Chinese Tourists Are Back. They Just Aren’t Shopping Like Before.

livemint.com:

HONG KONG—The retail world used to cater to Chinese tourists. Luxury shops opened wherever they went, and Parisian department stores hired Mandarin speakers. Mom-and-pop stores in Hong Kong were replaced by vendors offering products Chinese tourists demanded, such as milk powder and medicines.

Now, after being grounded for three years during the pandemic, Chinese travelers are taking to the skies again. But they don’t look or spend the same. The new wave of traveling shoppers is dominated by people under 40, and they are forging less of a well-traveled path, eschewing the big bus tours that drop off tourists at malls and shopping districts.

Many use an app called Xiaohongshu, nicknamed “China’s Instagram" and translated as “Little Red Book." It helps them find new spots to visit and take selfies. That is affecting companies that have made big bets on “travel retail," or operating stores in tourists’ favorite destinations. The cosmetics company Estée Lauder saw its shares drop sharply on Nov.

1 after a profit warning that was primarily driven by expected pressures on its Asia travel retail business and a slower-than-expected recovery in mainland China. The company has invested in stores at various checkpoints of travelers’ journeys: at airport gates, border shops, shopping malls in popular tourist destinations and duty-free zones. Last month Shiseido, a Japanese rival, cut its full-year profit forecast by 36%, citing weakness in its China and travel-retail segments.