Moreover, Marseille has a significant soft power among Chinese people, which is especially apparent in football, film, literature, and beauty. Famous brands and products from Marseille such as Marseille soap and wine and brands like L’Occitane, Compagnie de Provence and Le Petit Marseillais have a glowing reputation in China. Meanwhile, businesses like Airbus Helicopter and CMA CGM are flocking to China, strengthening Marseille’s metropolis position.

Data source: Statista, arrivals of tourists from China (including Hong Kong) in tourist accommodation in France from 2012 to 2018

The Chinese perception of Marseille

Why are Chinese so enthusiastic about this Mediterranean city?

As a port-hub originally founded by the Greeks, many Chinese associate Marseille with the Mediterranean, beautiful landscapes and French fashion. But beyond these superficial perceptions, Marseille and China have deeper connections.

Since 1987, Shanghai and Marseille have become sister cities. Moreover, the 2018 Belt and Road Initiative conference was held in Marseille, boosting Marseille and China business investment.

Politically, the establishment of Chinese consulate-general’s branch office in Marseille demonstrated this city’s political significance for both countries. In terms of education, Aix-Marseille University has opened a joint institute with the Wuhan University of Technology in China, and the kedge Business School shares executive partnerships with Shanghai Jiao Tong University. Relying on its innovation dynamics, Marseille is upgrading its image and becoming more familiar to Chinese people.

Qualitative analysis of Chinese perceptions of Marseille

Source: Baidu index of Marseille 马赛 Chinese perceptions of Marseille

Chinese people’s discussion scope about Marseille centers on its popular tourist spots, cultural activities and products. Besides Marseille, Chinese tourists also show great interests in other cities in South France like Nice, Gannes and Provence. As for cultural activities, Marseille’s football matches are absolutely a sensation in China. Chinese netizens also frequently search for Marseille’s brands and products like Marseille soap, L’Occitane and Compagnie de Provence.

Source: Zhihu & Weibo, Chinese people’s various concerns about the security in Marseille.

However, Chinese tourists consider Marseille to be poorly policed. This is due to frequent demonstrations, thefts and robberies. Plus, Chinese tourists’ inclination for showing off wealth makes them more susceptible to pickpocketing. “Is it really safe there?”, “Are there many thieves?”, “Are manifestations of the yellow vest movement over yet?” such queries are often present in Marseille related posts on China’s social media. In fact, the security of France has been negatively reported by media in recent years, not just Marseille.

Footprints of Chinese KOLs in Marseille

Source: Red, Online social gathering with Chinese KOLs in Marseille

Recommendations and sharing of KOLs about Marseille largely direct Chinese people’s perception of this city. By focusing on Chinese social media like Red, Weibo and WeChat, Chinese KOLs have great interests in seeking excitement in Marseille. They like experiencing new situations and unique trips. Thus, exploring niche and wild landscapes like Verdon Gorge Grand Canyon, Calanques national park and seaside villages are their fondness. Because they can give their voice of loving life and chasing uninhibitedness by conquering desolate places. Just like a popular traveling blogger on Red shared, “I love the feeling of freedom and unfettered.”

Chinese KOLs also have a craze of sharing their liked local delicacy and shopping. “Traveling isn’t just about taking in beautiful scenery, it’s also important to enjoy local cuisines”, a Chinese traveling and food blogger commented on Red. Besides, it is indispensable for Chinese KOLs to take photos to record impressive dining experiences. And they will caption it “attendance (打卡) in an internet-famous restaurant”. If they find any adorable products and brands, they will also share them on social media. For example, Marseille soap, Le Petit Marseillais and Compagnie de Provence is harvesting more Chinese consumers through KOLs’ recommendations.

Marseille’s cultural output towards China

China has one million Olympique of Marseille fans

If you ask a Chinese football fan about their impression of Marseille, the answer will definitely be this city’s team, the Olympique of Marseille. Through leveraging China’s social media, this football club has attracted nearly a million followers on Weibo.

Besides, Marseille’s legendary player, Zidane also opened his personal account on Weibo in November 2018 and has more than 212,000 followers. Beyond its digital strategy in China, the Olympique of Marseille is also active in offline promotions. In 2018, it created a fan club in Shanghai. The president of the club Jacques Henri Eyraud attended the ceremony and said: “The establishment of this Shanghai fan club is the first step of entering the Chinese market, and we hope to have more comprehensive and in-depth cooperation with Chinese fans in the future.”

Source: Weibo, Chinese poster of the Olympique of Marseille

Marseille films rank highly in China, which in turn, puts the city in the map in modern Chinese literature

Marseille’s cultural output towards China goes far beyond sports. Marseille’s films, music and literature are also influential to Chinese, partly thanks to French filmmaker Luc Besson favoring Marseille as a location for film shooting. The symptoms of this city’s intense renovations in the 1990s were indicated in the action film series Taxi, which were highly appreciated by Chinese audiences. Douban, China’s authoritative film rating site, gave the Taxi series a 7.8 / 10 rating, same as the contemporaneous French film Jeux d’enfants (2003). In literature, French writer Alexandre Dumas’s magnum opuses, like the Count of Monte Cristo, the Three Musketeers and the Man in the Iron Mask, inspired many Chinese readers and draw them to visit Marseille. Additionally, there are also many depictions in Chinese novels about this city. For example, Chinese popular scientific fiction the Three Body Problem mentioned Marseille as a large-scale science research base.

Source: Douban, Chinese poster of Taxi 5

Chinese tourism in Marseille

Chinese tourists’ top destinations in Marseille

Ctrip lists the top three attractions of Marseille for Chinese tourists by three categories: popular landscapes, must-see museums and historical discovery. Known as the most beautiful canyon in Europe, Verdon Gorge is considered by Chinese visitors the most beautiful local place. Boating on the Sainte-Croix lake is a must-play activity for them. Another popular destination for the Chinese is the Château d’If. In center city, Chinese tourists like to take pictures in the old port and soak up the atmosphere of its fish market. Besides, the Notre-Dame-de-la-Garde basilica, the Panier district and numerous museums are preferred by Chinese tourists as for picturesque facades and historical value.

Source: Ctrip, ranking of landscapes and tourist sites in Marseille

Chinese tourists’ eating, living and shopping in Marseille

Restaurants serving local food, like Panisse, Madeleines and Moules Marinière, are popular with Chinese customers. O’Bidul, a seafood restaurant with authentic recipes and heart-warming service, is appraised by Ctrip as the most popular restaurant.

China’s wealth inflation allowed Chinese tourists to splurge on luxury hotels in Marseille. The hottest hotel in Marseille for Chinese tourists is InterContinental Marseille Hotel-Dieu, of which the cheapest room charges at least 30,000¥ for one night. In addition, Chinese tourists increasingly adopt Airbnb is as a cost-effective accommodation.

In terms of shopping, there are many super malls like Galerie Lafayette, Les Terrasses Du Port and Centre Commercial Bourse, which can satisfy Chinese customers’ various fashion demands. Also, many Chinese tourist make bulk purchases at local pharmacies and boutiques.

Source: Ctrip, ranking of hotels, restaurants and shopping malls in Marseille

Chinese interest in Provence, France was sparked by a soap opera

Lured by clusters of mauve flowers, Chinese tourists are conquering Provence in the form of sightseeing. Every July and August, groups of buses carrying thousands of Chinese visitors crowds the country lanes. Many French medias has reported Chinese people’s obsession with Provence, and are surprised they don’t go to Paris, but yearn for this remote landscape.

In fact, this Chinese craze stemmed from the Chinese drama shot in Provence, Dreams Link (一帘幽梦), which was on screen between 2007 and 2008. The lavender and sunflower fields, the French castles and the pure sky had root in the memory of the Chinese the frame of a France more romantic than ever.

Source: Xiaohongshu & Weibo, Chinese tourists are conquering this purple land

There is no doubt that the Chinese boosted local economic development. They are bigger spenders than other foreign tourists. In Provence, the average daily expenditure, excluding hotels and meals, of the French is about 60 euros, for Americans it is 97 euros, however, for Chinese it is an amazing 170 to 300 euros. Hence, local tourism beneficiaries adopted various strategies to cater for Chinese tourists, like making everything in lavender purple, adding Chinese instructions in billboards, and promoting special souvenirs. Additionally, Provence has become the Garden of Eden for Chinese couples. In recent years, the trend of holding wedding or spending honeymoon in Provence is soaring for Chinese people. Because the Chinese translation of Provence includes the character Wàng (旺) which means ‘prosperity’.

What you should know about Chinese tourism in Marseille

Along with the boom in traveling abroad, China’s tourism is undergoing a consumption renewal towards niche destinations and customized tourism. Under this circumstance, knowing how to effectively reach these increasingly sophisticated travelers is a strategic advantage for Chinese tourism stakeholders. Digital marketing is an effective channel, and there are so many platforms to choose from. In combination with a KOL marketing strategy, niche and lesser-known destinations can put themselves on the radar for Chinese travelers. As demonstrated by the success of the Olympique of Marseille, Weibo is useful to accumulate consumer awareness in China.

Additionally, Xiaohongshu can also be leveraged to promote destinations including stores, restaurants, and hotels. WeChat is also not to be overlooked, not only running a WeChat account for promotion, but also local vendors can set up WeChat pay for Chinese tourists in Marseille.

Source: Zhihu, digital tourism marketing channels in China

The economic links between Marseille and China

Beyond its tourists, China’s businesses are flocking to Marseille.

Marseille’s economy is surging under the cooperation with Chinese companies. Many international groups having long traditions of working in China such as Airbus Helicopters and CMA CGM shipping. Chinese magnates such as Weichai Power, PetroChina, Watchdata Technologies and Tinno Mobile have all invested in Provence. In March 2019, Marseille-Fos gained a 105 million euros investment from Quechen Silicon Chemical to build its European silica factory. This expensive contract is one of the largest Chinese greenfield investments in France.

Now, many Marseille-China direct sea and air routes are planned.

Along with Marseille’s transportation connections being expanded, more investments from China will be boosted. “With its unique geographical location and abundant resources, Marseille can play an active role.” Fei Zhaohui, president of the Paris branch of China’s Export-Import Bank, said at the 2018 Belt and Road conference in Marseille. In the future, Marseille-China trade will advance as Marseille can act as a bridge between China, south Europe and North Africa.

The popular industries, brands and companies of Marseille in China

Competitive advantages of brands and products from Marseille in China’s market

Skin care products

Soap produced in Marseille is a well-known traditional craft for Chinese. It boasts a high reputation in China by means of its beauty benefits and scents of olive oil or lavender. Now, Marseille soap is more than a must-buy cosmetic for Chinese tourists, as it is a symbol of the city.

Le Petit Marseillais and Compagnie de Provence, niche skin care brands in China, are extensively shared by Chinese beauty bloggers on social media. These two brands’ shower gels have attracted many loyal Chinese customers because of their various and innovative fragrances. Many second-time purchasing customers commented that they love their attractive aroma. However, without accessing China’s market, the main purchasing channel of these two brands for Chinese customers is through Daigou or Haitao.

Source: L’Occitane, L’Occitane’s KOLs strategy in China.

If Marseille’s skin care products are the crown, L’Occitane is definitely the pearl on top. Now, China has become L’Occitane’s third biggest market in the world with 197 million euros sales revenue in fiscal year 2020, behind America and Japan. Its success is attributed to its digital and KOL marketing strategies in China. Vigorously participating in China’s various e-commerce promotions, L’Occitane focuses more on online selling. In Chinese ‘6.18’ online shopping carnival, relying on its high customer reputation and imported brand property, L’Occitane’s turnover increased by 170% compared to 2019. Meanwhile, it leverages Chinese celebrity influence to acquire more customers. Among 100 comments of its popular hand cream, 54 purchasers spoke bluntly that Zhu Yilong, the brand ambassador of L’Occitane, was their buying stimulus. This Chinese male star has acted in several popular Chinese TV series and films, and he has 25 million fans on Weibo.

