credit cards to an account as long as the app was downloaded in mainland China, Hong Kong, Macau or Taiwan
Help Prepare the Retailers You Support for Success in the Market.
According to Nielsen, 91% of Chinese travelers said they were more likely to buy from a merchant if they supported a Chinese mobile payment service. Seeing that an establishment accepts Alipay and WeChat Pay inspires an instant feeling of recognition and trust—similar to the way travelers in the early days of transcontinental travel used to feel about seeing a merchant that accepted travelers checks.
Merchants adopting these platforms have the potential of turning their Chinese visitors into advocates –sharing their positive experiences long after they return home.
If you have not already started, now is a great time to engage your retailer clients to be ready to support and market to Chinese tourists. The support for frictionless payments will not only benefit Chinese travelers but eventually all consumers worldwide.