How Chinese tourists are shaping world's retail and travel sectors

Global retailers and travel companies are vying to capitalise on a surge of Chinese tourists, one of the most visible symbols of the country's increasing wealth. These shoppers are now a frequent sight at the world's retail hot spots, armed with their UnionPay cards and laden with luxury goods.

According to figures from the United Nations World Tourism Organisation, the Chinese overtook the Germans to become the world's top spenders last year. In 2005, China ranked seventh in international tourism expenditure, and has since successively overtaken Italy, Japan, France and Britain, the report says.

Last year, the Chinese spent US$102 billion, up 40 per cent on 2011. But based on China's total population of 1.3 billion, this works out at about US$78 per head and suggests we are seeing only the beginning of this potential spending power take effect.

Average incomes in China are likely to increase sevenfold between now and 2050, from their current level of US$2,500. This means that discretionary spending is likely to jump markedly as incomes rise and more Chinese citizens join the middle class.

Global retailers are starting to lure Chinese shoppers by hiring Putonghua-speaking sales staff and installing UnionPay. The increasing acceptance of UnionPay is a marker of the internationalisation of the renminbi.

The Chinese government is keen to promote the currency beyond its borders and has also been encouraging workers to take more holidays as part of a bigger policy to shift the economy from a reliance on investment towards greater consumption.