Data source: Digitaling, L’Occitane’s relative comments and activity on China’s social media.

Alcohol        

Chinese wine drinking habits are changing at a quick pace. However, China’s national wine production has plummeted, and the demand of imported wine has soared. Under this circumstance, the unique geographical advantage makes wines from Provence highly appreciated by Chinese consumers. From January to June 2019, France is China’s second largest wine exporter with 351 million dollars total annual in exports.

Hence, as one of France’s prominent wine production zones, Marseille has great potential in China’s wine market. French wines & spirits giant Pernod Ricard is penetrating China’s alcohol market. China accounts for 9% of Pernod Ricard’s net sales, becoming its third largest market in the world. Additionally, its turnover in China increased 21% in fiscal year 2019, while Chinese baijiu and whisky showed robust momentum. Additionally, targeting China’s strongly evolving spirits market, this alcoholic drink tycoon has accelerated its layout in China. Pernod Ricard’s whisky distillery in Sichuan, as China’s first spirits factory with foreign investments, started the construction in 2019, and the production is scheduled to start in 2021.

Source: Pernod Ricard, Pernod Ricard’s business in China

Logistics

CMA CGM China (达飞轮船), a subsidiary of Marseille’s CMA CGM Group, has served 28 years in China. With 51 offices nearly covering all major port cities across China, CMA CGM China has evolved into an industrial leader. It implements “Customer Centricity” strategy to provide high-quality, customized and cost-effective shipping solutions for Chinese customers. Beyond an industrial giant, CMA CGM China is committed to environment protection and marine biodiversity preservation by reducing carbon discharge. Besides, in order to facilitate customer serving process, CMA CGM China has opened its official account on WeChat, which allows customers to discover more about them and submit LOI documents remotely.

Source: CMA CGM, key figures of CMA CGM China

During the COVID-19 outbreak, CMA CGM Group proved its resilience and team’s expertise. Due to Chinese government’s strict measures to restrain the epidemic, CMA CGM China’s business suffered an obvious decline. Shanghai Yangshan Port, China’s busiest port, saw a 17% plunge in cargo volume under the impact of COVID-19. However, CMA CGM effectively controlled its cost and limited the volume shrinkage at optimistic 4.6%. Moreover, its operating margin surprisingly increased to 13.5% and realized positive net result of USD 48 million in the first quarter of 2020. Besides, CMA CGM Group has donated 50,000 FFP2 (EU N95 standard) masks to China to help Chinese government in controlling the pandemic, which reflecting its close bond with China and a great sense of social responsibility.

Source: CMA CGM, CMA CGM Macro Polo’s call in Chiwan (China)

Future prospects for Marseille and China

Marseille is the fastest growing interconnection hub in Europe, and it is striding towards a metropolis leading the world having close contacting with China. Yet Marseille has showed its significance in the diplomacy, and it will be strengthened with Belt and Road policy’s further implementation. As for tourism, Marseille is one of Chinese tourists’ top destinations, aiding local economic advancement. Meanwhile, relying on its geographic advantages and abundant resources, this port city will be more attractive as a goldmine for Chinese companies to invest there. Contrary, although the organization and HR of Marseille’s famous brands and companies in China were impacted by the epidemic, they will certainly be more competitive in China’s market following the country’s economic recovery. If you want to know more information about China’s market, please send e-mail to dx@daxueconsulting.com

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This article Marseille and China: A cross-sea bridge connecting France to the middle kingdom is the first one to appear on Daxue Consulting - Market Research China.

Find here the China paradigm episode 95. In this interview, Sophie Sun, Founder and CEO at TravelRight tells how her company targets Chinese outbound travel to Europe and delayed flights of Chinese passengers with a unique business model.

Full transcript below:

Hello everyone. This is China Paradigm, where we, Daxue Consulting interview season entrepreneurs in China.

Matthieu David: Hello everyone. I’m Matthieu David, the founder of Daxue Consulting and its podcast, China Paradigm, and joining me today is Sophie Sun, the founder and CEO of TravelRight. TravelRight is a company that helps you to get your money back when there is a problem with your travel and we are going to try to understand how the product is built. Is it an interesting product for the delayed flights of Chinese passengers? Is it a product that helps you claim your rights toward those airlines and any travel agents or intermediaries? Let’s look at a few numbers. What I didn’t mention, but it is obvious that we are focusing on China. It is travelright.cn and we focus on China. So, let’s look at what it is to work in Chinese outbound travel to Europe. We talked about a market which is not as big as what we could think of when we think about the 1.4 billion inhabitants, but which has been growing very, very fast and very steadily. Now, we talk about 165 million outbound travels. That’s a common mistake to think of is that we very often are confused about travelers and travels. The statistic we are talking about concerns travels. So, the number of travels is much lower and the number of Chinese having a passport to travel actually is still low contrast to the population, so there is a lot of room for growth. That’s something everyone is looking at even though with the current situation. I think they are going to slow down, certainly in 2020. We talked about 35 million flight tickets bought and as a pillar of protection and I am talking about that; the protection because that’s where you are playing. It is with the protection of the consumers. So, thanks for being with us, Sophie. You started TravelRight 2 years ago if my information is right. Before starting TravelRight, you had been working at a very, very big company called Alibaba for 3 years and that’s something we will look into is what you learned from Alibaba to start your business. So, thank you, Sophie, for being with us and the first question is, what is your company doing?

Sophie Sun: Hi Matthieu. Thanks for giving the interview.

Yeah, you are perfectly right. You did very deep research. TravelRight is a bond for helping Chinese outbound travelers when they come from a very difficult situation like flight delays, flight cancellations, luggage lost and delayed flights of Chinese passengers a passenger ride is not of use. No one is aware that they were protected and even if they know, they don’t understand how to file for that. My job is to understand their difficulties and give them what they want and the solution is very easy. If the flight is delayed, the passenger just needs to come to our website travelright.cn and file their claim telling us what happened, and then they get their money back. So, the procedure is very simple. They delegate all the rights to us to talk to the airlines so they don’t need to handle the hassle by themselves and our business model is very interesting. We don’t charge anything until we get paid from the airline. So, passengers don’t need to take any risk. It is actually what we say is it is a minimal risk when you want to do a claim with the airline. A lot of passengers actually try by themselves because they want to get full compensation for the delayed flights of Chinese passengers, but finally, it comes back to us. So, I think the business is very interesting for Chinese outbound travel to Europe. 

Matthieu David: Thanks for the clarification. Actually, I have got a sense initially when I read what you do. TravelRight would be an insurance company, but actually, I think it would be wrong to say that it is an insurance company. It’s about the defense of the consumer. It’s a company that actually helps consumers to apply their rights, to claim for their rights and claim for the money they can get back. So, what I understand is that people don’t have to subscribe to anything for your service. Are you taking a commission on what they get back or what is your business model? 

Sophie Sun: Yes, you are right. So, because we have partnered with insurance companies; that is why they give us a word or a tip. In this product today, we only charge the service fee when we win the case for delayed flights of Chinese passengers. The customer doesn’t have to register anything. 

Matthieu David: I see. So, what would be the way, how do you make money?

Sophie Sun: Yes, just a successful theme. Once a case wins, we charge 30% as our service fee; 30% of the entire compensation. So, for example, if there is a delayed flights of Chinese passengers and you file a claim. You don’t pay anything in advance and while we get money from, for example, Air France for your delay and we take 30% for us and we transfer the rest of the money. So, you are getting 70% without making any effort. 

Matthieu David: I see. I understand. So, who do you define as your clients? 

Sophie Sun: My clients obviously are passengers of delayed flights that do Chinese outbound travel to Europe.

Matthieu David: Okay so, the people who are paying for your service you consider people who are actually; you take the commission from your clients. The environment has a lot of players. You have OTAs, you have airlines (learn more on how Chinese airlines are reacting after the Covid-19 crisis), you have the insurance companies who are actually covering the cost, sometimes reimbursing others and that may be actually the companies you are contacting to get the money back. So, would you mind telling us a bit more about China’s travel ecosystem and how you work with this China’s travel ecosystem and the product? 

Sophie Sun: Sure, so as you know in the travel industry in China, it is totally different than outside of China. That is why a lot of European people; it can come to compete with us directly in the China market, easily. The reason why is the China’s travel ecosystem is different. First of all, from the user behavior we don’t book flight tickets directly with the airlines so often. More than 70% of flights were booked online by online travel agents’ websites as we call them OTA and today actually, we partner with OTA to find delayed customers and that is our B2B2C model and this model is very light landing. So, we don’t need to invest massively for the B2C market which is very, very difficult to target a delayed customer today in China. So, the B2B2C is a faster way to reach our passengers and so obviously the insurance, in the beginning, the insurance company will really be surprised by their solution because what if they compensate the customers once the flight is delayed? It is not a lot of money because so much delay happens in China and the compensation is obviously very little. So, in China, if you buy delay insurance, it’s costing you let’s say 30 China Yen up to 200 China Yen. 200 China Yen is mostly for the national delay and that money; if you are delayed and the delay condition is very high; like more than 4 hours delayed or 5 hours delay. You only get up to 600 Euro compensation. Compared to what you get finally and with all the conditions; it just encourages passengers to protect themselves by their delay insurance, but regardless of all those, delay insurance is super popular in China because Chinese passengers will allocate it by the market and a delay happens every day. So, they have a high chance to travel out with a delayed flight. So, they must buy insurance to protect them. So, every time while we are talking to the passengers, telling them we have a solution, getting your compensation, etc. The first question they ask is, “How much do I have to pay in advance?” I tell them, “No, you don’t need to pay in advance. We are under insurance” and they say, “Oh, I am surprised.” So that’s just to explain to you what the reaction is from the passengers or the players in the market. 

Matthieu David: With OTA; how are you incentivizing them? Are you sharing commission or it is an add-on for the client so they are happy to add you on their website ad talk about you and mention you? How is cooperation?

Sophie Sun: Basically, OTAs don’t want to disturb any passengers while the solution is not valuable. So, they want to minimize it and so they don’t disturb any of the people. They don’t push messages to everyone, of course. They are only targeting delayed flights of Chinese passengers and then they have a condition. Of course, we want to target more than 3 hours delay because when there is more than 3 hours delay, we have a higher chance to get compensation and the cancellation now, so there we will see in-depth if their flight is illegible or not and give them compensation for the online travel agent. So far, most of OTA didn’t ask for the money. The reason they cooperated with us was not for money, initially now so far. So, some OTA even never discusses compensation for their part while working with us. So, actually, I think Chinese OTAs have a huge competition between each other and they want to be a unique service offering and value-added service to their passengers in China’s travel ecosystem. I think that’s the reason why they work with us and plus, we have a double culture. See, both have an organization power and a proficiency. We are professional in terms of asking for compensation with the airlines and they all trust us by sending their customers to us because our customer service in travel is perfect.

Matthieu David: You say one of the first OTA you worked with is Ctrip. Would you mind sharing with us how you can work with such a huge company when you start your business if I am correct? Is it Ctrip?

Sophie Sun: Yes, well not only Ctrip. We worked actually working with most of the OTA so far, and the reason for this is…

Matthieu David: So, the ones we know are Ctrip, Sky Scanner; who else? 

