China’s Middle Class: New Global Travelers

Recently, I was interviewed by Travel Weekly, a national newspaper of travel industry, on increasing Chinese travelers and how they affect the travel industry in the U. S. Below is an excerpt of my conversation with Diane Merlino, editor in chief of Travel Weekly PLUS:

Merlino: How do you define the Chinese middle class?
Wang: Chinese middle class households earn between $10,000 and $60,000 a year, but those figures can be misleading because the cost of living in China is very different from what it is the West. In the U.S. you can’t even get by on $10,000, but in China $10,000 is the beginning of having a lot of purchasing power in certain areas, especially in smaller cities. In Shanghai, the cost of living is quite high; that’s why there is that range in income.

So, the rule of thumb I use is a family is considered middle class in China if the household has a third of its income available for discretionary spending.

Merlino: Give us an idea of the size of the Chinese middle class and the growth rate of that demographic.
Wang: Five years ago, when my book first came out, the Chinese middle class was estimated at 250 million to 300 million people. Today, the middle class has reached an estimated 450 million people, and we’re projected to reach 800 million middle-class Chinese by 2025.

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Merlino: How important is travel to the Chinese middle class?
Wang: 
A lot of Chinese have a desire to travel because China was closed 30 or 40 years ago. Very few people traveled during that time, but now that China is opening travel, to go see the world is a life goal for a lot of people. The younger generation, those in their 20s and 30s, are traveling a lot. If they have less money, they travel within China, but now when I travel around the world I see so many younger Chinese. It’s amazing.

Merlino: What preferences or characteristics of Chinese travelers should U.S.-based travel companies interested in securing their business be aware of?
Wang: 
A lot of Chinese prefer to travel with friends or in groups. Five years ago, I started to see a lot of Chinese traveling overseas. I saw them when I was in Egypt and then in Italy. But I almost never saw them in my hotels — a Sheraton or a Westin.

Now I know one characteristic of the Chinese is that they seek value. They want to travel to see the world, they want to buy some luxury goods to bring back and show their friends, but they will stay in a very economical hotel or less expensive hotels when they travel because that part of indulging is less important for them.

But this is changing very quickly. I’ve recently started to see Chinese travelers in Westin resorts, younger people in their early 30s. So they are moving up the ladder very quickly. Not only are they traveling to see the world and bring back some luxury goods to show off, but they are also starting to enjoy staying in these relatively high-end hotels.

Merlino: You mentioned buying luxury goods. Is high-end shopping a big part of the experience for Chinese travelers?
Wang: 
Yes, and they are buying a lot more luxury goods overseas than ever before. I just saw somewhere that Chinese travelers spent over $100 billion buying products to bring back to China. Definitely shopping is real big.

Merlino: Why is shopping such a big part of the Chinese travel experience?
Wang:
 Part of it is that tourism is relatively new, and all of a sudden they have a lot of access to material goods, a lot of choices. Part of it is also to show they are doing well. They feel good about that, and they want to show the world, show their friends and family, “I’m moving up. I can afford this. I can afford that.” They see consuming luxury goods as a quality of life.

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To read full interview, visit here.

 

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