Hollywood Allure Outshines Trade War for Chinese Tourists

(Bloomberg Opinion) -- The number of Chinese tourists traveling to the U.S. fell for the first time since 2003 last year, dropping 5.7 percent to 2.9 million. Coming against the backdrop of the trade war, the decline has stoked fears that geopolitical tensions and growing anti-China sentiment are finally spilling into the spending choices of the country’s growing middle class.

Those concerns are overblown. True, the Trump Administration has altered the perception of the U.S. held by many Chinese. But Chinese tourists continue to flock in growing numbers to Los Angeles and other cities and sites that make an effort to actively welcome them. Of course, there's no guarantee that those numbers will continue to grow. But for now they're a reminder to citizens, companies and brands that the Trump Administration and the trade war don't need to be the final word on American openness.

The travel and tourism industry might not have the same allure as technology, but its economic importance is profound, accounting for 7.8 percent of U.S. GDP in 2018. The majority of that activity was the result of domestic tourism. But the U.S. isn't the world's most popular international destination for nothing, and total spending by foreign travelers was $198.8 billion. Of that, Chinese accounted for roughly 11 percent, despite the fact that they only represented 4 percent of visitors.

Clearly, shopping is important to Chinese tourists. In part, the allure is the bargain: Many luxury items can be purchased in the U.S. for 30 percent less than their cost in China. But retail therapy isn't the only activity motivating arrivals. For many, there's also a fan's interest in having an experience of the U.S. as depicted in the film and television programs that remain among the most influential and popular cultural products available in China. Others are curious to experience American diversity and values for themselves. And large numbers are interested in visiting family and friends who have settled there, perhaps as students or for longer-term reasons.

Los Angeles, more than just about any other American city, checks off all of these boxes, and as a result it's long been one of the most popular destinations for Chinese tourists. Yet for all its allure, the city and its tourist-oriented businesses long ago realized that they couldn't passively rely upon outlet malls and Universal Studios to keep drawing in Chinese visitors. In 2014, California opened up three travel and tourism offices in China designed to promote the state as a travel destination. That same year, Los Angeles established a “China Ready” training and certification program designed to help participants court and cater to visitors. To win certification, businesses establish Chinese-language websites and other informational materials, accept China UnionPay credit cards, and attend seminars on Chinese cultural preferences, among other items. In turn, the seminars train businesses in marketing via Chinese social media – the most influential means of turning a city or site into a tour destination.

The results are impressive. While overall Chinese tourism to the U.S. declined 5.7 percent in 2018, the number visiting Los Angeles increased 6.9 percent, to 1.2 million. That made it the most-visited American city by Chinese, and earned praise from Chinese state media. And it's not just Los Angeles. New York City, a destination with its own allure, has made a concerted effort to boost its visibility on Chinese social media, with tangible results. In 2018, Weibo Corp., owner of the eponymous, Twitter-like social media site, ranked New York as the second-most popular destination marketing account on its site, after Hong Kong. Sure enough, in 2018 New York enjoyed a 5.4 percent increase in Chinese travelers.

Of course, the outperformance of Los Angeles and New York isn't just about marketing and projecting an atmosphere of openness. China's economic slowdown means that less affluent tourists – especially those attracted to first-time multi-city tours – are staying closer to home. Meanwhile, richer and more experienced visitors are returning to places they like, staying longer, and spending more. More often than not, that destination is the U.S.: During the all-important Chinese New Year travel period in February, America remained China's most popular long-haul destination.

That's unlikely to change. China's middle-class continues to grow, their desire to travel is strong, and politics is unlikely to dissuade them. For example, millions of Chinese individuals visited South Korea in 2017 even after Beijing banned group tours over the country’s deployment of U.S. missiles. There's little reason to believe that tourists to the U.S. will behave any differently. So long as there are destinations and brands willing to welcome them, geopolitical tensions and ill will won't keep them home.
 

To contact the editor responsible for this story: Matthew Brooker at mbrooker1@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Adam Minter is a Bloomberg Opinion columnist. He is the author of “Junkyard Planet: Travels in the Billion-Dollar Trash Trade” and the forthcoming "Secondhand: Travels in the New Global Garage Sale."

©2019 Bloomberg L.P.