Sophie Sun: Sky Scanner hasn’t worked with us yet. So, if anyone knows Sky Scanner, please reach out to us. I think we are mostly working with… yeah, local-based. Let me explain to you why. I understand a lot of people are curious about that. In China, first of all, every company start-up; because digitalized life didn’t really start like decades ago. It just started ten years ago. Every company is new and because we understand every business has a day one. So, we actually are very open to all the styles, and sometimes you know, when we have start-up’s we actually focus more on the customer needs because that is why a start-up exists. We have discovered new needs and that’s why large companies actually appreciate innovation (learn more about innovation trends in China) and their service-focused startup and we are just arrived at what do they want to partner with and that’s it. I mean, a European country like in France; the start-up needs to prepare for years and then be able to sign their large company like Expedia and as you know like Expedia, they of course… our industry in China; we also are the biggest in the air service and I don’t know other ones; probably very tiny and they also take a look into our service quality; how we handle the claims with other OTA in China’s travel ecosystem. So, a lot of check-ups by the big companies, but they are convinced about our service.

Matthieu David: I see. Does it mean that for every single city traveler whose flight is delayed; they would actually be suggested to contact you or your company? 

Sophie Sun: Not everyone. It is only for serious delayed flights of Chinese passengers or cancellations. So, those other customers really need us and we don’t want to disturb every passenger. When any passenger flies to Europe, they should be aware of this regulation. 

Matthieu David: Good. We understand your product. You are basically helping consumers to activate their own consumer rights in Europe in case of Delayed flights of Chinese passengers. You are focusing on Chinese outbound travel to Europe and specifically for Chinese travelers. Is that correct?

Sophie Sun: Yes, that’s correct.

Matthieu David: Talking about the size of the company; would you mind sharing a bit where you are in development in terms of teams, offices, revenues if you can share, number of clients? You started two years ago. You are not part of Chinaccelerator. We’ll talk about that later on, but what about the size of the company?

Sophie Sun: So, my company; we first registered in 2018 and that is the time… five months after I resigned from Alibaba in France (learn more on how Alibaba is conquering Europe) and so I was based in France before. So, the initial team was recruiting in France and we were just coming from Hong Kong also and then we registered this company in China once SOSE decided to invest in us. So, our team; we have two teams. One is in France and another one is in Shanghai and there is a team in Shanghai because of our OTA partnership so, we have most of the people here. We have airline relation teams to make sure all the claims get welcomed and communicated with the different airlines and both in China and also in the west of Asia because we didn’t only receive a claim from China. We also receive claims from Asia and we have our customer service team, obviously. Customer service; we don’t really recruit local Chinese. We actually recruit international Chinese. So, they both understand how to handle the claim and also talk to the client directly. So, they understand and they are mostly having experience traveling abroad and so they understand the pinpoint for Chinese outbound travel to Europe. So, also customers can trust them easily. Another team is we call it the BI team is Business Intelligence and the Business Intelligence team is very important in our business because once we handle like if we hand 20 clients per day, it doesn’t require a lot of automation and data support, but once we handle more than 200 per day; then that’s something like really we need to focus our automation on and other data analysis, data support is very important for our industry. So, my BD team is only me. So, they don’t call me the CEO of the company. They call me a BD. I think since I was working for Alibaba so, I understand what is the big company needs, who they trust to work with, what type of partners they are searching for if they want to work on these surveys and so I think it is perfect to understand their situation and their concerns. That is why I can let them trust us and move the first one.

Matthieu David: So far, how many clients have you helped get a claim back?

Sophie Sun: We can’t disclose these numbers because we signed obviously there is a large hand that we don’t want to tell and it is not okay to tell because we signed an NDA for these parts. 

Matthieu David: Okay got it. How many do you estimate you could reach? What is the size of the market; the number of delayed flights with Chinese passengers or claims you could get? Do you have an idea of that?

Sophie Sun: So, obviously that’s something we need to verify in day one as entrepreneurs. So, we have a team that do Chinese outbound travel to Europe and there are 1.5-2% of flights that are seriously delayed or cancelled and since between China and Europe, it is mostly in line with up to 600 Euro compensation. So, the market is actually quite big, but we need to target the right passengers because it is not every Chinese that’s going to fly to Europe. China is big and yeah; the number in China is… let’s say it’s the same number as in Spain or in Italy because we are entitled to a bigger compensation if the number of travelers is large enough and later since we can potentially be the other OTA relation such as the South Korea market and Japan market and putting South Korea and Japan market together is actually possibly half of the China market. It is quite big and also Taiwan and Hong Kong are very interesting for us.  

Matthieu David: And it’s a growing market. The thing is that the numbers from China are still lower than they were saying in the beginning, but it is growing fast. It’s slow compared to the population, compared to the US. The penetration rate of traveling has… the activity is still low in China, but growing rapidly and certainly is one of the biggest markets in the coming decade. So, we talked about the product. Now, we know what you do, we know how you do it as well and we understand your business is B2B2C as you said. You go through intermediaries; you get it from the user which is using your service and gets 70% of the claim and you keep 30%. I’d like to talk more about how you discovered this opportunity? You said you were in France at the time, but how did you dig in and find out that that was something you could do and it would be relevant to do? We’re talking about Europe now. Bank one as a lawyer, for instance, to understand all of this. How did it come to you? 

Sophie Sun: Yes, so I was a big traveler and I love to travel and I think the travel experience for me is the most important in my life. I want to protect it and I want to keep it pleasant and less hassle. I think it’s for my personal hobby and interest it makes 100% sense to me to work in China’s travel ecosystem. I saw a lot of things and I since I am a Chinese living abroad, I understand what a Chinese feels when they travel outside of China and what they really need and they always make me think about, “I need to go for a better startup to help people solve their pain points.” So, why Chinese outbound travel to Europe is because I was living there and I understand the ecosystem there. I can build a partnership easily there. I think while I was working at Alibaba actually, there is an interesting story. We have a lot of Chinese people traveling to Paris and everyone has a different story and I think the most hazard that is happening is air travel and lost luggage, delayed flights of Chinese passengers, cancellation of the bookings; all those are really disturbing people and it can destroy the entire journey. That’s why I think working and I was working for an Airbus project before. So, for the air business, I don’t think it is like a mystery for me. For the air business, it is very simple. We understand how they operate, how the airline operates, what is the most important thing for them etc. So, for me solving the pinpointing in air travel is quite interesting. So, all putting things together and then one day while my friend told me, “Hey Sophie, I’m thinking about one idea for a very long time.” He presented an idea to me is that there is an idea in our company, actually. I mean 60% is for like our business and then I check the competition and I talk to the OTA’s and I say, “Okay there is a market. Let’s do that” and so, that’s why our product is number one and it doesn’t mean we will stop here because I think since the Chinese outbound travel base is huge. It’s like one hundred and we have thirteen million in travel to Europe, but that is only 15% of entire flights of outbound travelers and we want to protect every passenger; their rights and we want to not only compliment them after or help them with their flight delay or cancellation. We want to change or re-schedule and we want to also help them handle their luggage hassle and those are really important for a traveler. Let’s say this is just a… in China this is just for that number one and we believe it’s amazing what we can do together with OTAs to help Chinese travellers travel with a better experience thus improving Chinese outbound travel to Europe.

Matthieu David: I see so, I understand that you have a lot of people coming from Alibaba and you found out that they were very annoyed by the delays, loss of luggage and so on and other travel that you knew you could get paid back part of it and you saw there was an opportunity. I get that. You said that you worked for Alibaba for more than 3 years. I looked at your LinkedIn profile. I found out there was like two years and in France, you had been one of the first to join Alibaba in France now which is quite well established and gets a lot of visibility. What did you learn at Alibaba that helped you to start your business? I am asking you that because I have seen so many people with a profile to write Facebook headlines ex-Alibaba or ex-Google and I am always wondering how and why is working in such a company such a statement; as much as getting a degree, as much as it is defining yourself because people use it to define themselves on LinkedIn. So, what did you learn at Alibaba which could now define yourself and change yourself to start this business?

Sophie Sun: Yes, so people gain different things from different experiences. No matter who Alibaba was and who I worked with and which lawyer I worked with; I think if you understand what you want to get, which value you want to contribute and with those objectives, people can learn better than a lot of people. So, people’s learning skills are different. I believe you agree with me and that’s why I met with you today. See, Alibaba is valuable and they taught me, it is a cultural difference and a huge difference. So, I think still Alibaba is not the best example to go abroad. Facebook is western culture. Amazon; yes, but not Alibaba yet. The reason is that the Chinese culture is very strong. We have uni-culture and that culture doesn’t seem to really work very well with European culture and another thing that I found out is that China is big enough to make Alibaba grow very focused on China. They are just the focus in China. Internal needs are already huge. So, for them like going outside of China… for me, it is not really something essential. Well, others make like Alibaba’s decisions. Ours is very unique to any other country. I see the pain points and I learn from that and I said, “I want to build a company that is different” and the culture (learn about the corporate culture in Chinese and MNCs) should be really international. That’s why I think I built a team in France. I recruit mostly Chinese people and why I built a team in Shanghai is because I recruit mostly western minded workers. My team is very international today and the culture let’s say we can both recruit in Chinese locally. We have a Chinese customer service lady who didn’t speak very well English in the beginning and finally, she got along very well with the people in the team. So, I think we have done very well. By learning from Alibaba, I will have the culture and it is really important in the business or in our day one and the second thing I learned is no matter the company; how big it is, how powerful it is. They need to understand local needs. So, local needs mean, when you want to serve people from France, how, why, what do they need? I think if you have never lived there, you will never understand. So, putting yourself in the shoes of the travelers; international travelers in the different countries is really important.  

Matthieu David: So, what I understand now is that what you learned from Alibaba is that culture is actually a sizeable part of the business. So, it is a sizeable reason why you may fail or succeed in business or you may have the idea and play well with the idea; the initial idea. What you did say opened my eyes to a couple of things. I was always surprised at how people who are not technical developers would write on their LinkedIn profile ex-Google or ex-Facebook which are companies where people would find our technical people, but what they may have learned is a culture of innovation, which makes them different or like a new degree. So, give me an understanding of why people may state so much on their profile; the company they have been working with and it is especially big on Google, Facebook, Alibaba and I’d like to talk about your funding. You joined Chinaccelerator one year ago; soon one year ago. I think it’s like 9 or 10 months now and you got money from SOSV which is managed by William Bao. How does it work with Chinaccelerator and SOSV? Could you tell us more?

Sophie Sun: Okay yeah. So, first of all, my company wasn’t like especially searching for funding because we already established a big partnership in China, and obviously funding for us, isn’t a difficult subject, but we don’t necessarily need to take the money. Still, I believe founders who would be able to end their Taiwan’s team salary will be the most important sole leaders and sole foundation of the company. There are so many start-ups that need funding; continuous funding. So, founders who are working full time for funding to survive. We are not in this situation and that’s why the investors who joined us love this. So, William Bao who is the boss of SOSV in China. He liked our idea and my way to do business in Taiwan and that’s why the deal is very easy to close. The reason why we choose them, is also I can see not only because we have a huge amount of work, but it’s also because the organization of SOSV and Chinaccelerator in China are very well organized. They actually have a lot of history of servicing different start-up’s in different fields and they have strong partnerships with large companies. I think, all in all, we really built good collaboration with them and so the program is a 6-month program. Let’s say a 3-month intensive program and then another 3 months come actually earlier to stay with them to understand how they work. So, I am actually a founder who has really arrived to stay in the same office as them, even before the batch starts. We are on batch 16. When batch 15 was still there I was already in the office and brought my desk and by that time I had just moved from Paris to Shanghai and I am a lawyer and I need to find a team. Even they were servicing for their batch 15. My papers still had to still be finalized with their team. They started to help me out. I think it’s a team that is really generous to help. They do whatever they can. They understand the start-up pinpoint. They saw so many examples. So, we can avoid a lot of stupid mistakes by listening or taking their advice. Also, I think they have a luncheon every Friday with us with different founders and key members of the team. Sometimes I ask my intern to join me. So, we understand how to work with them. So, SOSV actually helped us a lot, not only helping me kick off the business but also to give me some advice as a team leader; how to train a team and also, more importantly, manage financially the risk. So, my company on day one, I actually have a founder who really saved a lot of money for the company. They keep a low bill rate in order to survive when there is a situation turning very bad. So, for example, today I was grateful for what we have realized in day one. We actually really are caring for each cent, how we spend and who we recruit and the team is also very aware of the situation today and that’s why we can go through a difficult situation together and I don’t know how long it will take for the Coronavirus to be cleared. Since China Chinese outbound travel to Europe is totally interrupted. I guess it will take at least 3 months to recover. 

