Is Britain Taking Full Advantage of China's Tourism Boom?

    In order to benefit from Chinese consumers' love for British brands, there are several best practices that UK companies can adopt.
    London hopes to attract more Chinese tourist revenue. (Shutterstock)
      Published   in Finance

    London hopes to attract more Chinese tourist revenue. (Shutterstock)

    Last week, the prestigious Walpole Eastern Growth Summit in London saw dozens of British brands, tourist destinations, and retailers converge to discuss China's outbound tourism boom and what it means for the UK. Much like New York, Paris, and Tokyo, London has already seen significant growth in arrivals from mainland China in recent years, with around 200,000 visiting the city last year. By 2020, VisitBritain hopes that Chinese tourist spending in the UK will double to £1 billion per year.

    But as Chinese tourists celebrate easier 10-year visas to the United States and a well-oiled and efficient Schengen visa program, Britain's relatively slow and clunky visa system remains an impediment for the country's brands.

    Throughout last week's event, three key themes emerged, the first of which being differentiation. For British brands large and small, highlighting history, heritage, and "Britishness" helps them stand apart from the French or Italian brands that have flooded the Chinese market in recent years. Speakers noted that more sophisticated Chinese tourist-shoppers are now looking for different brands without a large footprint back home, with a particular focus on quality and craftsmanship. This is particularly beneficial for British brands, many of which are less well-known in China and thus less likely to be caught up in the ongoing anti-corruption crackdown than the likes of Gucci or Louis Vuitton.

    Another theme that emerged was the importance of catching Chinese travelers' attention before they leave China. Speakers cited research indicating that Chinese outbound shoppers make the majority of their purchase decisions pre-travel, making it difficult for brands to influence sales when on the ground in the UK. However, this may not be strictly true, as a growing number of younger Chinese travelers with friends or family in the UK will look to these individuals to recommend new brands or shopping experiences—meaning it's important for brands and retailers to market to Chinese tourists before they travel as well as during their trip.

    This second point leads to the third, which is that WeChat is becoming an indispensable tool to reach and influence Chinese tourist-shoppers. Numerous presenters at the Walpole summit remarked that WeChat has become the most important Chinese social platform for everything from push-based marketing to CRM. Although this is not exactly breaking news, anecdotally, the majority of number of small- to medium-sized British heritage brands appear to be new to this platform.

    Building on these three themes, three additional best practices are important for brands new to the China market or traveling consumer to understand: Timing, Target, and [Price] Tag:


    : If your brand is currently unknown in China, it's probably not a good time to enter the market with a massive marketing and offline retail push. Good retail space is hard-to-find and expensive, and you'll need a vast marketing budget to make an impact right now. Unless the appetite for your brick-and-mortar stores is clear in China, take a wait-and-see approach.


    : Instead of looking to change the consumer culture in China, take advantage of consumer trends. If Chinese consumers are making the vast majority of luxury purchases outside of China, sell to them outside of China. For smaller brands in the UK, it's probably a better idea to build relationships with UK-based students, more sophisticated regular visitors, and part-time residents, who will then influence their friends and family back home.


    : Many brands struggle with their pricing strategy for China, but whether they cut prices 20 percent in Beijing or not, brands will continue to see the majority of Chinese shoppers buy luxury goods abroad. In reality, a significant number of Chinese shoppers are less concerned with price than they are about value, meaning the brands that offer the best service and perks, and whose CRM fosters a loyal relationship, will remain popular regardless of pricing strategy.

    Avery Booker is a partner at China Luxury Advisors.

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