Local retail economy now depends on Chinese tourists

The citizens from the world’s 2nd-largest economy have spent billions on their trips


Travellers from China could be the saviour of the local retail sector as the world’s most populous nation has become one of the biggest outbound tourists, spending billions on purchases across the globe.

It is estimated that more than 130 million Chinese tourists travelled abroad last year. The citizens from the world’s second-largest economy have spent billions on their trips, filling up hotel bookings and keeping tour groups busy — a boom to the local retail business.

Garry Chua

Chua said the retail sector can’t depend on the country’s population alone. (Pic by Muhd Amin Naharul/TMR)

Malaysia Retail Chain Association (MRCA) president Datuk Seri Garry Chua said the tourism industry can have an instant boost and spur the retail economy as travellers from China will provide the much needed spending prowess.

“The Chinese is a good market to be tapped into as they account for 25% of the world’s tourists.

“Last year, 130 million Chinese travelled abroad and spent more than US$260 billion (RM1.01 trillion). To put in perspective, that is more than double our reserve. Imagine if we tap just 10% of that.

“Not just Malaysia and Thailand, the world is also capturing China’s market for over the past 20-30 years. With the accumulated wealth that they have, the propensity to spend is enormous,” he told The Malaysian Reserve.

The local retail sector had a difficult year in 2017, rising 2% to RM99.8 billion compared to 2016, according to Retail Group Malaysia’s (RGM) figures. The growth lagged behind the country’s gross domestic product growth rate of 5.9%.

Supermarket and hypermarket operators were the worst hit, shrinking 2.7% for the October-December 2017 period.

RGM expects retail sales to rise 4.7% this year to RM104.4 billion based on the first quarter of 2018 projection.

It is not known how much of the total retail sales come from tourist spending. Reports suggest that the country earned about RM15 billion from China’s outbound tourists.

Chua said the retail sector can’t depend on the country’s population alone.

“Malaysia’s population is too small. We have slightly more than 30 million citizens compared to India, China, or even Thailand. The local consumption is simply not enough,” he said.

The China Tourism Academy’s and digital travel services provider Ctrip’s recent figures showed that Thailand is the most visited country by Chinese tourists followed by Japan, Singapore, Vietnam and Indonesia. Malaysia is ranked sixth above the Philippines, the US, South Korea and the Maldives.

Chua said Thailand has become the biggest captive market for Chinese tourists, receiving more than 10 million visitors from the largest country in Asia.

“We only managed to capture almost two million of them last year. I always say the ones who catch the most are the ones who capture the best.”

According to the tourism statistics, tourists will spend more than 30% of their budget on shopping.

“We could not afford losing out to this opportunity,” he said, adding that the increase in tourist arrivals will also address the issue of mall glut.

“By leveraging on tourism, it will help mitigate the glut in shopping malls, if we can attract more tourists,” he said.