1. Prof. Dr. Wolfgang Georg Arlt
Director COTRI
Influencing Luxury Shopping Behavior of Chinese Outbound Travelers to California

2. COTRI China Outbound Tourism Research Institute is the worldwide leading independent research institute for analysis, consulting and quality assessment relating to the Chinese Outbound Tourism market.
Headquarter in Heide/Germany, China office in Beijing.
Director: Prof. Dr. Wolfgang Georg Arlt FRGS Active in P.R. of China since Former owner of Inbound Tour Operator China->Europe COTRI founder and director since 2004 Professor at West Coast University of Applied Sciences
Exhibitors Workshop April 12, 2011

3. Consulting Services to Richemont North America, Inc.
Purpose
COTRI to assist with evaluation and research projects regarding the luxury shopping behavior of Chinese outbound travelers to California
Research tools
For the research two sets of research tools were develop and pre-tested in Los Angeles and San Francisco.
1) Half-open questionnaires as base for interviews with Mainland Chinese
Travelers visiting California about their shopping sources of information, preferences, expectations and actual shopping behavior.
2) Conversation guide as base for interviews with Chinese living in California about their experiences of shopping behavior of Mainland Chinese visitors.
Results
The results will be presented to Richemont as a trend indication and also used to further calibrate the research tools for a possible boarder survey

4. Global Tourism 2010: 6.7% increase of international tourism arrivals
Asia –Pacific region
20% increase year by year
Forecast for global tourism:
From 930 million to 1.6 billion travels by 2020

5. China´s Major Targets of the 12th Five-Year Plan for Annual average GDP growth: 7% GDP in 2015 (based on 2010 prices): 55 trillion Yuan (US$ 8.37 trillion) Proportion of service industry's output in GDP: up by 4 percentage points Release of major pollutants: down by 8%-10% Jobs created: 45 million Average growth of residents´ income: more than 7%

6. 2010: 57. 4 million outbound trips China is the No
2010: million outbound trips China is the No. 1 source market in Asia even without taking into account trips to Hong Kong / Macao For the second time in China: Outbound tourism spending higher than inbound tourism income

7. 2000: Global market share 1. 5% 2010: Global market share 5
2000: Global market share 1.5% 2010: Global market share 5.8% : One out of 67 international travellers originates in Mainland China : One out of 16 international travellers originates in Mainland China

8. Share of Chinese outbound travels during three quinquenniums (Source: CNTA / COTRI, no reliable data available before 1995)
More than 60% of all travels happening in last quinquennium

9. Chinese outbound travels projection for current quinquennium a) projected increase according to State Council planning b) projected increase if growth rate equals /

10. Visitors from China to USA 99 – 2009
Destination: USA
Visitors from China to USA 99 – 2009
ADS agreement between USA and
China officially started in 2008.
Mainland Chinese tourists arrivals
in 2010: 730,000 (NTA, up to Aug 2010)
Over 2 million expected by 2015 (NTA)
Source: USA Department of homeland security, Form I-94, Non-Resident Arrival Records

11. Temporarily home for more than 20,000 students
Most important destinations: California, New York, Washington DC.

12. How do Chinese citizens view the United States?
Words that commonly describe USA: dominant, successful and expensive. On the other side, unfamiliar and unsafe.
Motivations: seeing something new and different, learning and discovering, and experiencing a different culture.
Overall impression of the US (10 being the most positive): 7.68
Source: University of South Carolina, Research 2010

13. Destination: California
China: Seventh largest overseas market, 271,000 visitors in 2009, 51.6% of total visits to USA.
Average stay 16.9 nights, spend by visit US$ 1,606 per visitor.
Chinese visitors spend US$ 435 million in California

14. Activities while in the USA, 2009
Most common Metropolitan Statistical Areas visited by Chinese visitors to California, 2009
Activities while in the USA, 2009
Los Angeles (48%)
San Francisco (42%),
Hollywood /Melrose (33%)
Santa Monica (17%),
San Diego (12%)
Monterey/Carmel (11%).

15. While visiting California:
More likely
Be on their first trip to the USA
Visit casinos and go shopping
Travel for business purposes
Work in a managerial/ executive position
Spend a higher percentage on gifts and souvenirs and transportation
Less likely
Travel with spouse.
Visit small towns, national parks or tour the countryside.
Source: California Travel and Tourism Commission 2009

16. Market Segments Segmentation of market in
- low price/bad quality mass market
For the “Europe-from-the-Coach-Window” mass market there is still a queue of
at least 100 million Chinese waiting for their turn to get their photo in front
of the Eiffel tower.
and - “FIT” / “Semi-FIT”, ”MICE”, high-end market
"We didn't want to go on a group tour since these can be very rushed, taking in too
many countries over a short period of time. We think we handle independent travel
quite well since we were all in Singapore last Spring Festival when we also went to
Thailand. We think we will be able to get around Italy by ourselves.”
(China Daily )

17. March 2011: 457 million internet users in China 34% internet penetration rate.

18. Chinese luxury consumption worldwide
18% growth annually from 2010 – % From the total global luxury market.

19. Source: Market Probe Travel and Tourism
Luxury Market
Chinese millionaires
960,000 (Hurun Wealth Report 2011) 30% women
Average age: 39 years old,
15 years younger than Western
Chinese Luxury Tourists (CLT)
96% first/business air travel,
99% stay in four or five star hotels
Last minute holiday makers,
no seasonality, looking for safe, stable and
healthy destinations with good shopping.
Source: Market Probe Travel and Tourism
Group, 2011

20. China Outbound Tourism 2011
Good news – not only because of quantitative growth but also because of qualitative developments:
Political support for outbound tourism
Greater interest in in-depth travels
Easy access to passports and hard currency

21. 1. Political support for outbound tourism by Chinese Central Government:
On November 25th 2009, a State Council executive meeting chaired by Chinese Premier Wen Jiabao adopted the “Statement on Accelerating the Tourism Industry Development” which declared a planned annual increase of 9% for outbound tourism.
In the 12th Five-Year Plan for the first time the development of outbound tourism is actively promoted instead of being hindered by the Chinese government.

22. 2. Greater interest in in-depth travels:
“… one of the remarkable characteristics of China tourism in 2010 was the detailed market segmentation. When the normal tourism market was still the main component of tourism section, special interest groups were forming as well. Some special attractive long-distance and niche market focused tourism products which were offered by tour operators both inside and outside China turned out to be very successful.”
Prof. Zhang Guangrui
Development of China's Outbound Tourism 2010
in: Green Book of China's Tourism 2011
Niche market and special interest products offer opportunities to attract Chinese visitors

23. 3. Less bureaucratic problems from the Chinese side:
140 ADS agreements with all important destinations signed
Access to passports and hard currency relatively easy
Individual tourist visa agreements with Asian and some European countries
More choice of destinations and tours than ever

24. But complaints about many destinations:
Visa problems still existing
(Perceived) Safety problems given extensive media attention in China
Quality level often not according to Chinese expectations
Not enough visible dedication to Chinese market

25. Thanks - www.china-outbound.com and - www.chinatraveltrends.com