October 9, 2004
Opening a jewellery store in Australia staffed with a Mandarin-speaking sales force might be a winning business combination, according to an analysis of Asia-Pacific travel spending by a major credit card group.
The store should ideally be near a school or university and be part of a package sold in Beijing or Shanghai, which includes hotels and airfares, said James Murray, Asia Pacific executive vice president for Visa International.
"Within Asia at the moment, the largest group of travelers are mainland Chinese," Murray told Reuters in an interview to launch a report on spending trends across the region.
The company's analysis of data from its payment network showed that Chinese are increasingly paying with plastic when they travel. Australia is the top destination in the region for travellers with Visa cards followed by Thailand and Hong Kong.
Cardholders from China spent an average $253 every time they pulled out their plastic last year, compared with Americans who spent $135 on average and British tourists who spent $141, according to the analysis.
Travellers from the U.S. and the U.K. still accounted for the largest amount spent on Visa cards in Asia during 2003 because there are vastly more cards on issue in these nations, but Chinese consumers are growing fast as a spending force.
Rival credit card companies are finding similar trends.
"The Asia-Pacific region has entered a new era. It is no longer purely the manufacturing workhouse of the world," said Yuwa Hedrick-Wong an economist for rival payment card provider MasterCard International in a recent report.
"Instead it is developing its own internal drivers, consumers, many of whom are young single and high spenders," Hedrick-Wong said.
Murray said Visa has three million cards on issue in China, up from one million a year ago. Comparable card issuance by competitors was not immediately available.
Asian spenders emerge
The emergence of a large Asian middle class willing to travel and buy consumer goods and services is changing the region rapidly, driving the creation of new budget airlines and boosting the growth of banking, private education and healthcare services.
"The Asian region is undergoing a structural shift," said Jim Walker, chief Asia economist for brokers CLSA in a report that argued the trend toward consumer spending and outsourcing was replacing an old growth mode led by low-value-added exports.
Visa's Murray said the detail his group can provide on spending patterns among this influential group of consumers could be used by governments and retailers to target campaigns better.
He said spending by Chinese, for instance, was highest for education and jewellery.
"When someone goes to another country, we have information on where they went, what they did, what they spent their money on," he said.
Murray said around $100 billion was spent by tourists visiting countries in Asia last year of which about $17 billion was spent on goods and services using the Visa card.
This was up only slightly from the $16 billion spent using Visa plastic in 2002, but last year was also when SARS hit the region and crippled the industry.
Asians are increasingly making up a large proportion of the amount spent by tourists in the region. They accounted for 45 percent of total Asia-Pacific spending in 2003, compared with 39 percent in 1999.
"So of that $100 billion spent last year there's been a $5 billion shift to Asian consumers," Murray said, adding that the outbreak of the deadly Severe Acute Respiratory Syndrome made 2003 one of the industry's toughest years.
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