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The economic impact of the Chinese Traveler: Is your business ready?

Posted by Chad O'Connor  February 4, 2014 06:00 AM

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For decades, Europeans, and in particular, visitors from the United Kingdom were the primary source of international tourism in the US. China’s rapid economic ascent has radically changed this landscape. Chinese visitors to the US have increased tenfold over the past decade. Chinese travelers are now the largest spenders internationally, outstripping the longstanding leaders-- the Germans-- by a wide margin. In 2012, Chinese tourists spent an astounding $102 billion abroad.

Every business - hotels, restaurants, retailers, universities, real estate agents and attorneys alike - should take note: business won’t be as usual.

It may surprise some but China is the second largest country of origin for foreign visitors to the Boston area. In 2012, over 147,000 Chinese tourists visited the Boston area, against 207,000 arrivals from the UK. Swift action by the US business community and the Obama administration has reduced visa processing times for Chinese to a matter of days. This further fueled growth in travel to the US. As is, the number of Chinese visitors to the US is growing at an astounding 20+% per annum. Contrast that to European arrivals, which are largely stagnant and, in many cases, declining. Expect growth to accelerate even further as Hainan Airlines begins first-ever nonstop service in from Beijing to Boston this June.

But it’s not just numbers…it’s disproportionately high spending.

What catches the eye of most businesspeople is the sheer spending power of the Chinese tourists when they travel. To put this into perspective:

Visitors from Germany spent an average of $396 per stay.
Visitors from the UK spent an average of $459.
And visitors from China? A whopping $2,039.

Chinese visitors contributed $300 million to the Boston economy- hardly a drop in the bucket. Combine the rapidly growing numbers with a disproportionately high average spend and you have a trend that businesses will need to address strategically.

Why Boston?
Chinese tourists visit Boston for distinctly different reasons than the ones the city currently markets. They are less interested in the Freedom Trail and the Paul Revere House and more drawn to Harvard, MIT and Newbury Street. Shopping is a (and often the) primary reason for Chinese traveling to the US. Education is another. While a significant challenge facing Boston is encouraging Chinese visitors to stay longer (most are stopping over on a trip to New York), many call Boston home, or partial home at least. Boston hosts a large, affluent and rapidly growing student population, as well as parents that are eager to establish a foothold outside of China. They look for real estate and professional services- financial and legal.

Photo courtesy Chen Man / China Luxury Advisors

So how can your business prepare?
Granted, there is no single approach to attracting and engaging with Chinese consumers as every business is different in its positioning, budget and its exposure to the tourism market. But there are a few that have proven to be successful.

1) Make your business more Chinese consumer-friendly: Have a menu, signage, or a website in Chinese. Remember how that helps you when you travel abroad; the Chinese are no different. These are critical investments in the tourism industry and savvy ones for other businesses such as retailers, real estate agents, financial advisors or attorneys.

2) Invest in hiring Mandarin-speaking staff: Having Mandarin-speakers on staff is by far the best way to engage with Chinese travelers. It’s not enough to expect that visitors will speak English. While many may, they will inevitably be more comfortable speaking Mandarin. Additionally, Mandarin-speakers understand cultural norms and nuances best and can engage with customers most efficiently and effectively.

3) Engage with Chinese travelers via social media: It is critical to understand Chinese travelers are much younger than Americans or Europeans. They are also far more connected consumers. They research extensively online well in advance of their visit and are also connected when they visiting- sending photos to their friends of places they visit and products they buy. Provide wifi access, a brief mobile welcome or a description of your business. Platforms such as WeChat and Weibo can be powerful tools for local businesses looking to engage with Chinese consumers. Note that Chinese platforms are completely different from those in the West; Twitter and Facebook have their Chinese equivalents.

Of course, attracting and engaging with Chinese consumers is a long-term effort with ever-evolving best practices and rules of engagement. Yet the opportunities are immense; Businesses will need to broaden their strategic planning in order to capitalize on this tremendous opportunity.

Philip Guarino is a Partner of China Luxury Advisors, a boutique marketing and consulting firm with offices in Boston, Los Angeles, Beijing and Paris. CLA works with firms in the US and Europe to help them better attract and engage with affluent Chinese travelers.

[CORRECTION - February 5th, 2014 - When this article originally ran on February 4th, 2014 there was a mistake in the reporting of average spend per visitor. The author meant to say "per stay," not " per day" as was originally mentioned. The author apologizes for the oversight and this post has been updated by the editor accordingly.]

This blog is not written or edited by or the Boston Globe.
The author is solely responsible for the content.

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