Chinese travelers want personalized service

Chinese wealthy gentleman - China Elite FocusChina’s outbound luxury travelers spend $65,000 per household on tourism per year, including $34,000 on travel shopping, according to a new study from Marriott International.

Chinese outbound tourists have long been a high-priority group for luxury brands, but the demands and habits of younger travelers are changing quickly. The digital natives aged between 18 and 36 years old want a more personalized experience, including superior guest services and smart device integration.

China’s young luxury travelers go abroad between three and four times a year on average, primarily for leisure. While France remains the most popular destination in Europe, Japan is the preferred shopping destination given its proximity and favorable exchange rates, while Australia is the preferred leisure destination.

Australia has long been a developed economy, but it is less commonly seen as a haven for growth than North America, and luxury’s home in Europe has also pushed Australia to the back burner for many brands aiming to capitalize on China’s growing tourism rates. A strong presence in Australia could entice wealthy vacationers to make a purchase.

Moreover, western brands should be aware that summer travel is less common in China. National Day Golden Week travel in the early fall and travels for Chinese New Year are nearly two and three times as likely, respectively.

As with North America’s millennials, China’s young travelers get most of their travel information digitally, largely from official WeChat accounts, underscoring the platform’s importance. C-Trip, Qunar and Tuniu are also popular third-party platforms on which hotels should strive for good placement.

While the above generation is more closely defined by a desire for material goods, a reaction to globalization and advertising in the wake of China’s emergence from poverty, its young travelers strive for more adventurous travel. Hotels and retailers alike should tailor messages to these consumers to emphasize experiential components and offerings.

More specifically, over the next three years global travel is expected to increase 25 percent, while polar exploration grows 32 percent, adventure travel by 52 percent and road trips by 75 percent.

However, personalized service is still the biggest consideration in traveling for luxury travelers. Besides a liking for amenities, being able to choose pillows of different firmness and having a butler or personalized service through digital channels are also important. Seventy-three percent demand WiFi while 55 percent want smart TVs, while unique art and design are also high draws.

With luxury growth stalling around the world and quarterly earnings being largely at the mercy of Chinese tourists and which markets they enter, the country remains the top concern for marketers. As it transitions to a consumer-driven economy, China’s growth has fallen below the double-digits that were beginning to feel normal, but it still offers enormous opportunity.

Chinese residents will make 90 million outbound trips in 2020, with that number increasing by an additional 36 million over the following decade, according to a report by Euromonitor.

Outbound trips have increased on average by an impressive 13 percent since 2000, helping China overtake Japan as the second largest consumer market in 2011. With the significance and size of the Chinese tourist market only projected to swell, brands will need to develop a more nuanced understanding of the market in order to reach consumers. In particular sophisticated native advertisement campaigns in influential digital travel publications catering to China’s super-rich, such as the Shanghai Travelers’ Club (STC) magazine, give good results to reach China’s elite.

However, as brands cater to Generation Y consumers and look to the future, they must be as aware of generational differences in China as they are in the West.

In a reversal of the more materialistic tendencies of their parents, almost 95 percent of Chinese Generation Z consumers say it is essential for brands to be sustainable and environmentally conscious, according to a report by RTG Consulting.

The continued growth of China over the next several years will ensure that its consumers remain prime targets for brands for the foreseeable future, as even a slowed China exceeds the growth rate of western nations. As a result, brands will need to make a connection to this group, the first born in a fully modern China, in the interest of long-term success

Source: TheTopTier

Pierre Gervois: What Chinese Travelers Want

Hospitality guru Pierre Gervois on how to cater to Chinese tourists.

PIerre Gervois TV Interview News China 2016

Wealthy Chinese investors are buying cash vineyards, Islands and $170M paintings

Chinese-billionaire-Liu-Yiqian-Shanghai Travelers Club - ModiglianiA hundred years ago, Amadeo Modigliani painted a portrait of his wild British mistress splayed across a red velvet throw, nude, her hips arched, her kohl-rimmed eyes shut. The artist was hardly trying to play it safe – Paris officials promptly shut down the show where the work was first exhibited.

By contrast, the purchase of the painting last week by Chinese collector Liu Yiqian for $170 million was a staid investment and – unlike his bold foray back into Chinese stocks at the nadir of this summer’s crash – much more in line with those of other Chinese billionaires.

If 2008 was the year that the global financial crisis set Chinese wealth flowing across the globe, often in pursuit of dirt-cheap real estate in the United States and Europe, 2015 will be remembered as a year in which private money has been driven out of China and then stranded there while the economy back home adjusted jerkily towards a new normal. And where low interest rates have nudged funds out of banks, continued currency devaluation loomed and a crackdown on corruption has driven wealthy individuals out.