Matthieu David: Yes, so for people who are listening to us, later in the year we are recording today, 18 March 2020, and Europe has banned any travel; the European Union as from today. So, I believe this is impacting what you are doing because you are specifically working with Chinese outbound travel to Europe. The ban will last for one month. 

Sophie Sun: I don’t think in one month we will recover. As you can see, the extension. China has managed the Coronavirus very well. It still takes us a month and a half or let’s say 2 months because it’s still continuing and it will take longer than that and that’s why I think the situation in Wuhan and Italy; probably the next step would be the US that would be really, really horrible. We are worried about that because we are exactly in that business. So, I’m a person that really hopes that Europe can manage well otherwise we can only wait and see, but I believe we are not the only ones who are worrying. No matter Chinese companies and you know, it is for the entire China’s travel ecosystem together.    

Matthieu David: I think a topic that is really useful to learn from currently is the topic of crisis management. Every entrepreneur is facing a crisis. Every big company can be facing a current crisis and how to react to it and how to manage it. What is your take on that? How do you react and how do you manage it?

Sophie Sun: Yeah, actually before I started this business my fear or worry is bigger than the reality and then the Coronavirus happened. So, my company was running very well no matter from the different perspectives. We have small problems, but I fix them immediately and make us a little bit stronger each time we fix problems, but this time it is different. This time it is the industry that is interrupted. So, I think under these situations that are really special… so first of all challenge number one was the working distance and while we have a working distance, we have to deliver the project like a new website and we started. I was scheduled to start a partnership with Ctrip like just 1 February. The 1 February was off. So, all those things after February this year, it is the most important month in my life in TravelRight and under so many expectations. We were expecting them to come and we prepared and finally, we have to work from home and all these things happened. We were in shock in the beginning, but immediately we realized how important it is to be united at this moment because each team realized, “Okay, we are a small team” so everyone’s performance will affect business. So, I think this sense of responsibility under the stress, we started to train ourselves to work distancing in high efficiency. So, we succeeded with the work and even now like I didn’t realize the difference between working in the office and in distance and my team will start office work, obviously tomorrow. They will be all in the office. I just returned from France since last week so I need to stay 14 days in my apartment.    

Matthieu David: We are in the same situation. 

Sophie Sun: And another thing is we actually deliver good products. Let’s say if you can check our new website and compare it with our previous website; the user experience… maybe you didn’t go to our previous version so we improved ours, but regardless of distance work. So, my top leader speaks Chinese but lives a New Zealand citizen, and his team is based in Shanghai. Fortunately, we are almost working in the same time zone. So, that’s in distance work and the other challenges are you know; we promised some people to be promoted. When the crisis happened a lot of companies actually fired people. They have no choice if they want to survive, but I had to keep my promise because my team; every one for me is precious and everyone carries importance. I don’t want to miss anyone in this crisis. On day one, the Coronavirus happened and we don’t know how long it will last, but obviously at least a month and a half. So, my estimation for China is accurate. We do promote our team. We realized our promise and some of the key members to let them join us you know; a founding partner and some of them join the talent pool. So, I really managed well the employees and the crisis and the founders insisted on doing the same which was good for the team and it really cheered up a lot of people in the team. On the other hand, we have to face a reality since Europe starts to have the Coronavirus and we realize the crisis is longer than we think. So, at this moment I trust my team who also understands the situation and is willing to do temporary sacrifices in terms of their revenue in order to let the company survive. So, I think the founder needs to understand to give and take. This is very Chinese and also, I think it is a very universal philosophy. Another thing is I was grateful for insisting on global rates in the company. So, we don’t recruit…. If we can manage with one person, we do not recruit two. We only increase the number of workers when the volume really comes in. So, I am not so aggressive which is right because even before the Coronavirus the Chinese economy was slowing down and other venture capitals (read our latest article on the venture capital market in China) started investing in most of the start-ups, especially in an early stage. So, those are the things I learned and we were insisting to do the same thing, but I think now we have the capacity within the team to make a change. It’s really important. Last week during our weekly meeting, the entire team was talking about how we bring a new avenue to the company. Every person gave one or two points to think about that and I found that my team has a lot of ideas; how to pivot, to bring extra revenue, and I really appreciate that. It seems that making a change is not only me. It is the entire team together. So that is why yesterday I wrote on my WeChat, “If your cash is not enough to support you for the coming 8 months” the entire team has to make a change together and that change is not only about a company change., it is also a personal avenue change, organization change and why do you need to standby and waste the situation? It is not just the company in the situation and then you can maybe re-join the company again. So, a lot of things could have happened and we can only make the choice. Do not be afraid to talk about your fear to the team because if you don’t talk about it now and one day you realize in the last moment that you are going to hurt someone and I think sometimes we need to let people know in advance; a psychological preparation. I am not being very negative. Actually, that’s the only way to save the company or to survive and survival will be the one to welcome the next up because life has ups and down’s also. So, why stop? If you can survive, you will be the person to welcome the up. So that’s what I wanted to say. 

Matthieu David: Yeah thanks for sharing your management of the crisis. What I understand is that your focus was on the team to make sure there was a team positiveness and you stand together and the second move was; which is very interesting is what kind of pivot we can do and make sure everyone is comfortable with a pivot on the product. So, you actually followed a typical crisis management program, which is to make sure that everyone is on board first and secondly, to see what can be added to the product to the current situation. It’s very interesting feedback that you gave to us. In the documents you sent to us talking about the team, you say that you are running a daily debrief meeting. Would you mind sharing a bit more about your management style? A daily debrief meeting looks very much like what entrepreneurial organizations and books are teaching entrepreneurs. So, would you mind sharing more about your principle of management?

Sophie Sun: Yes, so every person joining the team, I tell them… most of them are young people. So, I was a really lucky person to receive western-style management in day one of my careers. So, I was allocated by the western side management style, but I grew up in the Chinese… or let’s say my family is running a business so I have seen since I was young. I understand my mom allocating me and how she ran her business was very tough, but it is very real. So, I understand both the Chinese management style and the European management style, but compared to the styles; personally, I think we need to take those good styles. Let’s say western management style is mostly my company’s conduct. So, internal organization, a communication tool, we use western sides and partnerships, spirits, contribution, united when the situation is difficult. That is very Chinese because I think that on the western side, people are very self-protective. They protect themselves. They have a reason for doing that, but in China, we try to focus on the bigger picture and sometimes we sacrifice while it is necessary, but finally, will everybody do the same thing? A situation can change quickly to a positive situation and then I think we need to take it both sides. So, under the partnership, I really like the Chinese on my side. So, the region where I grew up is where Alibaba was born, where all the suppliers for Alibaba were born.  

Matthieu David: Where are you from?

Sophie Sun: Taisho. So, we are like one hour and a half drive away and so, in my region, every business was running by the family and the staff is zero which means family putting money together to support their relatives to run their business and they trust that person and probably he is the most intelligent and hard worker. During the day time, you are a boss, but during the evening time, you are sleeping on the floor. 

Matthieu David: Yes, for people listening to us, who may not know the difference between the different provinces, Zhejiang is on the east coast and very commercially dynamic and Wenzhou which has a very huge boo ha in France, particularly, but all over the world and they are known in China for being business people and indeed, there is this saying that I would prefer to sleep on the floor than to work for someone else. That is the mindset of the people living in Zhejiang and Wenzhou because Wenzhou is very well-known as a city of small to medium entrepreneurs in China. Is that correct? 

Sophie Sun: Yes, Wenzhou is very special. Wenzhou really supports entrepreneurship. Zhejiang still has a lot of corporate life and they want to be abroad and no matter if they qualify or not. It doesn’t matter. Running a small business like opening a restaurant is even better than any corporate life. So, they were thinking of this side. The western region less, but we are very reasoned. We are kind of aversive for the entrepreneur, but we don’t really overdo it. What I want to say is like I am not the type of person who wants to take too much risk because risk; if it is manageable you should take it. So, for me, which means they want actually the news why TravelRight is insisting on lowering the bill rate. We know the money comes as a trust from the other people, my investor is my best friend and they not only understand my business but also understand me. So, I am a very lucky person to have very good investors on board and I hope I can insist on doing the same thing so that our entire organization’s funding can run in a healthy way. A lot of founders are hiring or talking to investors. Talking to investors can take the entire day and that will make rouble of yourself. So, I would rather be modest and welcome fewer investors instead of welcoming all investors. We are very cautious about that.  

Matthieu David: We talked about the identity of coming from those provinces, but there is another identity you are mentioning in interviews and papers you have shared with us and this is to be a female entrepreneur in China. My feeling is that if there is a country where you can express yourself as a woman and an entrepreneur it is China because China has the highest number of a woman or female billionaires and it seems that it is has been the case for many years or decades that female entrepreneurs in China are part of the economic life and high positions, but what is your take on this? Do you feel the same as I do or do you feel China still has progress to make? 

Sophie Sun: Matthieu, you understand China very well. I can see that. True, female entrepreneur in China is something. It is popular and I met a lot of female entrepreneurs in China. In Shanghai, we have a lady who supports all the ladies in the tech industry and actually, William Bao and the lady who does the events. William in believing in the female entrepreneurs in China; he is an example to invest in a woman. I think supporting a woman is that we don’t feel such huge differences between males and females. So, that is a basic understanding. In family life, the woman takes leadership. In the big cities, that is normal is that local culture; the woman takes leadership. I will tell you why and probably I can find some clues for you. A lot of language schools (learn more about China’s language schools market) back to my university life it was a woman who started English majors and French majors and so, women are good at foreign language and foreign companies recruit people who speak good languages. So, they are recruiting mostly women, and women learn very openly about their culture. They are very sensitive to culture. You can see that the Chinese woman stays in Paris more than most. So, all these things make women learn the western culture very quickly and once you understand the culture better and you know how to deal with the people and you take the lead. So, you can see that in a lot of big companies., So, women leadership in foreign companies; they have woman leadership that is super strong. 

Matthieu David: That would be the last question on this topic. I feel you have spoken a lot about it. I’d like to dig a bit more. As far as I understand there are two kinds of feminism. One feminism is and I don’t know if you like the word ‘feminism’, but there are two kinds of what we call feminism. One is to say, “Male and female are the same.” So, you would need to treat them the same way. There is no difference. Another kind of feminism is to say, “Men and women are different.” We are biologically different, so we have to be treated differently, but equally. So, to have access to equal opportunities and so on in our differences because at some point, women and men may have different constraints in life which could be biological and all that, but he has to be respected and valued in the same way. What kind of feminism do you believe most China is in because again, the place of women in business has been one of the obvious successes of the development of China, but what kind of feminism it is? Is it that male and female are the same; the exact same way or male and female are different, but we make sure we have access to similar opportunities? 

Sophie Sun: Oh yeah, I think another thing about that; before you ask me this question because rarely in China people ask, “Is a man and woman the same?” Your father loves you. Your parents love you and your sister more or your brother more. So, it is kind of a very remote question in China, but I do ask it a lot as a female entrepreneur in China. I am curious, probably. There is a woman who wants to catch up to me and say, “You should understand them.” I think China asks the question last today because they are almost equal, I guess. I am away for 7 years in China, probably it was not what I saw today. Maybe one year later you give me another interview and I will talk differently, but so far, I feel that woman entrepreneurs in China are mostly supported. So also, I think both men and women should access of course equal opportunities in different industries. It is encouraging the ladies in the tech business, in the tech field which is good, I think. People are different and we cannot only divide the woman and the men. All people are different so, they have different skills and we shouldn’t say, “Okay in legal teams or in tech teams, I need to recruit a man more than a woman”, but from my company, I found out that men and women are equal (learn more on gender equality at work in China). They are all excellent, but I tend to and it’s like it’s not just me that makes the choice. We all just want to recruit the best people ever, who fit with the team, who are motivated and that is very important because skills can be trained, but motivation we cannot change easily. So, always we pick the people who are most motivated. 

