The Rise Of The Chinese Tourist – And The Power Of Using Payments To Greet Them

When Los Angeles first began its efforts to market to international tourists in 2006, China wasn’t much of a consideration. With all of the nations that sent tourists to L.A., China didn’t even make the top 10 a little over a decade ago.

But as of the last few years, that has changed – and in big way, noted Kathy Smits, the vice president of international tourism for the city’s tourism marketing agency.

“Chinese tourism is a big deal for Los Angeles. China is driving more than one billion dollars into the city’s economy annually,” she said.

Over the last decade, in fact, Chinese tourism to L.A. has increased over 650 percent – and it is now second only to Mexico in supplying international visitors to the city.

And the L.A. story is not an outlier – in fact, it’s representative of a trend visible in the U.S. and around the world.

In 2017, the China National Tourism Administration reported that Chinese tourists made 131 million trips overseas that year, an increase of 7 percent from 2016. And the amount that Chinese consumers spend on those trips continues to grow. In 2016, they spent $261.1 billion abroad, a 4.5 percent increase from the previous year, and enough to lead the world.

Chinese consumers also spend more per capita than other international travelers: $762 as opposed to the average of $486, according to Nielsen’s Outbound Chinese Tourism and Consumption Trend: 2017 Survey. They also tend to visit more countries.

And, critically for merchants, Chinese tourists shop a bit differently than their non-Chinese counterparts. Price is the leading concern for the majority of non-Chinese consumers and determines their buying habits 52 percent of the time – with total travel budget and product quality influencing decisions 43 percent and 35 percent of the time, respectively.

Chinese tourists, on the other hand, are mostly motivated by discounts offered rather than by pure price, with 41 percent defining that as their leading concern. Price was a factor, but only 40 percent of the time.

Perhaps most interestingly, though, is how much payment methods affected Chinese consumers, with 41 percent noting that the types of choices available to them have a strong influence on where they shop and buy – and what are they looking for.

Mobile Payments

Given the speed with which mobile payments have taken over the Chinese commerce ecosystem – and managed to both largely displace cash and leapfrog card technology – it is perhaps not terribly surprising that customers are looking to pay abroad the same way they like to pay at home.

As of the latest figures from Nielsen, 65 percent of Chinese tourists have used mobile payments to pay abroad – a use rate six times higher than the average cross-border traveler. Specific favored uses include shopping, dining and visiting tourist attractions. And, more impressively, a full 90 percent of Chinese tourists say they would like to use mobile payments abroad, but merchants do not make them fully available.

And yes, they always ask: According to the survey, Chinese tourists request to use mobile payments at merchants a full 83 percent of the time.

The study also noted that Chinese nationals tend to spend more when given access to mobile payments, and that this trend is likely to grow as the younger generation of tourist shoppers are increasingly insistent on having access to them. According to the study, post-90s generations make 3.3 out of 10 payments via mobile, and 3.7 via card. Post-70s generation shoppers, on the other hand, make 2.3 out of 10 transactions via mobile and 4.9 via card.

“China has embraced mobile payments faster than any country, and will continue to lead the global charge in this regard,” said Vishal Bali, managing director of Nielsen China. “Mobile payment is on the rise globally, and will continue to support greater connectivity and efficiency across the commercial ecosystem.”