Much of that money has been shifted to property in the U.S., London, Australia, Singapore and Canada. This year Chinese investors surpassed Canadians to become the biggest foreign investor in U.S. residential real estate, spending $28.6 billion in a single year, according to the National Association of Real Estate Agents.

There are also signs that the merely wealthy have joined the ranks of billionaires who bought properties in earlier years.

“The truth is it’s becoming more of a mass market now,” said Maureen Yeo, a General Manager with Fanssmore, a Taiwanese firm that helps connect western developers with Chinese clients. “It’s more about volume.”

While, in the past, Yeo brought clients to 432 Park Avenue in New York, where individual Chinese buyers have scooped up two or three floors worth of apartments for $16 million a piece, and to London’s One Tower Bridge and Royal Wharf, a newer wave of clients is looking for houses at a fraction of that price, leading to more work and less profit for the likes of Yeo.

At the same time those who invested in overseas real estate in the wake of the financial crisis are not selling as prices of their assets rise but are instead broadening their portfolios – moving into different regions, buying different types of property and even investing in the kinds of small and medium-sized enterprises that would be considered high risk back home. For example, Yeo’s earlier clients are investigating investments in vineyards and breweries in Europe. One client just bought a villa on a Greek island. For some, it is the beginning of a plan to bring their money home again, though it’s uncertain when.

“This year is going to be tough and next year is going to be tougher,” Yeo said. “It’s a very cloudy time for us and we just need to wait and see what happens.”

When the global financial crisis hit in 2008, the way Yeo remembers it, elite Chinese investors witnessed markets crashing in Europe and the U.S. and, after years of playing catch-up and being talked down to, had an epiphany.

“The attitude changed and they saw that Westerners were broke but the Chinese had a lot of money,” said Yeo. “So they went offshore to do acquisitions.”

The world’s financial turmoil was barely felt by China. Only a tiny percentage of the population had invested in public markets and the few high net worth individuals who did regarded it as a high risk, short-term investment, balancing their exposure and exiting nimbly at the first sign of trouble. To make up for lost exports the government shored the economy up with stimulus targeting big infrastructure and real estate projects. Private money followed suit, targeting property and branching out to other types tangible assets, including art.

The share of sales going to Chinese buyers at Sotheby’s Asia swelled from five to 40 percent between 2005 and 2012, according to Artnews. Over the same period Chinese collectors established themselves as force in the global art market, bolstering it at a time when it was sagging.

“Chinese art collectors are particularly interested in U.S. and European artists,not that much in Chinese artists”, said Pierre Gervois, Publisher of the Shanghai Travelers’ Club magazine, a publication read by high net worth Chinese. “Auctions houses like Christie’s and Sotheby’s have not yet fully understood that Chinese collectors were interested to buy at auctions in Paris, London and New York, and not very much in Asia. They still have to promote more actively more their prestige sales outside China to Chinese buyers”, Gervois added.

There was so much Chinese money floating around, Yeo’s best year was 2013, well after property prices in New York and London had recovered.

“I had a lot of customers and they were paying in cash,” she said.

Thirty years ago, wealthy Japanese emigres settled here to open the outposts of their newly booming economy. A small wave of Koreans soon followed in their wake.

In New York’s suburbs, most Chinese house hunters flock to the nation’s second-best school district, in Jericho, Long Island, where a well-established Chinese community has transformed neighborhoods, sustaining a network of Chinese agents.

But those who make their way to Westchester are relieved to discover Ng, who produces content for the agency’s website.

“They are happy to see me and of course they rely on me,” she said.

Such clients, said Ng, have a taste for large homes with swimming pools and, as with Yeo’s clients, they pay in cash. Sometimes Ng wonders what would happen if she and her husband wanted to buy in the area in a more conventional manner – with a deposit and borrowings.

“If we wanted to spend just $800,000 and put 20 percent down, I wonder if they would just say, jeesh, nevermind, and turn us away,” she said.

And they probably can. With China’s environment looking inhospitable to the wealthy for some time to come, these sellers are likely to find big-spending Chinese buyers aren’t going away anytime soon.

Source: Article by Zoe Alsop / CNBC, All rights reserved CNBC

China’s wealthiest are fleeing China

Rolls Royce car in China - China Elite FocusDo the wealthy Chinese know something we don’t?

A new report shows that 64 percent of Chinese millionaires have either emigrated or plan to emigrate—taking their spending and fortunes with them. The United States is their favorite destination. One-third of China’s super rich—or those worth $16 million or more—have already emigrated.

The data offer the latest snapshot of China’s worrying wealth flight, with massive numbers of rich Chinese taking their families and fortunes overseas. The main reasons rich Chinese are leaving is to pursue better educations for their kids, and to escape the pollution and overcrowding in urban China.