Matthieu David: My feeling is that China is more in the family zen of ‘we are the same’ and male and female should be treated the same as in the western countries; Europe and the US may be more in the second feminism, I feel which is to say, “We need to do positive action for women because they are not elected enough in politics so we force to choose one male and one female all the time to be elected” or we push them to have access to certain things by creating regulations. That’s why I’m all the more surprised at how it has advanced and has been successful in China Simon De Bovoar, The Second Sex book is famous and well known in China. That has been one of the surprises when I arrive in China 10 years ago when I was picking this team, how popular and well known and respected she was for her feminism. So, yeah. Thanks for joining us. It was very interesting. We are talking about a time that is very challenging for you and very challenging for other people and a lot of countries and companies. As entrepreneurs, we all believe that it will all be back on track soon. Hopefully within 2 or 3 months and I wish everyone is staying safe.

Sophie Sun: Thank you, Matthieu, for the interview. I am happy to talk with you and share my experience. Hopefully, we can have another interview after the crisis is finished. I hope you are staying safe with your team. 

Matthieu David: Stay safe everyone. Thanks for listening. Bye-bye, everyone. 

China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

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This article China Paradigm transcript #95: How one company leverages delays of Chinese outbound travel to Europe is the first one to appear on Daxue Consulting - Market Research China.

China is the world’s largest outbound travel market in both the number of tourists and spending. Drivers of China’s rising outbound travel market include rising incomes, relaxed travel visas, increased global awareness, easier access to travel information online, and more international airlines. Outbound travel is, of course, the driver of Chinese duty-free consumption. This report explains how duty-free shops, both in China and overseas, can reach Chinese travelers.

[Data Source: chyxx.com, Chinese Duty-Free Consumption report by daxue consulting, growing number of Chinese outbound trips]

Popular destinations of Chinese outbound tourism

South-East Asian and East Asian countries are the first choice for Chinese outbound tourists. Top destinations are Thailand, Japan and Vietnam. The choice of these destinations is due to the geographical proximity to China and the ease of obtaining a visa.

[Data Source: Analysys& National Tourism Administration in different countries, Chinese Duty-Free Consumption report by daxue consulting, top outbound destinations for Chinese tourists]

Key trends of Chinese outbound tourism

The rapid growth of outbound tourists continues to drive Chinese duty-free consumption, but the per capita single-consumption amount has not changed significantly. Besides, due to the opening of new airline routes and the general increase in consumption capacity, non-first-tier cities have become major growth engines. In terms of age distribution of tourists, the growth is concentrated on those born between 1950 -1970, and 1990 -2010. More and more Chinese travelers are interested in both shopping and new experiences. Restaurants, museums and special performances are key projects for outbound travel.

Outbound tourism expenses

Due to the rising purchasing power of the middle classes, Chinese consumers’ spending on outbound tourism has been the world’s No.1 for 7 years and the number is still increasing. Regardless of tourism destinations, Chinese often spend a large part of total travel expense on cultural activities, accommodation, and shopping.

[Data Source: UNWTO, Chinese Duty-Free Consumption report by daxue consulting, China’s growing expenses on outbound tourism]

When asked about favorite shopping destinations during travel, more than 60% of Chinese outbound tourists prefer duty-free shops, as have assured quality at a cheaper price. Retailers around the world focus on Chinese customers because of their strong purchasing power. For example, in South Korea, Chinese duty-free consumption accounted for 83.4 billion RMB on duty free goods in 2018. This accounts for 73.4% of the total sales of duty-free stores in the nation.

[Data Source: McKinsey & Company, Nielsen, Chinese Duty-Free Consumption report by daxue consulting, duty-free stores are the most preferable channel for Chinese tourists]

Global duty-free sales

Due to an increasing number of travelers and rising spend per person, Asia Pacific region drives most the global growth of duty-free sales. In emerging countries such as India and China, Chinese middle-class consumers have the spending capacity to promote the growth of the duty-free industry in the global market.

[Data Source: Tax Free World Association, Generation research, Chinese Duty-Free Consumption report by daxue consulting, growth of duty-free sales in APAC]

Global duty-free sales in different channels

Due to the high volume of passengers, good maintenance and having a wide variety of brands and products, airport shops account for the largest amount of global sales. Downtown shops and border shops had realized significant increase in sales with the continuous expansion of shops in urban areas.

[Data Source: Statista, Chinese Duty-Free Consumption report by daxue consulting, airports take a lead as duty-free channel]

Inbound duty-free market in China

Due to policy support in recent years, China’s inbound duty-free shopping is now competing with South Korea’s dominant position. Offshore duty-free shops grew quickly during the last few years with the relaxation of restrictions and the increased number of product categories.

COVID-19 hits the Chinese tourism industry

The damage to the Chinese tourism industry because of outbreak is equivalent to a loss of 1 trillion RMB GDP. Many travel enterprises estimated the ongoing shutdown costs the industry about ¥17.8 billion every day.

[Data Source: Tai Media APP, Sina Finance, Chinese Duty-Free Consumption report by daxue consulting, decreasing domestic trips due to COVID-19]

Only 2% Chinese tourism related companies felt that they had not been significantly affected after the COVID-19 outbreak. Coronavirus impact on tourism in China especially visible among travel agents, hotels, and retailers (related to tourism). 

Chinese tourists contribute to the tourism industry in many countries. For instance, in 2018, Chinese tourists represent more than 70% total tourism in Hong Kong and Macao, similarly, more than 25% total tourism in Thailand, Japan, Vietnam and Korea. The impact on the economies of these countries will likely rebound in the second half of 2020.

[Data Source: Press reports; McKinsey Global Institute; Pengpai News, Chinese Duty-Free Consumption report by daxue consulting]

Coronavirus impact on tourism in China opened the opportunities for new online approach in this sphere. During the COVID-19 outbreak, many scenic areas and museums used live-stream to increase exposure and attract tourists, which attracted a lot of traffic. Even after the outbreak, the live-stream still can be watched by elderly and people with disabilities, and can be used as a preview before travel.

Short-term and long-term coronavirus impact on tourism in China

[Data Source: TravelDaily, Chinese Duty-Free Consumption report by daxue consulting]

Key Characteristics of Chinese Outbound Tourists

Chinese outbound tourists demographics

Those born in the 90s and 80s make the majority of overseas tourists. They are, on average, highly influenced by social media and they usually plan carefully to find value-for-money trip sand shopping. These Chinese tourists pay attention to both quality and price, they like customized activities and products offered by local stores.

[Data Source: Analysys & National Tourism Administration in different countries. China Tourism Academy, Chinese Duty-Free Consumption report by daxue consulting, majority of Chinese outbound tourists are young people]

Most Chinese outbound tourists come from tier-1 and tier-2 cities (provincial capital cities), over half are female. Most are also upper middle-income citizens who are willing to spend money while traveling to seek high-quality experiences.

[Data Source: Analysys & National Tourism Administration in different countries. China Tourism Academy, Chinese Duty-Free Consumption report by daxue consulting]

Chinese Duty-free consumption: The most popular duty-free goods

Skin care and beauty products are the most popular goods in duty-free shops. Women are the most important consumers, since the top selling products are women’s products. In addition, Chinese tourists tend to buy famous wine and wrist watches. Many Chinese tourists research duty-free products before purchase by reviewing online recommendations. Even after they arrive at their destinations, Chinese travelers will continue to research about duty-free goods. Brands can reach Chinese tourists by launching their own Chinese websites and apps. This allows consumers to shop anytime, anywhere, at their convenience.

Buying purpose of Chinese Duty-free consumption

When visiting duty-free stores, Chinese tourists of ten purchase duty-free goods for themselves or as gifts. A small percentage of Chinese duty-free consumption accounts for buying duty-free goods on behalf of others, such as Daigou, which is someone who buys goods from foreign markets and sells them back to consumers in mainland China. Many duty-free consumption behaviors among Chinese tourists are planned spending rather than impulse spending, they make plans based on the info from guides and comments on Chinese social media and travel websites.

[Data Source: PTRA, m1nd-set, Chinese Duty-Free Consumption report by daxue consulting]

Payment methods of Chinese overseas tourists

The payment methods of Chinese tourists vary by age and travel destinations. The post-70s and 80s Chinese tourists tend to use bank card payment during trips. For post-90s Chinese tourists, mobile payments make up a big proportion of their payment methods. Cash payment is used by all the generations of Chinese overseas travelers. They use bank cards more frequently in developed regions where credit cards are used more commonly, such as the USA. At destinations where tourists can easily connect to mainland China’s banking system, such as Hong Kong, Chinese tourists prefer mobile payment since it is convenient and a better way to keep track of spending.

[Data Source: Nielsen, Chinese Duty-Free Consumption report by daxue consulting]

How Can Brands Reach Chinese Outbound Tourists

Offer content that adapts to Chinese consumers

China outbound tourists generally choose to read travel recommendations before trips, and the most convenient way is to use popular media platforms that specialize in tourism and shopping, such as Weibo, WeChat public accounts, Mafengwo, etc. Those platforms normally provide accurate content by precisely targeting groups to permeate. Naturally, major brands choose to cooperate with these platforms to get them mention their products in articles in order to gain a high degree of attention.

Interact with consumers by delivering targeting brand campaigns

As competition intensifies among brands, companies nowadays innovate and differentiate themselves by delivering customer-centric campaigns in China, and experiences that give their target audience a compelling reason to become customers. As for duty-free brands, participating in similar duty-free shopping festivals can better interact with consumers and increase brand recognition in this field. For Chinese consumers, this kind of offline events make them have easy access to some foreign luxury brands that are not easily available in mainland China.

Provide more duty-free exclusives

Since Chinese outbound travelers purchase ahead of the Chinese New Year period and other holidays, travel retail exclusives are key purchase drivers at those time period. Also, “uniqueness of products or services” is one of the most impactful factors among duty-free shoppers. Duty-free stores offer some famous Chinese brands with lower price, compare with domestic stores, like Moutai. Because of the export tax rebate policy (exported goods pay less tax), Moutai in duty-free shops is much cheaper than the same product in domestic shops, which attracted many Chinese overseas tourists who like Baijiu (白酒).

[Data Source: daxue consulting, Special selection Moutai in duty-free market]

Cooperate with mobile e-commerce to reach traveling consumers

By cooperating with a mobile e-commerce platform like GlobuyX, duty-free brands can settle in mobile e-commerce to expand their promotion channels and connect with Chinese consumers. Globuy launched a WeChat mini-program that allows duty-free brands to exposure advertisements, duty-free goods discovery and pre-orders, WeChat menu links and exclusive benefits. Through this kind of cooperation, brands can reinforce their awareness and branding, achieve the purpose of communicating brand events and products with consumers and increase footprint and exposure online and offline in China.

[Data Source: GlobuyX mini-program, Chinese Duty-Free Consumption report by daxue consulting]

KOL Marketing to reach Chinese duty-free consumers

With the strong development of KOLs in China, consumers will now hold a wait-and-see attitude and buy products after KOLs. Therefore, some high-end duty-free brands choose to cooperate with KOL to increase their sales. According to Weibo data, the number of discussions on the Sanya Duty-Free’s Night in reached 30,000 times, and the number of likes exceeded 5,000. During Sanya’s Duty-Free Night, they successfully attracted a large number of fans by holding meet-and-greets with fans for major KOLs, including cosmetics, fashion, etc. When KOLs interacted with fans (take pictures, signature, etc.), they also recommended products to them.

