China’s Tourism Industry Experiencing Resurgence, But Consumer Market Worth $6 Trillion Still Recovering from Significant Downturn

China Tourism Industry

After a dismal fourth quarter, China’s consumer rebound from zero COVID is off to a strong start.

Guangzhou’s Michelin-starred Rêver restaurant returned on Thursday after a Lunar New Year vacation to a “sold out” crowd, according to the chief operating officer of the Guangzhou venue, Edward Suen. He reported that the following three days’ reservations were almost full.

Rêver’s income dropped by around 35% in 2017, and he’s hoping this year will be better. In late 2022, when China was implementing its COVID regulations, the city of Guangzhou was one of the most impacted. However, in early December, Beijing unexpectedly halted most efforts, and a wave of illnesses swept the nation.

“Quite a few individuals booked bookings but then became infected, so last Christmas was the first time in three years that we didn’t run a full house,” Suen said. As of June 2020, he was a co-founder of Rêver.

Rêver, a restaurant in a low-key Chinese city famed for its Cantonese food on a global scale, is testing the waters by offering contemporary French cuisine in the region for a multiple-course dinner price of 1,280 yuan ($183) or 1,680 yuan ($220).

“We try to be a little bit careful on how things proceed,” Suen remarked of the next year. since the world is undergoing such rapid and unexpected change at the present time.

China’s economic growth in 2022 was among the lowest it has been in decades. Catering sales fell by 6.3% within a retail sales dip of 0.2% to 43.97 trillion yuan ($6.28 trillion).

Newer statistics reveal that Chinese consumers are once again willing to spend money, notably on vacations.

Official estimates show that national tourist earnings increased by 30.0% year-over-year to 375.84 billion yuan over the seven-day Lunar New Year vacation that concluded on Friday. But it fell short of budgeted spending for the year.

The mood among consumers has improved. According to Ashley Dudarenok, head of China digital consultancy ChoZan, “spending power is sort of back” as of Friday. But I don’t believe things went back to 2019 or doubled 2019 in the span of a month.

Dudarenok said that leading up to the Lunar New Year of 2023, a number of smaller firms had become more cautious about China and reduced their marketing spending for the nation by half.

“Consumer mood was extremely weak; nobody understood what was truly coming,” she said, and as a result, “11.11 [Singles Day] and the other December shopping event did not yield a lot for companies.”As quickly as China opened, it closed. A lot of folks were caught off guard by how quickly things changed.

Overall, Dudarenok thinks that people will keep spending more “to feel better” in big cities and more on quality goods in smaller towns.

A lot of people think that the fact that Chinese consumers saved so much money during the epidemic will result in increased spending this year.

The Chinese government has supposedly made consumer spending a top priority. After the Christmas recess, Premier Li Keqiang presided over the first executive meeting of the State Council on Saturday, when he “asked for measures to hasten consumer recovery and maintain foreign trade and investment steady,” as reported by the State Council’s official website. As a result of the conference, plans to increase incentives for the purchase of automobiles and other high-priced goods were discussed and declared to be “completely accomplished.”

However, China has not issued statewide cash distributions to its citizens in the aftermath of the epidemic, as the United States did. In 2022, Li told reporters that instead of focusing on social issues, the government will prioritize helping companies and creating new employment.

“We feel that the most significant element impacting spending is the perspective on future income, which connects to several variables,” Hao Zhou, chief economist at Guotai Junan International, said in a note. However, the diminished policy and virus-related uncertainty will undoubtedly benefit morale by raising it.

Overall, he thinks retail sales will go up by 7% over the same time last year.

 

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