But analysts say there is another reason the Chinese rich are fleeing: to protect their fortunes. With the Chinese government cracking down on corruption, many of the Chinese rich—who made their money through some connection or favors from government—want to stash their money in assets or countries that are hard for the Chinese government to reach.

According to WealthInsight, the Chinese wealthy now have about $658 billion stashed in offshore assets. Boston Consulting Group puts the number lower, at around $450 billion, but says offshore investments are expected to double in the next three years.

A study from Bain Consulting found that half of China’s ultrawealthy—those with $16 million or more in wealth—now have investments overseas.

The Shanghai Travelers’ Club, a China Elite Focus luxury lifestyle publication for China’s wealthiest, reported that 62% of their readers will consider to buy a property overseas in 2014, and 76% of them had overseas investments.

The mass millionaire migration out of China is also hitting luxury companies hard.  China’s luxury sales last year fell 15 percent—the biggest drop in over a half a decade. Spending on gifts, which made up a sizable portion of luxury sales, fell 25 percent.

Bentley Motors last week said that its sales in China slowed last year in part because of “the migration of high net worth individuals from China.”

In other words, it isn’t that wealthy buyers in China are spending less—they’re just disappearing.

 The United States was their top destination, which any real estate agent in San Francisco, Seattle or New York can confirm. Europe is their second favorite destination, followed by Canada, Australia, Singapore and Hong Kong.

Source: CNBC

Chinese billionaires snap up superyachts

yacht-shanghai-travelers-clubSuch is the growing demand in China for superyachts that yacht makers are now starting to install special features that appear to the wealthy Chinese market.
Superyachts have long been a staple for the world’s rich and famous and now, it is China which is snapping up the multi-million pound boats.
In 2013, the British yacht-building company Sunseeker was bought by China’s richest man Wang Jianlin for nearly $500 million.
Since then demand has risen, with more than half of the company’s customers now coming from outside Europe. You’d be forgiven for mistaking this yacht as a designer penthouse. Every gadget and parts in this decadent home, which sleeps 12, are made to the highest luxurious standard.
This is the world of the superyachts – a world the Chinese market is tapping into.
Stewart McIntyre, managing director at Sunseeker, said: “The way the Chinese economy works, they’ve clear got a lot of very, very wealthy people and they’ve got into boat fairly quickly along with other luxury assets like cars, helicopters and private jets.”
At the London Boat Show, there are plenty of high-net worth individuals ready to snap up luxury on the water.
And just like property in London, so many of these superyachts are being sold to customers outside of Britain.
More than a third of Sunseeker’s orders now come from customers outside of the EU and according to a report, yacht sales in China are set to grow 13 per cent from 2012 to 2017.

Such is the growing demand in China for superyachts that yacht makers are now starting to install special features that appear to the wealthy Chinese market.wealthy Chinese - Yacht - China elite focus
Whether it’s a custom made karaoke room or a mahjong table being installed on the upper deck, yacht makers are going the extra mile for the Chinese customer who is spending in excess of $16 million. ” Last year, a reader of the Shanghai Travelers’ Club contacted us discretely because he needed an introduction with a yacht broker to buy a $35 Million yacht. The deal was made less than three days after we gave him the contact. He was in a rush to buy a yacht, but he never explained why. Of course, we never asked.” said Pierre Gervois, CEO of China Elite Focus and Publisher of the Shanghai Travelers’ Club magazine, a luxury travel publication for High Net Worth Chinese

The culture of boating in China is also different, these yachts are not being used to sail the high seas – but instead being used for business and entertaining.
“Apart from boardrooms, karaoke rooms and mahjong rooms on their boats, they like luxury and the like things that are new. They like the latest products, latest materials and latest fabric according to their specifications and their lifestyle,” explained McIntyre.
Despite the growing success in China for British yacht builders, gaining an even stronger foothold will not be easy.
European yacht exporters have to pay a 43 per cent import tax on vessels sold to the mainland. But if the success continues, this slice of British luxury looks set to fill up Hong Kong harbour for some time to come.

China’s Rich Fleeing the country

Wealthy Chinese- Shanghai Travelers ClubIt’s one of the largest and most rapid wealth migrations of our time: hundreds of billions of dollars, and waves of millionaires flowing out of China to overseas destinations.
According to WealthInsight, the Chinese wealthy now have about $658 billion stashed in offshore assets. Boston Consulting Group puts the number lower, at around $450 billion, but says offshore investments are expected to double in the next three years.
A study from Bain Consulting found that half of China’s ultrawealthy—those with $16 million or more in wealth—now have investments overseas.
And it’s not just the money that’s exiting the country. The wealthy are increasingly following their money overseas.

