Outbound travelers shrug off declines in yuan value
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E-mail China Daily, June 20, 2016
When the yuan fell to 6.58 to the US dollar, the lowest level in five years, on Friday, it marked the Chinese currency's 1.4 percent depreciation this year. Alarm bells rang in some sectors, but not in the tourism industry, which continues to remain sanguine.
For, the yuan's descent against the greenback is unlikely to hurt the market for outbound trips of Chinese tourists, experts said.
Although local currency exchange rates matter in trips to all destinations, not just the United States, it's the dollar-yuan rate that has implications for other rates.
But, given the yuan's internationalization, reasonable fluctuations in currency exchange rates are to be expected, and should not cause undue concern, said Jiang Yiyi, director of the International Tourism Development Institute, which operates under the aegis of the China Tourism Academy.
She said the yuan's current weakness had only a marginal effect on Chinese tourists' purchasing power abroad. "The impact is minor."
Agreed executives at top travel agencies.
"The biggest cost in US trips are flights. Prices of most of our travel products were announced six months ago. Recent exchange rate fluctuations have not caused much change in prices," said the public relations department of Ctrip.com International Ltd, China's largest online travel agency.
On Ctrip, the average price of a trip to the US from China works out to about 20,000 yuan ($3,070) per person.
Like Ctrip, Beijing Utour International Travel Service Co Ltd fixes the yuan prices of its travel products much in advance, sometimes two years beforehand. "The yuan's recent depreciation won't get reflected in our prices," said Li Mengran, its publicity manager. "But (Chinese) tourists' purchasing power may weaken a bit when they visit US malls."
A Chinese tourist, she said, may have to fork out 650 yuan this year for a bag that might have sold for 600 yuan last year.
More than half of Utour's proposed summer trips to the US have been sold already, and are expected to be as popular as those in previous years.
She said boutique tours and in-depth short-term travel products with a focus on children's interests are well received among Chinese travelers. Summer camps in the US, the United Kingdom and Canada are much sought after. Parents also prefer Singapore and Malaysia as they involve short (six-hour) flights.
Two factors are key to outbound Chinese tourists who double up as consumers abroad.
One, the widening price gap between imported goods in China, which are perceived as superior, and the same products bought abroad. So, Chinese travelers tend to buy a lot at duty-free shops during their trips as this works out cheaper than buying imported goods in China, which are subject to high taxes and hence expensive.
Two, Chinese consumers' low confidence in domestic brands, which experts blame on poor supervision of quality, especially of baby-and-mom goods like infant formula and maternity products, medicines, health supplements, even personal hygiene items.
The travel-and-shop phenomenon is consistent with the broad global trend of the past five years.
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