China Reopens its Borders with the End of Zero COVID
EXCLUSIVE CLA INSIGHTS
China reopened its borders on January 8th – almost three years since China first went into COVID lockdown on January 23, 2020. With the reopening of the border, both Chinese citizens and other nationalities can enter and exit China without any quarantine or COVID tests upon arrival. China will resume the issuance and renewal of passports for Chinese citizens and passenger capacity limits will be lifted.
Not all travel will resume immediately, as there will be a phased approach to:
- Increasing flight capacity into and out of China, which was severely reduced during COVID to only 6.7% of 2019 levels
- Normalizing flight costs and availability
- Lifting restrictions and issuing visas for foreigners visiting for leisure purposes
Despite the phased approach, there is much pent-up demand for outbound travel from Chinese citizens who have not been able to leave their borders for three years. In late December the hashtag “where to travel abroad next year” gained close to 80 million views on Weibo after the announcement that COVID border restrictions were being lifted.
Online searches for outbound flights and hotels overseas jumped to a three-year peak in the final days of 2022 on Trip.com. According to company data, Macao, Hong Kong, Japan, Thailand, South Korea, the United States, and the United Kingdom were among the website’s top 10 destinations with the fastest growth in search volume since the announcement.
While many countries and airlines have not yet adjusted their flight capacity, we are seeing Asian destinations to be the first locations to receive Chinese tourists. Flight bookings to Singapore are up 600 percent, while bookings to South Korea, Hong Kong, Japan, and Thailand increased by around 400 percent.
Stay tuned for more announcements and the rebound of Chinese tourism.
NEWS
Customer Insights
Five Trends Reshaping China’s Consumer Market – McKinsey
As China relaxes pandemic-related restrictions, consumer companies are reviewing their plans for investment in the world’s second-largest economy for 2023.
In a new report, global consultancy McKinsey identified five consumption trends at play in China that executives should ponder before deploying resources in the year ahead.
“If, and when, consumers bounce back, they will certainly have a lot of money to spend,” said McKinsey’s consultants including Daniel Zipser in the report.
Historically high savers, Chinese consumers in 2022 doubled-down on their intent to put their money in the bank rather than spend it. Savings deposits swelled by RMB14 trillion ($2 billion) during the first nine months of this year.
Travel
Where are Chinese Travelers Heading Now That Borders Have Reopened?
(CNN) — Xiongjie Dai, a freelance software engineer living in the Chinese city of Suzhou, dreams about his first big trip post-Covid-19.
The 32-year-old says destinations like South Korea, Europe, Japan, New Zealand and Australia rank high on the list. But he has his eyes set on the US.
“When I have enough money, I’d like to visit America first,” he tells CNN Travel. “America is the leader in both the computer science and IT industries, so I want to visit Silicon Valley and famous universities like MIT, Stanford and so on.”
Dai is not the only Chinese citizen with hopes of traveling abroad, now that the Chinese government has removed quarantine entry requirements and is reissuing passports.
According to Trip.com Group data, outbound flight bookings increased 254% in late December, the day after it was announced that travel restrictions would be eased as of January 8.
2023 Lifestyle Trends
The Top Lifestyle Trends in 2023, from Local Communities to Drinking Tea
At the cusp of every new year, Xiaohongshu is able to share key lifestyle trends that will make it big in the new year, based on what users shared in their posts throughout the last year. In a tie-up with the Institute of Sociology of the Chinese Academy of Social Sciences, Xiaohongshu released our “2023 Top Lifestyle Trends” report, hoping to shed some light on what trends people should expect in the coming year.
This is the third consecutive year that Xiaohongshu has released our annual lifestyle trends report. Since 2020, based on the diverse content gathered in the community, we have sorted out key trends that are highly popular and growing quickly, in a bid to analyze possible changes in the lifestyles of young Chinese consumers in the coming year. Our trends report is not only a lifestyle guide, but also a reference for various lifestyle and business decisions.
In 2022, people started getting closer to their neighbors. Due to COVID-19 epidemic control measures throughout the year, many people started joining community groups to organize group purchases, and through this process many met their neighbors living next door for the first time and realized the importance of community. In 2022, posts related to “building community in neighborhoods” on Xiaohongshu increased by 213% year-on-year. By developing relationships after experiencing the warmth and mutual help from people in their neighborhoods, young people are increasingly looking for stops nearby, such as going to the supermarket in the neighborhood, ordering coffee at the cafe downstairs, and participating in community activities. Small community shops such as bakeries and coffee shops are booming, becoming a “third place” where young people come to socialize.
Marketing
L’Oréal Taps China’s Art Toy Frenzy In The Year Of The Rabbit
L’Oréal Paris has unveiled its collaboration with local collectible toy brand RobbiART, encompassing a series of gift boxes and limited-edition large-sized art toys. The beauty brand’s signature products are introduced with special packaging featuring red and gold details, both of which are colors representing prosperity, luxury, and joy in Chinese culture. In addition to the gift boxes, the collectible Robbi rabbits were dropped on social media platform Dewu App (also known as Poizon) and Xiaohongshu in limited amounts.
Retail
What China’s Reopening Means for Luxury
After years locked down at home, Chinese consumers can finally dust off their passports to travel internationally. The country is lifting its quarantine requirements and opening back up for tourism on 8 January, in a welcome move for the global luxury industry. But with Covid infection rates said to be higher than official data shows in China, challenges remain.
Beijing has pursued a zero-Covid policy since the pandemic to eliminate the virus. China is the world’s second largest economy and is set to become the biggest luxury market by the end of 2023, according to consultancy Bain. The local economy and international markets that rely on Chinese consumer spending and manufacturing facilities have taken a significant hit from the policy, which has led to frequent lockdowns. Major companies including Capri Holdings, Estée Lauder, and Tapestry all knocked back their outlooks in their most recent earnings due to a slowdown in the region toward the end of last year.
Rare mass street protests broke out in November against the strict policy. On 7 December, restrictions eased in some major cities such as Guangzhou and Zhengzhou; removing health code checks for domestic travel and scrapping the requirement for those testing positive to quarantine in centralised facilities. On 27 December, China announced its decision to reopen its borders for international travel in 2023. Shares in LVMH and Richemont were up 2.7 percent and almost 4 percent respectively following the announcement.