Businesses scramble to reach China’s growing experiences economy

This report is from this week’s CNBC’s The China Connection publication, which brings you insights and evaluation on what’s driving the world’s second-largest economic system. You’ll be able to subscribe right here.

There’s nothing fairly like the vacation rush in China for the Lunar New 12 months.

The Beijing metropolis streets begin emptying out a number of days upfront as the vast majority of residents return to their hometowns or journey elsewhere. A quiet calm replaces the usually tense environment of individuals speeding to work or faculty.

So the place are the locals going? Immersive experiences rank excessive.

Bookings for theme park resorts practically doubled from a yr in the past, whereas demand for journeys with conventional performances and artisanal crafts rose about 40%, in response to preliminary figures from Fliggy, a journey platform owned by Alibaba.

“We have seen numerous youthful technology doing rather more deep dive into the cultural expertise, testing native actions by way of arts in China,” mentioned Kenneth Chow, a principal at consulting agency Oliver Wyman.

These are all developments that companies try to seize in an in any other case difficult financial surroundings.

Up to now, one factor’s clear from the numbers: persons are transferring round extra in quest of new experiences, thanks partially to reasonably priced trains and resorts.

The official vacation runs from Feb. 15 to 23 this yr, however China’s broader journey season stretches roughly 40 days, from early February to mid-March. China counts journey by way of “journeys” fairly than folks, and is predicting data this yr: 110 million journeys out and in of Beijing alone and a whopping 9.5 billion journeys nationwide. That signifies that almost all of China’s 1.4 billion folks will likely be touring to multiple metropolis.

H World Group, which operates greater than 20 lodge chains in China, mentioned demand is up for each “main transport hubs and leisure-focused cities reminiscent of Xishuangbanna,” a distant area on the border with Myanmar and Laos. Along with lush nature, the area is thought for its historical Dai Buddhist temples, constructed a whole lot of years in the past.

Reserving web site Journey.com exhibits that greater than 800 resorts opened within the area within the final two years, together with a Hilton Backyard Inn and one among IHG’s new premium “voco” branded spots.

Final yr, Xishuangbanna already reported greater than 4 million visits and tourism income of 5.04 billion ($730 million) yuan through the vacation.

Leisure corporations are additionally discovering methods to work together with viewers in particular person.

Forward of the vacation, video streaming firm iQiyi opened its first theme park in Yangzhou, a metropolis simply over two hours away from Shanghai by high-speed practice. The indoor venue options stay theater and interactive digital actuality experiences based mostly on standard exhibits streamed on iQiyi, typically known as “China’s Netflix.”

Founder and CEO Yu Gong did not shrink back from emphasizing the theme park’s significance to his firm. “As demand for offline leisure surges, we see iQiyi Land as a brand new driver for our long-term development,” he mentioned in a press launch.

It is a wanted increase for iQiyi, which has struggled to retain paying subscribers in opposition to competitors from short-form movies and exhibits on different platforms. The Yangzhou theme park opening was additionally delayed by just a few months.

It is the primary theme park by a video streaming firm in China. Rivals Tencent, Bilibili and Alibaba-owned Youku have but to open year-round experiences, however there is a rising push for occasions.

Shanghai-based Bilibili’s annual multi-day expo, the place characters from its animated exhibits and video games come to life, offered out in seconds.

In an effort to faucet into an analogous alternative, Common Studios Beijing introduced plans forward of the Lunar New 12 months to include themes from a significant Chinese language animated movie, a online game and different regionally standard characters into upcoming customer actions — not only for the vacation however the coming weeks.

Even Pop Mart, the toy maker behind the Labubu dolls, additionally operates a theme park in Beijing.

All these come in opposition to a pullback in total client spending. Retail gross sales in China grew by simply 0.9% in December from a yr in the past.

That hasn’t stopped Louis Vuitton from opening two new shops within the final 12 months — with a transparent emphasis on cultivating a shareable expertise. The European luxurious large has used celebrities to generate buzz in regards to the model, whereas opening a restaurant and utilizing iconic retailer structure to generate buzz on social media.

Purchasing malls are additionally filled with luxurious manufacturers exhibiting off garments and jewellery designed with the theme of the upcoming yr’s Chinese language zodiac image — a horse.

However what increasingly more shoppers in China clearly pays for is an emotionally wealthy journey to a brand new vacation spot. That is one thing companies might want to alter to.

The Lunar New 12 months is a giant spending vacation in China, and luxurious manufacturers are utilizing the competition to attach with prospects.

Stephen Chang, portfolio supervisor at PIMCO, defined why traders ought to stay targeted on higher-quality credit score issuers in China. He additionally mentioned his expectations for the Chinese language yuan.

Mainland China and Hong Kong exchanges have been closed for the Lunar New 12 months vacation.

Buying and selling in Hong Kong will resume Feb. 20, whereas mainland exchanges reopen Feb. 24.

The CSI 300 is down 1.2% yr to this point, whereas the Cling Seng Index rose 1.4% throughout the identical interval.

Feb. 24: Mainland China inventory markets reopen after Lunar New 12 months vacation