How Duty-Free Shops Can Attract More Chinese Outbound Tourists

Global competitive landscape of travel retailers

The global duty-free and travel retail market is highly fragmented, and the market is dominated by non-Chinese brands.

Chinese Duty-free consumption: Business overview of Dufry

DufryAG, from Switzerland, is the world’s largest duty-free retailer with over 2,300 shops in 65 countries. The combination of organic growth and M&A enabled continuous high growth of Dufry.

[Data Source: The Global Travel Retailer 2019, Chinese Duty-Free Consumption report by daxue consulting]

Dufry’s digitalization strategy

Dufry aims to be present at every stage of the whole Chinese customer journey. By using digital and technology innovation, it is enabled to improve consumers’ shopping experience and provide personal tailored services. Travel loyalty program combining shopping and travel benefits.
 

After one year of membership, average purchase frequency increased 80% and the average spending increased 131%, comparing to the data collected one year before the membership. Dufry has virtual lipstick testing technology in the store, customers can change the color with a tap of the screen.  The strategy engages customers during in-store shopping experiences.

Dufry’s pre-order service for Chinese consumers

Dufry’s “reserve & collect” website allows consumers to pre-order duty-free goods online, then pick up and pay for Hong Kong’s offline stores. The website had 5,570 visits in November 2019. The service adopted Chinese consumers’ demands for convenience and preferential price.

Chinese Duty-free consumption: Overview of the China duty-free Group (CDFG)(中国免税集团)

As a state-owned duty-free company, China duty-free Group (CDFG) has realized high-speed development in recent years with powerful support from the Chinese government. The company has started to step into the global market, although it focuses on China’s domestic market.

[Data Source: chyxx.com, Chinese Duty-Free Consumption report by daxue consulting]

CDFG’s new travel retail strategy

Utilize digital technology to enhance connection with consumers. For example, in 2018, CDFG built a membership big data platform that helped the company have better understanding on their customers. Then, personalized service can be offered to ensure better shopping experience.

[Data Source: tfwa.com, Chinese Duty-Free Consumption report by daxue consulting]

CDFG’s strategic cooperation with Alibaba

In November 2018, CDFG officially built strategic partnership with Alibaba Group to expand the retail market in China. The cooperation focuses on areas including e-commerce, big data and logistics, aiming at establishing a new tourism ecosystem. The partnership allowed CDFG to use Alibaba’s digital tools and e-commerce platforms to optimize offline duty-free shopping and improve its logistic efficiency. According to the agreement, consumers can use Alipay in CDFG’s offline duty-free stores. As one of the merchants on ‘Fliggy buy’ (the global shopping channel on Fliggy, platform owned by Alibaba), CDFG can provide its products and content to attract Chinese consumers.
Powerful support from Alibaba group ensure CDFG better performance on digitalization and have access to more consumers’ information.

CDFG’s social media strategy

In addition to KOL collaborations, CDFG also leveraged live-stream promotions. The live-stream focused on skincare and cosmetics demonstrations. Also, it picked some popular brands to introduce price, size, discount, etc. by interviewing salespeople. Many Chinese consumers favor this kind of videos that share in-store experience. Audience members who share the video can have a chance by lucky draw to receive Guerlain’s perfume for free. This attracted much attention from Chinese customers and received 3.67 million views on social media.  

The upgraded strategies of duty-free retailers

As in the case with many offer industries, digitalization offers great opportunity to the duty-free and travel retail industry. For duty-free retailers, digital technologies are tools that can build a travel retail ecosystem. By working closely with brands, airports, airlines, etc., data can be integrated to obtain a complete view of the customer journey and buying behaviors. Therefore, duty-free shops and travel retailers are enabled to provide superior customer experience and establish loyalty programs. By integrating online and offline channels, travel retailers are able to further increase personalized communication with customers at home, during their whole journey, and when they are at the airport.

Chinese traveling shoppers usually learn about duty-free products from shopping related content and other people’s comments on Chinese social media platforms. Understanding and adapting to the needs of Chinese tourists is critical. Chinese consumers have different shopping habits from other countries’ tourists. Duty-free retailers should have content and promotion activities that precisely target different types of Chinese consumers.

Key Takeaways

China’s travelers are increasingly sophisticated. The Chinese millennials (born in the 80s and 90s) are sophisticated, price sensitive, and usually search on social media and travel websites before tourism and purchase. They seek high value, unique and exclusive products during their trips.

Experience is as important as price. Chinese overseas travelers value unique experiences. Innovative store design, engaging customer service, targeting emotional connections and flexible payment methods can bring better shopping experience to Chinese duty-free consumers.

Reach consumers ahead of time and optimize convenience. Most Chinese tourists plan their duty-free purchases ahead of time. Brands and duty-free shops promote products by allowing pre-orders, remote fulfillment and mobile payments. This helps Chinese consumers move purchases from being impulse to planned, and reduce ‘inconvenience’ as a barrier of shopping.

Attracting Chinese consumers by exclusive deals. Many Chinese tourists want to buy products they cannot find in China. Duty-free stores can drive demand by having a greater array of limited-edition products, value packs, and duty-free exclusives.

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This article Chinese duty-free consumption: China as the World’s Largest Outbound Travel Market is the first one to appear on Daxue Consulting - Market Research China.

Matthieu David interviews Sophie Sun, a founder at TravelRight. If you’re a traveler and flying to your destinations is your choice of transportation then you’ve definitely dealt with flight delays before. For people flying from China the answer to their flight delay related issues seems to be TravelRight, which is not an insurance company but it is a valuable resource to OTAs and travel insurance companies across China. Let’s find out why in this China Paradigm podcast!

• 0:10 Guest introduction
• 2:38 What does TravelRight do?
• 4:53 What is TravelRight’s business model?
• 5:59 Who are TravelRight’s customers and is the company meeting their needs?
• 9:56 Why do OTAs like to work with TravelRight?
• 15:20 TravelRight – a short company history
• 18:44 The delayed customer market – how big is it?
• 21:19 How did Sophie Sun come up with the idea for TravelRight?
• 26:33 The value of an Alibaba education
• 31:10 The funding behind Travel Right
• 36:17 The Coronavirus outbreak – how does it affect TravelRight?
• 37:44 The Pandemic Paradigm – how to manage a business crisis
• 47:07 Shopie Sun’s management style – a western education
• 54:10 Opinions on being a women entrepreneur in China
• 1:01:41 Outro

How a company claims flight compensation for Chinese passengers

One relevant episode

We believe, that China, with 20% of the world population and as the second world economy, is impacting every single business, small to big. That is why it is a new paradigm. How does China impact your business is the ultimate question we will answer through those podcasts.

China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

This article China Paradigm 95: Navigating the travel industry in the time of the Coronavirus is the first one to appear on Daxue Consulting - Market Research China.

Full transcript below:

How can you promote medical tourism online in China?

It is a very good question. Online, it is extremely effective for medical tourism. I just explain what medical tourism is. It is all the tourism linked to health outside China. For example, if I need to go to another country for surgery if I have a health problem and want to cure it abroad. All these are under medical tourism; people who travel for medical reasons. In China, it is extremely developed because you have a lot of rich people that don’t trust the Chinese medial system and over trust hospitals in Western countries. There are a lot of countries where hospitals have a great reputation. For example, Israel or Switzerland as well as many other countries in Europe. They are extremely famous for doing surgery. If it is for esthetics and you want to modify your body, then Korea or Thailand are popular. Online, it is really effective. Most people when searching has a problem finding information and will thus search online. Most of the time they’ll use the Baidu search engine to try to find solutions to their problems or try to find information. When you need to go to another country, you need to read a lot of information to understand how it works, what are the costs, etc. It is an extremely complex problem so people will search for hundreds of hours to understand how it works.

Promotion on Baidu is primordial. After, everything is made from reputation. When these rich people are going abroad, they will not compare the price but compare the best services of hospitals and clinics. They will compare one clinic to the others to find to best one. Also, everything is linked to social media. You need to communicate, keep people informed and reach more people via social media. It also can be effective to drive more traffic to your company. Again, if you speak about medical tourism, there are a lot of restrictions. For instance, you cannot do an advertisement for Baidu. Most of the platforms will refuse the adds since everything has to be organic. That is their criteria. So, you are limited in terms of adds. You cannot use adds on WeChat because you are not registered in China. Everything has to be organic, so it takes more time in general.

What scandals do healthcare companies need to be aware of before they enter China?

The subject is really sensitive. Every two or three years there one or two big scandals that occur. I will explain two of them. The first one is the scandal of Baidu. Basically, they were selling adds to fake hospitals that were curing cancer. It was a really big scandal. There were fake treatments. So, people were looking for a cure, found these advertisements and paid for treatment and died later on because they were not treated. One person discovered. So, a lot of Chinese got aware of these issues and the government put a really strong punishment on Baidu to limit advertisement that is too aggressive on these fields

The second scandal was also really bad. It is about vaccination, especially for kids, so, in several hospitals, one or two companies supply all the vaccines for the kids. One of them killed kids and hurt millions of mum in China because they were forced to buy a certain vaccine for their kids and discover that the company providing the products were not doing it properly. It is a kind of bad atmosphere around the Chinese company and created a bad buzz. It was also linked to corruption. This scandal reinforces the idea that in the west, the medical. 

The sector is safer, cleaner although more expensive.

Does it make sense to target Chinese travelers outside of China to communicate one healthcare product?

It can make sense for companies. So, if you are a seller, all these products in retail travel, in the retail stores and want to attract people, then it can make sense. It is a strategy usually used in luxury. When it comes to health, people will do the first purchase but won’t buy as much, so you are investing a lot of resources to gain these customers but financially, it doesn’t make a lot of sense unless people can buy the product online later. So, it can be good to let clients discover the product, but in the healthcare industry, most of the time the product has a limited value, you won’t make money on the first purchase. You will only make money with further purchases or recommendations. You need to be sure that they can find the product when they go back to their country. Otherwise, you will only do one sale and that is not interesting. 

Daxue Talks is a show powered by daxue consulting, a china-based strategic market research company founded in 2010! With Daxue Talks, you will stay up to date with all the latest business updates in China.

This article Daxue Talks transcript #41: Medical tourism in China as a booming business is the first one to appear on Daxue Consulting - Market Research China.

Events such as The Harbin Ice Festival and Snow Festival are helping push up demand in China’s winter apparel market. Attracting a larger number of tourists yearly, the festival requires tourists from regions farther south to invest in winter apparel, even if just to be worn once.

Preparation for Beijing 2022 Olympics boosts winter sports market in China

In light of the upcoming Winter Olympics Game, this market is worth examining so as to better understand what benefits it holds for foreign companies. Some companies stand to benefit handsomely from the combination of upcoming events and current socioeconomic trends in China.  Some of these trends include the Chinese youths’ increasing fixation on luxury sports, winter scenery tourism, Chinese government support for winter sports participation and of course the 2022 Winter Olympics.

[This scene of the construction site of the Olympics Winter Village in Zhangjiakou is a sure sign that China is taking preparations for the games seriously. Zhangjiakou, located in Hebei just outside of Beijing, is poised to become a new mecca of  winter sports tourism in China. Source – Greg Baker / AFP]

How the 2022 Winter Olympics may increase spending on winter apparel in China

In 2008, China took to the limelight by hosting the Summer Olympics in Beijing. Now China is preparing to appear in the spotlight again as it prepares for the 2022 Winter Olympics. Scheduled to take place in Beijing and nearby Hebei Province, the winter games already have the world watching China.

