“There is a lot of catching up to do”: The world is waiting for the return of Chinese tourists

As China reopens to the world for the first time in almost three years, 24-year-old May Liang is wasting no time planning her first trip.

The student from the city of Nanjing hopes to travel to Hong Kong later this month and has already budgeted Rmb5,000 (US$730) for high-end cosmetics.

“I miss the streetscape, the atmosphere and the food so much,” she said. “Beauty products sold in Hong Kong still have a competitive advantage in terms of price. I trust their authenticity more than what is sold on Chinese e-commerce platforms.”

Since early 2020, the world’s largest tourist population has been cut off from the world by China’s apparatus of zero-Covid restrictions, which has included mass testing, lockdowns and quarantine on arrivals.

A woman arriving from China enters a Covid-19 testing center
Some countries impose border controls and mandatory testing for visitors from China © Lee Jin-man/AP

That will change this weekend, when Beijing finally scraps the last of those measures. Around the world, airlines, hotels and luxury companies are preparing for the return of tens of millions of tourists and their hundreds of billions of dollars – although experts have suggested the revival could take months to gain full momentum.

May’s travel visa to Hong Kong, which reopens its shared border with China on Sunday, expired in 2019 and she has been unable to renew it while services have been suspended during the pandemic, reflecting greater obstacles to travel from the locked-down country. China had “strictly limited” foreign travel to prevent its residents from returning with the virus.

In 2019, before the coronavirus pandemic, 155 million Chinese traveled abroad and spent $255 billion, according to analysts at Citi, which forecast a solid recovery in the first quarter of 2023 and a mass tourism recovery in the second.

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The earliest impact will likely be felt in Hong Kong, where tourism accounted for 4.5 percent of the economy in 2018. The city government has announced a quota of about 60,000 daily arrivals in each direction when it reopens the border on Sunday.

Her return is eagerly awaited. In the first 10 months of 2022, only 249,000 mainland visitors came to Hong Kong, up from more than 51 million in 2018.

Mainland tourists’ penchant for luxury goods has also been the lifeblood of Hong Kong’s faltering retail sector, which lost its crown of the world’s most expensive retail district last year by renting New York’s Fifth Avenue, according to property consultant Cushman & Wakefield.

For key global destinations like Europe and the US, limited commercial flights and a backlog of visa applications mean it could take time for the impact of China’s reopening to be felt. The China Outbound Tourism Research Institute estimates that 18 million Chinese tourists will travel internationally in the first half of the year, followed by 40 million in the second.

“There is a lot of pent-up demand for travel from the Chinese, but the problem is how agile we will be to accommodate them by issuing visas and creating additional flight connections,” said Eduardo Santander, chief executive of the European Travel Commission.

Harrods, the London luxury department store, is buying clothes designed for a Chinese fit for the first time since 2019. Michael Ward, chief executive, pointed to the lack of flight availability as an early obstacle but predicted an acceleration later this year.

“We are talking about very significant numbers when Chinese tourists return,” he said. “Our outlook has improved in two ways: it allows us to return to the country to speak to high net worth individuals and it allows us to win back old friends who we haven’t seen in the UK for years.”

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In Japan, where pre-Covid Chinese tourists accounted for 30 percent of overseas arrivals, their return will be crucial to meet an annual target of $37 billion for the industry. Some traders have linked the yen’s recent appreciation from recent multi-decade lows to retail investors betting that an influx of Chinese tourists will reignite buying behavior.

Masaki Akita, president of department store chain Matsuya, told reporters this week that the group expects grocery and cosmetics sales to increase, while rival Isetan Mitsukoshi expanded tax refund counters at its flagship department store in Tokyo’s Shinjuku business district in November.

However, as Japan joins countries like the US, UK, France, Italy and Spain in imposing border controls and mandatory testing for visitors from China, analysts could say it could take up to two years for arrivals to return to pre-pandemic levels recover.

“We’re beginning to see the return of wealthy Chinese customers, but we don’t expect the kind of explosive purchases of cosmetics that we’ve seen in the past,” said a spokesman for Isetan Mitsukoshi.

In the US, where China was one of the biggest sources of inbound tourists prior to the pandemic, businesses are also yet to fully prepare. Expedia, the travel website, said searches for flights from China to the United States rose 40 percent after Beijing last week decided to lift quarantine rules on inbound flights, while searches in the other direction doubled.

The speed of the policy reversal, just as China was gripped by its worst outbreak of the pandemic, surprised viewers. Michael Yu, a 30-year-old office worker in Shanghai, had already arranged a September trip to Italy for a November wedding despite the restrictions in place at the time.

“It was predicted at the time that the reopening would take place in the first half of 2023, but I didn’t expect it to be that soon,” Yu said.

In many cases, enforcement of the zero Covid rules effectively stopped after the relaxation was announced, well before the Sunday deadline.

When Zhao Xiaoou, a 26-year-old master’s student from Zurich, flew back to Shanghai this week after nearly a year and a half abroad, the quarantine rules were still in place, but he escaped confinement. Police and airport staff are not particularly concerned, he said. Only the hotel industry – an industry that has itself suffered from the lack of tourism – still tried to enforce it.

“The hotel [wanted] a bit of extra income wherever they could get it,” he said.

Additional reporting by Xueqiao Wang in Shanghai, Oliver Barnes and Arjun Neil Alim in London, Andy Lin, Chan Ho-him, Gloria Li in Hong Kong, Andrew Edgecliffe-Johnson in New York and Kana Inagaki in Tokyo

https://www.ft.com/content/c58661a7-4516-441b-9dc1-6186bac76aa6 “There is a lot of catching up to do”: The world is waiting for the return of Chinese tourists

Adam Bradshaw

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