What Shanghai’s Tourism Expansion Means for Luxury

What Happened: Shanghai isn’t letting a global pandemic dampen its fun. This week, local authorities announced plans to double the city’s tourism revenue over the next five years, focusing on cultural tourism and digital events. Shanghai also aims to build 30 smart scenic areas and 600 smart hotels in 2021, as well as cultivate several top international tourism brands and flagship tourism events. 

At the opening ceremony of the Tourism Plus Shanghai 2021 exhibition, Fang Shizhong, head of the local culture and tourism bureau, said that Shanghai is an important window of “how the world sees China” and a significant link for domestic and international tourism cooperation.

The Jing Take: Although global travel is on the back burner, Shanghai’s tourism ambitions point to the staying power of staycations. The tier-1 city alone received 236 million domestic visitors in 2020, with revenues reaching $42.8 billion despite the impact of COVID-19. Nationally, the China Tourism Academy predicts that a total of 4.1 billion trips will be made this year, up 42 percent from 2020.

And where there is travel, there is shopping. With Chinese consumers unable to spend abroad, high-end purchases in the mainland more than doubled from 2019 to 2020, according to Bain & Co. As Shanghai is already home to flagship stores for many luxury brands, including Hermès, Louis Vuitton, and Dior, strengthening its tourism infrastructure should help these players see increased foot traffic — if, of course, they capitalize on the timing of these events and continue to innovate their retail experiences.

But repatriated spending isn’t great news for flagships in Milan and Paris that used to rely on Chinese tourists, or for smaller brands without a physical presence in China. While vaccine rollouts offer hope that the world may soon open up, brands shouldn’t hold their breath; rather, they should get busy pivoting to local tourist hubs because domestic travel, as Shanghai is banking on, is here to stay. 

The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.