Growth Dragons Weekly: The World Awaits the Return of Chinese Tourists, but They Have Yet to Come Back
Here’s what happened in Growth Dragons this week:
The World Awaits the Return of Chinese Tourists, but They Have Yet to Come Back
China's Manufacturing Sector Returns to Expansion Mode
Hong Kong Stocks Hit an 11-Month Low
Chinese Electric Vehicle Manufacturers Closing in on Tesla
#1 The World Awaits the Return of Chinese Tourists, but They Have Yet to Come Back
This year's 'Golden Week' holiday in China spans eight days, concluding on October 6. CNN reports that an estimated 896 million domestic trips are expected to take place via various modes of transportation, including rail, air, road, and waterways.
Notably, this marks the first holiday season following China's decision in August to lift its ban on group tours to over 70 countries. Bookings for international destinations, especially Singapore, Australia, and Thailand, have seen a remarkable surge, with trip.com reporting a 20-fold increase compared to the same period last year.
The global economy has felt the profound impact of Chinese tourists who, prior to the pandemic, accounted for 15% of international spending. With the lifting of the ban on group tours, sectors such as Consumer Discretionary have experienced a surge. Travel agency Lotte Tour Development saw its shares spike by a staggering 25%, while luxury hotel operator Hotel Shilla witnessed a 14% increase. We can see that Chinese tourists held significant importance for these businesses.
Even the Prime Minister of Thailand personally welcomed Chinese tourists at the airport last month, sending a clear message of welcome to China. On September 13, the Thai Cabinet decided to implement a five-month visa-free policy for Chinese tourists, effective from September 25, 2023, to February 29, 2024. This policy covers China's Mid-Autumn Festival, National Day "Golden Week," New Year's Day, Spring Festival, Lantern Festival, and other holidays, aiming to attract more Chinese tourists to visit Thailand.
During this Golden Week, All Nippon Airways in Japan is fully booked until October 8-9 for flights from China to Japan. Many department stores in Japan, as well as in other countries, are gearing up for increased business, anticipating a boost in sales.
However, international travel has been slow to recover, while domestic travel has already returned to pre-Covid levels.
An ongoing poll on Weibo reveals that the primary reasons for reduced interest in traveling abroad are safety concerns, followed by higher expenses and changing income levels.
Safety concerns have risen, particularly for those traveling to Southeast Asian countries, which were top outbound travel choices for Chinese tourists.
From January to July 2023, the number of Chinese tourists visiting Thailand was only 1.83 million, marking an 84% drop compared to the 11 million total in 2019. Recent incidents, such as a shooting incident in Siam Paragon resulting in the death of a Chinese tourist, have contributed to these safety concerns.
Additionally, other Southeast Asian countries have been affected by recent scandals, including cybercrimes in Myanmar and human trafficking issues in Cambodia, tarnishing their image in the eyes of Chinese tourists to some extent.
We believe that geopolitical tensions may be a contributing factor too. Few people want to travel to a foreign country and spend money in an environment where they might be unwelcome. Both China and the world rely on each other, but political conflicts are making it challenging for everyone involved.