Another study from China Elite Focus, the publishing company of the Shanghai Travelers’ Club magazine, a luxury lifestyle publication for Chinese billionaires, showed that 72% of Chinese with a personal wealth over $50 million will consider to purchase a property overseas in 2014.
A study by Bank of China found that more than half of China’s millionaires are considering emigrating or have already taken steps to move overseas.
Many experts say that the wealthy are moving to protect their wealth, their health and their families. With China increasingly cracking down on ill-gotten gains and corruption, many of the politically connected wealthy are looking for safer havens abroad.
They are also looking for better environments for their children—with better schools and cleaner air.
“Whether it is the perceived political instability or perhaps lack of educational opportunities, or pollution in the urban environments there, when you put those altogether … and you mix that with the wealth that’s present in China now, it really makes sense that there are folks there looking to explore these opportunities,” said Peter Joseph of the Association to Invest in the USA, which represents investor-visa programs in the U.S.
Some say the capital flight and millionaire migration are normal consequences of rising wealth. Oliver Williams, of WealthInsight, said that the Chinese wealthy have about 13 percent of their wealth overseas—below the global average of 20 percent to 30 percent.

Still, much of China’s offshore wealth is moved illegally or in the shadow economy. China maintains a closed capital account and Chinese citizens are generally not permitted to move more than $50,000 out of the country. So reliable data on exactly how much money is moving out remains unclear.
But the global buying spree by wealthy Chinese suggests the numbers may be far higher than reported. Wealthy Chinese buyers purchased more than $8 billion worth of residential real estate in the U.S. in the 12 months ended in March, according to the National Association of Realtors. China’s share of foreign-purchased residential real estate has jumped 50 percent since 2011.
One of China’s richest women, Zhang Xin of developer SOHO China, recently bought a townhouse in Manhattan for $26 million, according to reports.
China’s wealthy also are pouring money into collectibles and art. Billionaire Wang Jianlin and his company Dalian Wanda last month bought a Picasso at a Christie’s auction for $28 million. Bidding from Chinese buyers was strong throughout the auctions, according to dealers and gallerists.
It’s also going to wine and diamonds. Diamond dealers say more than half of today’s collectible diamonds are going to Chinese buyers. And on Saturday, the world’s most expensive case of wine—1978 Romanée-Conti—sold in Hong Kong for $476,000.

Wealthy Chinese buy their dream houses in Silicon Valley

Wealthy Chinese Businessman- Shanghai Travelers ClubSilicon Valley is booming, and the Chinese are starting to cash in on the region’s housing craze.
With tech stocks surging and IPOs sprouting up left and right, the area is in the midst of a real estate bonanza that’s attracting a wave of buyers from China.
The average price of a home in Silicon Valley has surged more than 27 percent over the past two years, according to home purchase data from Santa Clara County.
Technology executives, budding entrepreneurs and venture capitalists are putting their money to work in the Silicon Valley real estate market, and they are finding new competitors from around the world, especially from China.
Ken DeLeon—named by The Wall Street Journal as the country’s most successful real estate agent—said he has done close to $300 million in sales this year and that the market has never been hotter.
DeLeon said that in the past year he has sold more than 20 luxury residences in the Palo Alto area to buyers from mainland China, Taiwan and Hong Kong. Most of those buyers are looking for houses in the $2 million-plus range, he said.
Business is so brisk that the agent recently bought a Mercedes bus to shuttle his Chinese customers around the valley.
They are serious buyers, he said, adding that several have bought modest houses on a decent-sized lot, then undertaken ambitious renovations. Some tear down the house, dig a deeper basement and add several floors.
“The Chinese know there is good appreciation potential in this market, and buying here provides diversification for their real estate holdings,” said DeLeon, the president of DeLeon Realty.
The trend goes beyond Silicon Valley. The National Association of Realtors recently said the Chinese are now the second-largest group of international homebuyers in the U.S., behind Canadians. The same study said the Chinese are particularly interested in Northern California.
Real estate agents and builders said Chinese demand is just another reason housing prices continue to rise in Silicon Valley.
Fred Lam of Alain Pinel Realtors in Palo Alto said his Chinese clients want brand-new, furnished houses made with high-quality building materials. Lam has done close to $40 million in sales over the past year and said he’s seen a definite increase in the number of Chinese buyers in Silicon Valley.
General contractors and builders also have benefited from the influx. One Silicon Valley builder, who asked not to be identified, said Chinese buyers typically want big media rooms, marble moldings and high-end finishes.
Real estate professionals said Chinese families are drawn by a better way of life, with the biggest selling points including the weather, excellent local schools and much less smog than in Beijing.

Source: CNBC’s Mark Berniker and Josh Lipton.