As the Year of the Dog begins, we look at what and where Chinese shoppers buy during the Chinese New Year.
The Chinese New Year is a time of celebration but also a great opportunity to buy gifts for loved ones back home in China or abroad. In recent years, Chinese shoppers have become a force that should not be underestimated and retailers who offer a seamless and familiar payment option will be best positioned to take advantage of this trend.
Demand for luxury Western brands is high
With a growing economy and an affluent upper class, China is taking up an important role in the luxury-goods market. According to a McKinsey report, ‘Chinese luxury consumers (…) account for over RMB 500 billion (USD 7.4 billion) in annual spending, representing almost a third of the global luxury market.’
The interest for luxury-brands is not slowing down. The same report estimates that by 2025, Chinese consumers will account for 44% of the total luxury-goods global market.
Most of these purchases are made through official channels like brand stores and duty-free shops, but traveling is also an important opportunity to shop. More and more Chinese nationals travel to Western Europe and expect the same convenience when paying for goods in-store as they get at home.
Online Chinese shoppers look for UK goods
The demand for quality goods at competitive prices has spurred an increase in cross-border online shopping.
Myles Dawson, Adyen’s UK Country Manager, points out that “In 2017 alone, Chinese consumers shopping for products outside of China spent an estimated average of USD 473.26 each, representing 4.2% of the total retail e-commerce market.”
Over half (55%) of these shoppers buy UK goods, “spending on average GBP 104 a month, with around two-thirds of Chinese millennials preferring Western to Asian brands.”
How can retailers take advantage of the holiday spending?
Offering the right payment method is essential. Chinese nationals will usually reach for their mobile phones to make a payment and not for their wallets. Most consumers either have a WeChat Pay or AliPay account that they can use for payments. These platforms offer a seamless and frictionless payment method and Chinese consumers prefer to pay in the same way when traveling abroad or when shopping on Western ecommerce websites.
As Mr. Dawson explains, “Delivering a seamless payments experience is crucial for businesses wanting to avoid being overlooked. With smartphones conducting the lives of Chinese shoppers, enabling them to pay using familiar regional methods will provide an experience that will not only build on retailer’s profits, but keep the shoppers spending in-store or online.”
In conclusion, by diversifying their payment options both in-store and online, retailers can expect an increase in revenues around the Chinese New Year, a period in which many Chinese consumers buy gifts for loved ones at home.