Chinese travellers to hit 100m but spending to slow

PUBLISHED : Saturday, 17 August, 2013, 12:00am
UPDATED : Saturday, 17 August, 2013, 4:00am

China will surpass the milestone of 100 million overseas tourists a year earlier than expected but the growth of Chinese tourist spending will slow as a result of the continuing crackdown on corruption, predicts the China Outbound Tourism Research Institute.

From July 1 to June 30 next year, 106 million Chinese tourists will travel abroad and spend US$129 billion, the Germany-based institute forecast. This is earlier than the United Nations World Tourism Organisation's forecast that the mark will be reached for the first time in 2015.

Last year, 83 million Chinese travelled abroad and their spending soared 40 per cent to US$102 billion, overtaking the Germans as the top tourist spenders, according to the UN agency.

But for the 12-month period from July 1 to June 30, Chinese tourist spending will grow 17 per cent, considerably slower than the 40 per cent growth last year, said institute director Wolfgang Georg Arlt.

Austerity measures are … impacting official trips and their spending

"The new Chinese government's campaign against hedonism and extravagance will have some impact on official outbound travels, which will be cancelled out by the growing demand for leisure trips, especially from second- and third-tier cities in China," said Arlt.

Arlt recalled a case when five Chinese tourists visited Switzerland and bought US$3 million of luxury watches. Some Chinese tourists would spend US$300,000 in cash for a watch in Europe, arousing suspicion that a part of Chinese expenditure on luxury goods abroad was for illicit purposes, Arlt said.

"If someone brings a lot of cash into a shop, many people in the industry are thinking there is a possibility of money laundering," he said.

In another sign of a slowdown in overseas spending, tax-free shopping around the world by Chinese tourists rose 16 per cent year on year in January, 26 per cent in February, and 19 per cent in March, much slower than the 58 per cent rise in 2012, according to Global Blue, an international shopping service provider.

"Government austerity measures are significantly impacting official trips and their spending abroad. Previously, it was estimated that 20 per cent of all Chinese trips to Europe were inspection trips by officials who were very keen on ultra high-end, traditional watch brands and other luxury products," said Global Blue.

"It's possible that in 2012, many [Chinese] officials were buying support and consolidating their power with rising [political] stars. Now that the new power structure is in place, there is no need for lavish gifts. The change in leadership held virtually all officials at home during the Spring Festival this year, and impacted overseas spending and travelling patterns."

Another reason for the slower growth in tourist spending is more Chinese who are not that rich are travelling abroad, and they normally spend less per person than the wealthy, said Arlt.