I2I GROUP travel shoppers act, behave and how their income affects their travel shopping tastes and spend. These uber travel shoppers earn their income largely through independent businesses; they own their businesses. Glos gives an example: “I once met a man on a flight in China who told me his company, which he founded about 15 years ago, manufactures over 100 million glasses, mugs and cups each year for sale throughout China and the world. His average profit margin per item is approximately 20 cents, which translates into US$20 million a year. He told me he loves to hear the sound of glasses being dropped and breaking in restaurants or bars.” No matter how the Chinese economy grows or slows in 2017, these businesspeople, these uber travel shoppers, will manage their businesses to their bottom line. If sales drop because of Chinese or global economic woes, they will simply cut costs, dismiss staff, etc. Their bottom line, their take home income each month, will not be affected. Hence their disposable income will remain strong no matter and they will continue to travel and shop.
Alipay and WeChat Wallet
“I live in China and I am really glad I don’t work in the credit card business,” says Glos. “To paraphrase a recent Nobel Prize winner, The payments they are a-changing!”
Alipay, the financial payment system of online sales giant Alibaba, and WeChat Wallet, part of Tencent (China’s largest company by market capitalization), own this world of mobile payments. Over 800 million people in China are using one or both mobile payment systems for virtually all of their non-cash payment transitions. According to Worldpay’s 2016 Global Payments Report, Alipay accounts for 44% of global mobile wallet spending and is on pace to reach 60% by 2020. “No matter if you are topping up your metro card, paying for a taxi, at a convenience store, checking into a hotel, buying an airline ticket or now shopping in Asia, Europe or North America – Alipay and Wallet are the way the Chinese consumer wants to go and so you need to follow,” says Glos. The reason for this upsurge in mobile payments? Glos says they are easy to use, cheap, and offer discounts and benefits. Unlike banks with capped interest and expensive transaction fees, Alipay and WeChat Wallet are not banks and unregulated. Hence they pay higher rates of interest to the customer, take no fees, and offer cash discounts and loyalty incentives. It’s an easy choice for the Chinese global shopper. In 2016, China will generate over US$1,700 in mobile payment volume per capita, compared with US$475 in the US. In real terms, this is over US$2 trillion.
Premier shopping destinations for Chinese include New York, Paris, Los Angeles, London, Singapore, Tokyo and Seoul
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“If you are opening a WeChat store, or want to offer China home delivery, prearrival shopping to independent travelers, or just looking to be very China friendly, you need to take Alipay and Wallet,” says Glos.
The Trump effect
Chinese global travel shoppers can be fickle. As seen over a year ago, European terrorism impacted travel choices for all tourists and particularly the Chinese, who are especially risk averse and safety conscious. If hot words between the US and China under President Donald Trump translate into hotter deeds by either country, it’s logical to assume that Chinese travel shoppers will shift their travel plans to locations perceived or propagandized to be more appealing and welcoming to Chinese travel shoppers. Two years ago, exchange rates propelled the Chinese to Japan and South Korea because global luxury brands were underpriced by shifts in exchange rates. Suddenly stores in Tokyo’s upscale Ginza district were awash with Chinese shoppers. No matter what happens politically, the Chinese will still travel and shop. The only question to be determined is where. Smart brands will watch these trends and monitor travel and spending behavior as the political temperature swings, concludes Glos.
Alexander Glos, CEO, i2i Group