February’s $500M Chinese Shopping Spree

The Chinese are coming.  And they’re bringing $500 million in spending money with them.  

Spring Festival (otherwise known as Chinese New Year) is fast approaching, with an estimated 255,000 mainland Chinese set to visit Australia between February 6th and 14th. Each one spends about $2,200 on shopping, and an additional $5,800 on food, accommodations, transportation and activities.  Which, if you do the maths, is a LOT of money.

The Chinese have become Australia’s highest spending group of overseas visitors, especially in the retail sector.  The numbers are incredible.  The average Chinese visitor spends more on shopping alone than a Kiwi spends on his whole trip to Australia.

Although souvenirs and clothes remain high on the list of things Chinese tourists buy while traveling down under, some of the items in demand can be surprising.  More than half of Chinese visitors want to buy cosmetics and a fifth want to stock up on drugs and healthcare products.  Fish oil is incredibly popular.  These purchases reflect concerns over quality and safety back in China, where counterfeiting is rampant and consumer protections are virtually nonexistent.  Australia’s clean, green, high-quality image motivates Chinese visitors to open their wallets while they’re on holiday.

Other factors also drive high spending.  The Chinese have a strong tradition of gift giving, and tourists returning home often have an astonishing array of friends and family to think about.  Many tourists actually take this a step further, acting as “daigou” shoppers, buying large quantities of goods while traveling abroad and selling them when they return to China.  Baby formula and vitamins are staples of this long distance trade.  Specialty and fresh foods are also becoming more common.

The influx of cash will provide a welcome boost to Australia’s retail sector, which experienced anemic sales growth in 2015.  The nation’s two largest department stores, Myer and David Jones, have special cause to celebrate the rush of Chinese shoppers - Myer is in the middle of a $600 million turnaround and David Jones was recently acquired by South Africa’s Woolworths.  The Cross Border Management report says that Australian department stores will get $150 million of the Spring Festival spending.

Despite the size of the figures at stake, many Aussie retailers are surprisingly unprepared for the February tourist feeding frenzy.  The number one credit card in China is UnionPay, but many, perhaps most, Australian shops don’t accept it.  The number one thing that makes Chinese tourists enter a shop is Chinese signage – walking up and down Sydney’s George Street shopping districts, you’ll see more signs in Polish than in Mandarin. 

Spring Festival is one of the two major travel holidays on the Chinese calendar, the other being the National Day celebration, which falls in October.  Spring Festival is traditionally a time for people to return home and visit their families, making it the largest domestic travel event in China.  Last year, the Chinese undertook 2.8 billion passenger trips by air, rail and road, returning home to visit elderly parents and distant cousins in cities and villages around the nation.  These domestic trips reduce the number of Chinese tourists who travel abroad during this time.

The National Day holiday, however, is free from these family obligations, making it even more popular as a time for traveling abroad.  And an even bigger bonanza for Aussie brands.  If you look at the numbers, National Day is even bigger than Spring Festival.  February is a $500M month for Australian retailers; October is more like $600M-$700M.