Since the games are expected to attract hundreds of thousands of visitors from around the world and within China, the potential to increase interest in winter sports among visitors is high. Perhaps in conjunction with the Chinese government support, the 2022 Winter Olympics have begun to increase spending on winter sports and on winter apparel. For example, total visits to ski facilities in China has grown nearly fourfold since 2006 and this trend is likely to continue post-games.

In the lead up to the Olympic Games in 2022, it is likely that these trends will intensify. As with other Olympic Games, it is likely that there will be lasting impacts on the Chinese winter apparel market well after the games. Foreign companies that have not yet considered the effects of the Olympics on this market would do well to assess their potential benefits.   

[Shown in the graph is the steady increase in visits to domestic skiing facilities within China. Source – EUSME & China-Britain Business Council]

Trends in luxury sports will bolster growth in China’s winter apparel market

Trends across China catch on fast, sometimes spreading like wildfire. Notably examples are the tourism trend of daka (going to a tourist destination simply to take a unique photo, usually in imitation of a celebrity,) bike-sharing platforms such as Mobike or Qingju and the ubiquity of mobile pay. One trend gaining traction that has such potential to grow fast is the popularity of luxury sports in China. Foreign companies looking to profit from this emerging trend may look to China’s winter apparel market as a place to start.

Skiing and snowboarding in China are growing

The growth of luxury sports can be captured in statistics showing the increase in snowboard sales, which grew by more than 20% in 2016. While most reports on this topic highlight the robust growth in snowboarding, especially among younger consumers, it is also worth noting that skiing is still growing steadily, with annual growth near 10%. As both of these growth rates are faster than China’s overall GDP growth, it can be said that markets for snowboarding and skiing are performing well in China.

As skiing is considered a luxury sport and usually requires the purchase of expensive equipment, the market has the potential too. A report published by EUSCME shows that the Chinese skiing market alone is expected to grow from €600 million to €3.5 billion between 2016 and 2022.

The popularity of luxury sports in China combined with other factors will bolster increased demand not only on domestic skiing facilities and services, but also on winter apparel.

[Snow-covered mountains across China provide an excellent setting for the growth of China’s winter apparel market. Shown in the photo is Hailuo Gou National Park in Western Sichuan, an up and coming place in China’s domestic winter scene tourism market. Source – 睿睿]

Winter scenery tourism in China is becoming more popular

As Chinese consumers become wealthier, their appetite to visit tourist destinations domestically and internationally grows more and more voracious. Due to the astounding growth in disposable income in China over the past few decades, trips to these types of destinations have exploded. In 1984 there were only 5,000 annual visitors to Jiuzhaigou National Park in northern Sichuan. By 2002 however there were over 1 million annual visitors to the park.

Popular winter scenery tourism destinations in China include Hailuogou and Jiuzhaigou in Sichuan Province, Xueli Mei Mountain in Yunnan and of course snow and ice festivals in the Northwest. In addition to these well-established winter scenery destinations, a few others are in development, such as Bipenggou and Miyaluo scenic parks, also in western Sichuan.

The staggering increase of Chinese tourists visiting these sorts of tourist destinations has increased the demand for winter apparel sales and is likely to continue doing so as China’s middle class continues to grow.

[This promotional advertisement shows the government’s ambitions to increase interest and participation in winter sports, notably skiing in Shaanxi Province in this case. Source – 竞报体育整理]

The Chinese government supports winter sports

In combination with these other factors, the growth of China’s winter apparel market is being driven by none other than the Chinese government. Perhaps in conjunction with policies to increase China’s participation in football, Chinese government support for winter sports is most likely aimed at increasing China’s rankings in high-profile international games. That being said however, there is great potential for this government support to directly benefit foreign companies.

The government’s support for winter sports in China is manifesting itself in a few different ways, but most notably through policies, infrastructure and programs. Policies that will encourage the growth of this market include preferential tax and financial policies aimed at developing the winter sports market in China. In addition to the physical construction of winter sporting infrastructure, the government has also taken measures to set aside land for winter sports through land use and zoning policies. Finally, the government has created various programs that stand to increase the size of the winter apparel market, notably educational and youth programs that are designed to raise interest in winter sports among children.

Regional level governments support winter sport facilities in China

In addition to these ambitious national-level goals, regional governments have been pushing their own agenda in increasing the size of the market, such as in Jilin Province, where the provincial government has been working to construct world-class winter sports facilities.

Since the Chinese government has such a strong mandate and almost always achieves its goals, government support in these three categories is very likely to push up interest, participation and spending in winter sports and winter apparel by Chinese consumers. Foreign companies should take note.

[Screenshots of the oversized effect Internet celebrities have on markets in China, in this case the winter apparel and winter sports market in China.  Source – Taoabo]

What is the takeaway for foreign companies in regards to China’s winter apparel market?

With China’s increasingly important presence in international events and media, now is a crucial time for foreign companies to look at new and promising markets within China. As multiple studies have shown, the demand for winter sports apparel in China has reached a liftoff point as China’s middle class has come of age. Despite being slow to the game of market share, China’s winter apparel market has the potential for strong growth during the next decade.

The takeaway for foreign companies is that the 2022 Winter Olympics in Beijing will increase sales of winter apparel and winter sports equipment not only leading up to the games, but also for years to come following the event. In addition, winter sports expositions in China will complement the Olympic Games by increasing interest in winter sports in other socioeconomic groups. Next, the growth of winter scenery tourism in conjunction with the growth of the Chinese middle class was and will continue to be a sustaining drive in the demand for winter apparel in China. Most importantly, the trend of winter sports being seen as a luxury sport by Chinese youth is going to be a boon to this market as Chinese consumers continue to enjoy higher levels of disposable income.

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This article China’s winter apparel market is taking off with winter sports and winter tourism is the first one to appear on Daxue Consulting - Market Research China.

Full transcript below:

Interviewer: What is the new service ‘Ctrip point of interest’?

Olivier: Ctrip developed a new function in their app to regroup what they call the point of interest. What is Ctrip in general? It’s a kind of booking.com so people use it for book tickets, hotels etc. And what they want is that people will use their app more to search information while travelling or after and share their thoughts on Ctrip.

Ctrip’s indirect competitors are more Mafengwo or Tripadvisor. And this app became very successful because it is based on user generated content. Ctrip is going to ask its users their personal information to put it on a platform to regroup everything under tags. Those tags are called ‘points of interest’. Let me give you an example: a point of interest can be a museum, a church, a shop, a restaurant, it can be anything Chinese tourists need to see on a trip. And the more people are going to share their information the more points of interest will become popular and bring traffic. That is their first move.

As a marketer, because of my clients are restaurants or shops based overseas, it is a big opportunity for them because they can take control of this point of interest, put ads, manage content like putting some pictures to be in the top popular things to see in the city and attract the people.

So I’m a new traveler and I need to go to Paris for example. I have 3 days. Ctrip will make for me recommendations of the top 10 points of interest like the Louvre, Notre Dame and this kind of things. So I will be able to follow what Ctrip and all the users are recommending to me and check the pictures. Everything not based on beautiful flyers but on user generated content. That is the new concept of Ctrip point of interest.

Daxue Talks is a show powered by daxue consulting, a china-based strategic market research company founded in 2010! With Daxue Talks, you will stay up to date with all the latest business updates in China.

This article Daxue Talks transcript #31: Attract Chinese tourists in your local shop overseas is the first one to appear on Daxue Consulting - Market Research China.

[Source: Daxue consulting “Number of outbound trips from China”]

Most tourists travelling overseas buy travel insurance since they face a number of potential risks, especially when they are not familiar with the local culture and language. In the event of an accident, illness or unanticipated incidents, it can be difficult to find assistance or seek compensation. Tourists travelling within China face similar issues. However, many Chinese consumers have a sense of security about domestic tourism, they show less demand for travel insurance during domestic travel. Insurance companies need more publicity for travel insurance to enhance the safety awareness of Chinese tourists.

What does travel insurance in China include?

The main risks Chinese tourists face are personal injury, loss of property, flight delays, flight cancellations, lost baggage, hotel orders canceled, traffic accidents and disasters. Therefore, the travel insurance market in China has a large variety of products covering a variety of services including destinations, travel agencies, guides, tickets, transportation, hotels, etc. Among those risks, flight delays, disasters, lost baggage and property are the most frequent, the insurance target those risks are favored broadly by tourists. In the first half year of 2019, more than 40% of the claims of travel insurance in China were related to flight delays, since many airlines do not compensate for delays and cancellations if they are caused by external reasons like weather. Other than flight delays insurance, property loss (stolen or robbed) insurance is also necessary, especially for the Chinese tourists in Europe. In 2019, among all travel insurance claims related to the property loss (stolen or robbed) of Chinese tourists, about 20% happened in Europe.

What are the factors that influence sales of travel insurance in China?

The premiums and sales of travel insurance are highly affected by tourism season and holidays in China. Travel insurance usually enter the selling season during the New Year’s Day, the Spring Festival, May Day, National Holiday, winter and summer vacation. Secondly, the transportation tools used by travellers also have an impact on the sales of travel insurance. Tourists who travel by airplanes, bus and private cars are more willing to have travel insurance than people use other transportation methods. Policy and regulations about tourism are important factors. For example, every tourist must have insurance when they submitting application materials of short-term visa for the Schengen region. Travel insurance is also compulsory for traveling to Taiwan. Destination distance is also a key factor for consumers. Tourists who choose long-distance tourism often show stronger demands for travel insurance, and the security condition of destinations is significant factors as well. Most Chinese people are easily convinced of the need to purchase travel insurance after hearing of other tourists who had accidents while traveling in those regions.

Where do consumers buy travel insurance in China?

Travel agencies and insurance companies are traditional purchase channels for tourists, however, most consumers become habituated to use mobile apps and online tourism platforms (such as Ctrip 携程) to obtain information and buy travel insurance. On those platforms, travel insurance is treated as the value-added service of tourism and tickets, which largely simplified the purchase process of those insurance products.

[Source: vacations.ctrip.com “the travel insurance products for Chinese tourists”]

In addition, a considerable number of insurance companies have been trying to sell travel insurance through WeChat public accounts and mini-programs. However, some of Chinese tourists prefer to travel independently and they show less trust in travel insurance purchased online. Insurance companies need to develop more distribution channels for travel insurance in order to reach the diverse Chinese consumer base.

Leading players in the travel insurance market in China

PINGAN (中国平安) presence in China

[Source: baoxian.pingan.com “domestic and overseas travel insurance for the Chinese tourists”]

PINGAN is one of the largest domestic insurance companies in China. The travel insurance of PINGAN is divided into domestic and overseas tourism and includes both group travel and independent tourism. PINGAN’s domestic travel insurance mainly covers the risks of disasters, high-stakes sports, accidental injuries/death, medical treatment, property and luggage loss, the insurance also offers emergency rescue services and reasonable expenses for emergency situations (such as funeral and family visits). For the overseas travel insurance of PINGAN, it focuses on trip cancellation/delays, visa refusing and tickets loss other than personal injuries and property loss. PINGAN offers travel insurance targets on road trips, plateau areas and different regions, such as Europe, North America and Australia.

In order to offer better after-sales service, PINGAN developed online channels to provide quick claim settlement. The company encourages consumers to use simple three steps on PINGAN mobile app and WeChat account (scanning QR code) to get compensation in a very short time after they had accidents or disease.

Allianz (安联保险) presence in China

[Source: allianz360.com “global travel insurance for Chinese tourisms”]

As a globally famous financial service company, Allianz entered the China’s insurance market in 2003 and built partnership with JD (京东) to be a joint venture company in China. By working with JD, Allianz effectively expanded its online sales channels to benefit from China’s booming e-commerce market. The travel insurance products of Allianz cover different kinds of accidents, medical treatments, luggage, personal property, visa, flight delays and road rescue. Allianz launched the “digital first” strategy in China to make use of the huge mobile network, the company created a mobile app to digitalize the process of insurance purchasing and customize insurance products for consumers. Besides, consumers can implement self-service claims by using the WeChat account of Allianz. Through those strategies, Allianz provided superior quality service to the Chinese consumers and expended its market in China.

