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And so, just one month short of its near total closure three years ago, the border between Mainland China and Hong Kong will reopen tomorrow (albeit subject to quotas in both directions). And not just with Hong Kong. For tomorrow, 8 January 2023, quarantine measures for inbound travellers to China will be lifted and international flights in and out will see the beginning of what is expected to be a sharp recovery.
It’s almost impossible to overstate the significance of these developments. The timing, the pace and the repercussions of the opening up all warrant scrutiny. Not a single industry source I spoke to last year nor any pundit that I read predicted such an early relaxation of the Chinese travel restrictions. Q2, Q3 and even Q4 ranked as most people’s pick. Along with many, I believed the controls might be eased – probably marginally – from sometime in Q2
We were all wrong and as a result the welcome sight of Chinese travellers arriving at airports around the world – and into duty free stores on departure and downtown stores post-arrival – will once again become a familiar aspect of the industry landscape. That’s despite all the restrictions – pre-travel tests and other measures – being placed on Chinese travellers by many countries due to the surge in COVID cases across the Mainland (and likely in certain cases for political reasons).
On that subject, I very much agree with the perspective of Dr. Wolfgang Georg Arlt, CEO of the excellent China Outbound Tourism Research Institute (COTRI), who reckons Chinese travellers generally will not be put off by pre-departure test requirements. “Actually, they are not only used to testing and getting tests for free in China, they will also be happy to know that all the other passengers in their airplane have tested negatively as well,” he observes in an interview with CNN.
Yesterday, China’s National Health Commission (NHC) and National Administration of Traditional Chinese Medicine published the 10th edition of the diagnosis and treatment protocol for COVID-19. The notable change from earlier editions is the shift from prevention to treatment. The new plan focuses on vulnerable groups such as the elderly, children, and those people with already compromised health. The target? Preventing and reducing the occurrence of severe cases to the greatest extent possible.
Subject to allocation, apart from the fact that my China visa – unused for obvious reasons since 2019 – has long expired, I can now visit the Mainland or Hainan (there is now a flight from Hong Kong International to Haikou Meilan International every Wednesday). I can’t wait. And I could jump on a ferry today to Macau, just like old times.
The key question for the travel retail community though is not how many visitors will enter China but how many Chinese will travel abroad. And where they will go.
Between 12.40 and 16.10 today there were eight international flights out of Beijing Capital International Airport (plus one each to Special Administrative Regions Hong Kong and Macau). Two of those were to Frankfurt Airport. During the same hours there were 22 overseas flights out of Shanghai (including seven in total to Macau, Hong Kong and Taiwan). I wonder what the picture will look like closer to Chinese New Year and, more interestingly, in a few months once the current COVID surge is left well behind.
And, of course, most of those travellers will be returning home post their trips. Which is when its gets interesting for overseas duty free retailers. Between 9am and midnight today there is just one flight to the Mainland out of Frankfurt Airport. There will be many more in the future. Gebr. Heinemann will be monitoring not just passenger numbers but spending habits.
Despite the fact that large swathes of the world aren’t exactly rolling out the welcome mat and COVID rates across the Mainland remain very high, make no mistake, the Chinese are coming.
Perhaps we should take a cue from China’s current Chunyun (Spring Festival) travel rush, which lasts 40 days from 7 January until 15 February 15. Often dubbed the world’s largest human migration, it will see some 2.09 billion domestic passenger trips this year, up a whopping +99.5%.
In those long, almost forgotten pre-pandemic days of 2019, almost 155 million Chinese travelled abroad. In 202o that number collapsed to 20.3 million, roughly on the same level as 2003. 2021 edged ahead to around 25.6 million.
What will be the number this year? One industry executive whose opinion I respect a lot reckons it will be around 60 million, a little more than 2010’s 57.4 million. Swayed a little by the sheer enthusiasm (almost desperation in some cases) of almost all my friends and regular contacts in China to travel overseas and by the Chunyun spike I reckon it might go even higher. The China Outbound Tourism Research Institute (COTRI) projects the total, including Hong Kong and Macau, could reach 115 million.
Whatever the number, it’s going to be a heck of a lot better than the past three miserable years. Get ready for the surge.