Chinese tourism plays an important role for retailers in Canada, especially luxury brands, as in 2019 it “was the largest source of tourism arrivals from the Asia-Pacific region and Destination Canada’s second largest long-haul market and largest spend,” according to Jingjing Zheng, the Founder and Managing Director of Hexie. This was affected during Covid, and Zheng says it will mostly take a year or longer to fully recover to pre pandemic levels and talks about how China has an important part in Canadian retail.
“I am sure during Covid years things have completely changed, but now when I am looking at the recovery, I think we should look back at 2018 which was the peak as Chinese tourists spent the most amount of money in Canada compared to other countries, spent the most on luxury items, and spent the most time in Canada. So it was really obvious that Chinese tourists were one of the strongest and the most interested in luxury tag items.”
Zheng said in 2019, Chinese tourists spent an average of $2,900 per trip and spent an average of 44 nights. During Covid, the number of Chinese tourists, immigrants, and students dropped due to restrictions, causing a decrease of more than 19 percent according to Immigration Refugees and Citizenship Canada. Now since schools have mandated students back to campus earlier this year, Zheng says the pre-pandemic levels are expected to return.
“The number is expected to quickly return to what it was before the pandemic, but I would say the recovery is very slow, but might take a year or more. So with things slowly going back to normal, I would say it will probably take a year or even more to fully go back to the peak level, but it will come back and it is important that they do as Chinese customers are very important to luxury brands.”
Connections to Canada
Zheng said in China, Canada is the top destination for traveling and immigration and says a lot of them visit Canada first before immigrating. In addition, Chinese people also visit more and spend more time in Canada because of their connections such as family and friends and therefore, will have time for sightseeing and more time shopping.
“If you look at the pattern, the type of people that come to Canada to visit, they are quite different from the tourists that go to Europe or even the United States. A lot of the Chinese tourists that come to Canada have some sort of ties, either they have kids studying in a Canadian university or they have friends who are immigrants. So the pattern, even before Covid, was that they could come here and they would spend longer times rather than just sightseeing, they would spend more time with their family, and spend more time shopping.”
Zheng also said that with the recovery of international students coming back, there will be a huge increase in the number of students and as there was a lot of negative views on how the Chinese government handled Covid and says because of this, there will be more people looking at immigration and heard from various immigration consultants that there is a huge demand in wanting to move to Canada. Zheng said that, although Chinese tourists shop in Canada and are important to luxury retail – it is not a reason why they come here as Canada is not seen as a destination for luxury shopping.
The Importance of Chinese Shoppers to Luxury Retail
Zheng said Chinese locals, tourists, and students are the most important group for luxury brands and although the exact statistics are unknown due to privacy regulations, Zheng said before Covid between thirty to fifty percent of revenue from luxury brands came from Chinese shoppers and as we head into recovery, there are ways we can improve and attract Chinese shoppers back to Canada.
One way is to have more Canadian luxury brands as Canadian brands are more known as environmentally friendly, safe, and clean – but we don’t have the same luxury brands as you would find in France or Italy. And with the Canadian brands that already exist, such as Lululemon and Canada Goose, Chinese shoppers play an extremely important part.
“Seeing the Canadian brands grow and become luxury brands that Chinese consumers will also love – that is our future. It is not like you should come to Canada to buy Louis Vuitton, you can buy it here but that is not our selling point. The key would be to grow our own luxury brands and that would be a win for Canada and the rise of these brands will help change the perception of Canadian brands.”
Furthermore, Zheng says the luxury brands we do have such as Lululemon and Canada Goose are fuelled by Chinese shoppers and they play an important role in building up these brands into luxury brands, growing them within the Chinese communities, and expanding them into the China market, which Zheng says helps brands grow stronger and into who they are today. Both Lululemon and Canada Goose have flagship stores and very strong Brick and Mortar stores in China.
Launching an Asian Influencer Marketing Platform
Zheng said one thing that will help bring back Chinese shoppers to Canada is putting more effort into bringing awareness and marketing and she is doing this by creating an Asian influencer marketing platform which will be available soon.
“We are going to be the only platform in North America to have local Chinese influencers within our network and they are very active online, especially in the luxury category, and these are the people that are going to be very important to retailers.”
The influencers, between the ages of 18 to 40, range from thousands of followers to millions of followers. The bigger ones will have an international reach, including China, which will help retailers have a deeper understanding of their audience. Zheng said the influencers are a mix of international students, new immigrants, and most of them live a luxury lifestyle. The followers, Zheng said, are the people retailers can reach out to and can help up their marketing game as the followers “are accurate consumers who are interested in spending money in luxury.”
“We know for sure that local Chinese, students, and recent Chinese immigrants are very important to all luxury brands, and should be retailers number one focus, and there is more we can do. There are more effective ways to reach out, more strategy, and more work can be done. People don’t think Canada is a shopping destination for luxury, so by changing the narrative and promoting Canada more is going to help.”