AIG (美亚保险) presence in China

AIG insurance belongs to the American International Group and it is one of the largest wholly foreign-owned insurance companies in China. The company provides travel insurance to more than 1 million Chinese consumers every year. In 2017, the total premium of AIG insurance reached 1.6 billion RMB in China. The company localized in China by building seven branches in Shanghai, Beijing, Shenzhen, Guangdong, Jiangsu and Zhejiang. The travel insurance products of AIG target overseas tourism, domestic tourism, road trips and island tourism. In order to adapt the Chinese tourism market, AIG also launched distinctive insurance products, such as insurance products target on smartphones and outdoor activities like surfing, skiing, diving, etc.

The potential opportunities of the travel insurance market in China

Customized tourism is becoming more popular in China, along with independent tourism and niche destination tourism. Chinese tourists are also trying more dangerous activities while traveling, such as bungee jumping, paragliding, and surfing. These types of activities often require insurance packages to cover any risk of injury. As more travel that is adventurous becomes more popular among Chinese tourists, creating more opportunities to enter the travel insurance market in China.

Children and seniors have strong demands for travel insurance. Tourism is one of the most popular leisure activities for the Chinese senior citizens, in fact, seniors make up more than 20% of China’s tourists every year. However, there are not many travel insurance products targeting seniors, and single insurance products are unable to adapt to the diverse needs of consumers. As the number of travelers from and within China will very likely continue to increase, insurers should seize the opportunity to increase their market share by developing new products and identifying new customers groups, and making travel insurance more easily accessible.

Our report on Chinese travellers:

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This article The travel insurance market in China: Strong demands from the growing tourism industry is the first one to appear on Daxue Consulting - Market Research China.

Italian National Tourism Department Promotes Chinese Tourism in Italy on Digital Platforms

In 2018 more than 5 million Chinese tourists went to Italy and it’s estimated that this number will exceed 6 million in 2019. According to the Italian newspaper, IL SOLE 24 ORE’s report on July 30th, each Chinese tourist in Italy spent 1167 euro on tax-free products on average. How can Italian tourist destinations attract Chinese tourists? Italian National Tourism Department has a Weibo account which has attracted 310,836 followers with 2,191 posts and an average posting frequency of 3 posts per week. To promote Chinese tourism in Italy, it has been dedicated to sharing Italy-related information, covering from views, food, history, events, local customs and so on.

The top two hottest posts of Italian National Tourism Department are polls for your favorite Italian food in summer and the place in Italy you want to have a road trip at the most. As a result, gelato and Tuscany won the most votes respectively. Their voting posts with interactive dialogues and hashtags successfully promoted followers engagement.

To further enhance users engagement and gain more followers, Italian Tourism Department can use lucky draw with incentives. For example, in mid-autumn festival, Atout France encouraged followers to repost, comment and @ their friends with French wine as incentive. Moreover, compared to the Weibo official accounts of other countries Tourism Departments who usually have 1-3 posts every day, Italian Tourism Department has relatively small number of posts and low posting frequency.

Baidu analysis of Chinese Tourism in Italy through Chinese perception of Italian cities

Florence

Florence takes first place of the search results of the Italian cities we focused on, and 10% of tourist spending in Florence is from Chinese tourists. Being perceived as the cradle of the Renaissance and home of the greatest artistic treasures in the world, Florence is a popular travel destination for Chinese people, where they enjoy visiting the museums and churches especially Pizza del Duomo. Besides the tourism-related content, its football club, ACF Fiorentina, also contributes to the high search volume. They also search about Florence Village, the premium outlets in 6 major cities of China.

When people search Florence on Baidu, there are quite a lot relative keywords about other popular travel destinations in Italy such as Rome and Milan since they are the top 3 most well-known Italian cities, as well as the tourist attractions in Florence.  

Bologna

Bologna is a lesser-known Italian city for Chinese people with limited search results. People mostly search for information about universities in Bologna including the courses, application and rankings. The football club is also highly-ranked in the search results. Bologna is recognized as a niche tourist destination for Chinese and they are interested in its history since it is the oldest city in Italy.

The relative keywords are usually related to its football club such as Sinisa Mihajlovic, the former coach of Bologna Football Club, and the University of Bologna.

Naples

Naples is another well-known Italian city with relatively high search volume. It is known as the birthplace of pizza and the most important city in the south of Italy. Chinese tourist enjoy visiting the old castles by the sea, volcanos and the food, while they are also worried about the security of the city. There are a lot of search results about the four Neapolitan novels by Elena Ferrante and the TV series based on these novels. Likewise, Chinese people are also interested in its football club, SSC Napoli.

The top 3 relative keywords are Neapolitan novels, Carlo Ancelotti who is the coach of Naples football club and Reine de Naples, the Breguet watch created for the Queen of Naples.

Sicilia

Chinese people have relatively high awareness of Sicilia and their knowledge about this city is mostly from movies, such as Malena (西西里的美丽传说) which is named as ‘The Beautiful Legend in Sicilia’ in China and is famous among Chinese audiences with good reviews. Attracted by its beautiful views, mixed culture, Mediterranean weather and fascinating stories, a lot of Chinese tourists choose it as their travel destination such as couples spending their honeymoons. It is also known as a wine-producing area.

Foreign movies are quite popular among the Chinese audience, and movies have even been cited as a reason Chinese tourists choose certain travel destinations. It can be shown in the relative keywords, including Malena, the Godfather and the leading actress of Malena, Monica Bellucci, that the popularity of Sicilia is highly connected to movies.

Milan

Milan is the hot Italian city with the highest daily search volume. It is perceived as one of the world’s fashion capitals by Chinese people and the news about Milan fashion week every year strengthened this perception. In Milan, Chinese tourist spending makes up 36% of all tourist spending. In addition to its reputation amongst Chinese for fashion, it is also renowned by other aspects such as the commercial center, architecture, universities and football. The AC Milan football club takes up most of the top Baidu results. For most Chinese tourists, they are interested in its shopping centers, art museums and churches.

According to the relative keywords in Baidu index, Milan not only has high correlation with its football club, but also other popular travel destinations in the north of Italy including Venice and Florence. Due to their geography locations, Chinese tourists usually visit them together and they search for the transportation information between these cities beforehand.

What you should know about Chinese tourism in Italy

As Italy maintains its reputation of a world-class tourist destination in China, Chinese tourism in Italy is booming. In the meantime, Chinese tourism as a whole is becoming increasingly sophisticated with more focus on customized travel and niche destinations, which created more opportunities for lesser-known Italian cities. By understanding Chinese perceptions of Italian cities, they can reach to Chinese tourists and promote Italian tourism in a more effective way especially through digital marketing. Platforms such as Weibo, Red and WeChat are crucial to raise Chinese tourists awareness of Italian tourism.

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Atout France Actively Promotes French Tourism on Chinese Digital Platforms

The Weibo official account of Atout France has attracted 1.6 million followers with 6,125 posts in total and an active posting frequency of 1-3 posts per day. It has been sharing a wide range of topics about France, including views, food, history, travelling tips, exhibitions and events information, to interact with Chinese audience and promote Chinese tourism in France.

The top 5 hottest posts are all related to the new Paris tourism ambassador, including the endorsement of a C-pop boy group. This shows celebrity endorsement and KOL marketing can effectively boost awareness in the tourism industry, especially among young travelers like  Generation-Z.

The Atout France official Weibo account has a high engagement of its follower. They posted interactive dialogue, “Do you know the story behind Le Moulin Rouge?”, voting on “What’s your favorite sea food in Plateau de fruits de mer” and offered incentives through a lucky draw to encourage followers to comment and repost, thus enhancing follower engagement.

Baidu Analysis of Chinese Tourism in France through Chinese perception of French cities

Marseille

Marseille is a relatively popular travel destination for Chinese people. Chinese travelers show interest in its natural views and outdoor activities, and they relate it to a lot of famous French literature, such as The Count of Monte Cristo. Marseille is also well-known for its football club, Olympique de Marseille.

To distinguish the search result of Marseille and a Chinese actress who share the same Chinese name, we use “法国马赛” (France Marseille) as the search word in Baidu index. It is mostly related to other popular travel destinations in France such as Paris and Lyon. People usually go to multiple cities when they travel to France and they like to compare and contrast Marseille with other famous cities or do research about how to travel from other cities to Marseille beforehand.

Lyon

Lyon is also a well-known French city among Chinese people. Information about universities in Lyon such as their rankings, applications and courses takes up most of the top search results. As a travel destination, Lyon’s art, food and architecture are most attractive for Chinese people. Chinese people are developing a stronger interest in football, hence they are also interested in its football club, Olympique Lyonnais.

Nice

Nice gains high search volume on Baidu platform. It is another popular travel destination which is usually connected with sunshine and beach. The football club, OGC Nice, is also shown in the search result. The peak in the search index appeared when the Nice truck attack of 2016.

The relative keywords are also mostly other travel destinations such as Monaco and Lyon. Since Monaco and Lyon are close to Nice, Chinese travelers usually visit them together.

Bordeaux

Bordeaux has the highest number of search results on Baidu platform which are mostly related to wine. More and more Chinese tourists in France and Europe are visiting wine vineyards. In addition to Bordeaux wine, the travel guide and football club are also highly-ranked in the search results. The daily search index has been stable with some minor ups and downs in the last 4 years.

The top 3 relative keywords are Gavotte Wine, the wine producer, Cabernet Sauvignon, the one of the most recognized red wine grape varieties, and Bordeaux Mixture which are used as a fungicide in vineyards. 

Strasbourg

Strasbourg is a relatively unknown city among Chinese with limited search result. It is known as an important port city in France especially for people working in international trading industry. It is also a travel destination chosen by some niche Chinese travelers, who are usually interested in its French and German mixed culture, Christmas fair and European Parliament. The RC Strasbourg Alsace football club also contributed to Chinese people’s awareness of this city.

Nantes

Chinese people are less aware of Nantes, which can be shown in the small search volume. Its best known for the University of Nantes and the FC Nantes football club also caught Chinese people’s attention. Travelers who choose to visit Nantes are usually attracted by its history and quietness.

Versailles

Versailles is known by Chinese people not only as a city in France but also as a French historical fiction TV series set during the construction of the Palace of Versailles during the region of Louis XIV. The TV series has gained large popularity in China which has accounted for the main search volume and Chinese audience are attracted by its historical stories, magnificent views, fine clothing and accessories. For traveling, Chinese people are mostly only aware of the Palace of Versailles and frequently searched for the travel information such as transportation from Paris and tickets.

When people search Versailles on Baidu, the relative keywords have high correlation with its history including the Palace of Versailles, Louis XIV and the Treaty of Versailles.

What you should know about Chinese tourism in France

Along with much of Chinese consumption, Chinese tourism in France is also experiencing a consumption upgrade, with more focus on experience, niche destinations, and customized tourism. How can a tourism board effectively reach these increasingly sophisticated travelers? Digital marketing is an effective channel, but there are so many platforms to choose from. In combination with a KOL marketing strategy, niche and lesser-known cities in France can put themselves on the radar for Chinese travelers. As demonstrated by the success of Atout France’s digital strategy, Weibo is one platform that can be used. However, Xiaohongshu can also be used to promote destinations including stores, restaurants, and hotels. WeChat is also not to be overlooked, not only running a WeChat account for promotion, but also local vendors can set up WeChat pay for Chinese tourists in France.

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This article Chinese Tourism in France: Chinese Perception of French Cities | Daxue Consulting is the first one to appear on Daxue Consulting - Market Research China.