The Chinese middle class – they are wealthy, have a passion for travel, a love of brands and are providing new opportunities for the Australasia region, as new research from Mintel finds that as many as 40 percent of all Chinese middle classes holidayed in Australasia last year, making it the most visited region worldwide for Chinese middle class consumers.
Within Australasia, Australia has proved to be the most popular destination, with more than a third (35 percent) of this group having travelled to Australia last year alone. Meanwhile, almost one in five (19 percent) visited New Zealand. And while the comfort of a package has seen this type of holiday remain the number one way to travel, three in 10 (30 percent) having opted for a package in the past year, the Chinese middle classes are also pioneering the concept of the "independent" holiday, almost a fifth (17 percent) having travelled to Australia this way last year.
Paul French, chief China market strategist at Mintel, said:"Australia has been growing in popularity for a number of reasons. It is under nine hours of flying time, so less than Europe. There are also an abundance of luxury brands, casinos are plentiful and visa procurement for Chinese visitors there is easier. Right now the vast bulk of Chinese tourists arriving in Australia are on group tours – low cost packages with the bulk of any profits remaining in China with the travel agents, meaning that it’s up to tourism service suppliers in Australia to extract the cash."
But it is not just Australasia which is proving popular. Europe is the next most popular region, with as many as 37 percent of consumers holidaying there last year. France tops the list with a quarter (25 percent) of the Chinese middle classes choosing France as their destination of choice, while the UK is a close second at 22 percent. Meanwhile, a third (32 percent) of the Chinese middle class travelled to North America last year. And the appeal for overseas items is clear as just 6 percent say they have not purchased any luxury items while travelling outside of China, highlighting the cache for brands in international markets.
The research also reveals that just 5 percent of the Chinese middle class are not intending to buy any luxury item in the next year and the importance of luxury goods is highlighted by the segments the Chinese middle classes intend to invest in over the coming year. A massive 67 percent intend to invest in luxury clothes, 60 percent in clothes and footwear, 58 percent in jewellery and watches and 45 percent on electronics. A further 28 percent state that they intend to purchase luxury furniture and home appliances, a fifth (21 percent) into cars and motorcycles and 14 percent to purchase luxury branded pens.
"The global spending power of Chinese consumers has become the stuff of new legend. Chinese travelling overseas to spend and ‘arbitrage’ purchases, particularly on items that attract high taxes at home such as luxury goods, has become a new theme of global retail and consumption," adds Paul.
Indeed, China’s emergent middle class is gadget and technology crazy and can afford to be. Today, 96 percent of those defined as middle class own a computer and 90 percent own a digital or video camera. Desktop Computers (88 percent), HD TV (83 percent) and DVD Players (70 percent) make up the remaining top five gadgets owned. While the lowest ownership levels rated were for 3D TV – around one in four (26 percent) Chinese middle class consumers own one – and a noteworthy 0 percent of those surveyed claimed to not own any of the gadgets listed. However, the big revolution in China is smartphones with 97 percent adoption amongst the middle classes.
China’s electronic appliances market, both brown and white goods, has also boomed in recent years and the number buying appliances in the last three months indicates why (39 percent for brown goods (including televisions, PCs and game consoles) and 42 percent for white goods (including washing machines and fridges). The middle class desire to own gadgets is also shown in the response that over half (53 percent) of the middle class are planning to buy some form of brown goods in the next three months, while 43 percent plan to buy a white good over the same three month period. And while in the past credit was a hurdle for retailers to overcome to encourage spending, according to Mintel’s research 43 percent of Chinese middle class consumers have one card and 52 percent more than one.
In 2012, middle income (those consumers who are urban, invariably white collar workers and have a household income of between approximately USD9,000-USD30,000) households constituted fully 13.4 percent of total urban households in China, or approximately 30 million households or approximately 100 million people.