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January 11, 2012

The Year of the Fiery or Subdued Dragon? Lunar New Year and Consumers

Chinese New YearWith Christmas and the New Year and the Chinese Lunar New Year all packed into the space of a month, will consumers suffer from “festive fatigue” or go on to mark the celebrations in a big way? Will the bleak economic climate and uncertain future put a damper on the festive mood of consumers?

 

Key trends

  • It's never too early to get into the mood;
  • Let's take flight!
  • Family and ancestors first;
  • Festive shopping spreading to Europe;
  • Dragon rising in the West.

Commercial opportunities

  • Trends in festive snacks come and go, but among those that have stood the test of time are roasted nuts, especially cashews and pistachios (due to the representation of smiley faces) and candies (sweet is synonymous with happiness.

Background

Lunar New Year, or the Spring Festival it is sometimes called, is the biggest event of the year for China's many millions and for those Chinese who have moved overseas too. Celebrations can be seen around the world usually in the form of elaborate lighting displays, street stalls and big store sales. The Chinese believe that the New Year should be ushered in with new clothes, furniture and even new cars.

The Spring Festival provides consumers with a reason to spend big, as expensive items symbolise prosperity good social standing. Despite a looming global financial crisis, consumers seem keen to continue to spend, ushering in the Year of the Dragon with nothing less than sheer indulgence.

In Beijing, business operators have already started promoting dragon-related gold products in the hope of boosting sales. One consumer told Xinhua News: “Many Chinese buy gold accessories as presents for relatives and friends during Lunar New Year. As it is also the wedding season, the demand for gold is naturally rising.” Buying gold as a means of investment has become more of a common choice for Chinese people n the past third quarter as it is viewed as a safe investment during these uncertain economic times, said the World Gold Council (WGC) in its Gold Demand Trends report for the third quarter of 2011.

It's never too early to get into the mood

Plans are well underway for next year's Lunar New Year festivities in Singapore. The annual light-up marking the beginning of celebrations will happen on January the 1st,with over 500 stalls lining the streets in Chinatown selling anything from traditional goodies to clothes and potted citrus plants (which symbolise wealth). In the southern Chinese city of Xiamen, hotels and restaurants are almost booked up for family reunion dinners, according to lifestyle website WhatsOnXiamen.com. The family reunion dinner marks a family gathering on the Lunar New Year's Eve, which is traditionally considered the most important part of the celebration. Mimi Zhang, a housewife in Xiamen, said, “Even though we don't know the menu and prices yet, I want to make sure we secure a booking – more and more people are having their reunion dinners out.”

Let's take flight!

Sales and attendance numbers for Taiwan's biggest travel fair held in mid-November set new records by attracting 251,231 visitors, up 17% on last year's fair, according to the organisers. James Lee, senior general manager at Richmond Tours, said the nine-day Lunar New Year holiday, which begins on January the 21st in 2012, was a main reason sales rose at the fair. “Demand for trips to Europe and the US is strong. Our Lunar New Year trips are half full now and they should all be sold out by the end of the month,” Lee said, adding that “many Taiwanese are eager to travel in January and appeared undisturbed by a faltering global economy.”

The first charter flights from China to Darwin will usher in the Lunar New Year bringing more than 300 Chinese tourists to the Northern Territory by Sydney based Aspirion Air. Northern Territory Tourism Minister Malarndirri McCarthy said: “Chinese tourists will be able to choose from a number of itineraries that will have stops at Ayer Rock, Kings Canyon, Alice Springs or Darwin. I can't think of any better time to visit than Chinese New Year.” 

Real Consumer Expenditure on Package Holidays in China and Taiwan: 2008 - 2012

ScreenHunter_04 Jan. 11 16.36

Source: Euromonitor International from national statistics/Eurostat/OECD

Note: Data for 2011 and 2012 is forecast. Historical and forecast data based on constant prices and fixed 2010 exchange rates.

Family and ancestors first

During the Lunar New Year, otherwise known as “Tet” to the locals, Vietnamese honour their ancestors by burning incense and placing offerings on graves and household shrines, including food, fake money, alcoholic drinks and cigarettes that are thought to provide spiritual sustenance in the afterlife. With a rising middle class, many Vietnamese consumers are flaunting their new wealth by taking this tradition to a new level - ordering graveside offerings online. The Lac Hong Vien Cemetery online ancestor worship service is the first of its kind in Vietnam. Busy consumers can purchase afterlife gifts, from flowers to boiled chickens to expensive cognac, by the mouse click. Cemetery staff will then bring the items to the tombs and send videos or photos of the display by email. “This service is very convenient,” said 29-year old To Hoai Dung, a Hanoi construction engineer who has ordered fruit, flowers, and homemade liquor online for his grandfather. “It cannot replace traditional worshipping, but it helps us to feel comfortable.”

Meanwhile, despite a 39% increase in fares, many Vietnamese are undeterred from buying train tickets early to go home during Tet. Do Thi Ngoc Thao, a student at the Ho Chi Minh City University, took more than three hours one Tuesday in November to book a train ticket to the northern city of Vinh using the web site www.vetau.com.vn. The site kept crashing due to consumers scrambling to buy train tickets because they sell out all too soon every year. The Sai Gon Railway Passenger Transport Company said in a press release that more than 30,000 users had entered the system on the morning of initial sales and the site could only handle 10,000 at any point.

Real Annual Disposable Income per Capita in Vietnam: 2007 - 2012

ScreenHunter_05 Jan. 11 16.37
 

Source: Euromonitor International from national statistics

Note: Data for 2011 and 2012 is forecast. Historical and forecast data based on constant prices and fixed 2010 exchange rates.

Festive shopping spreading to Europe

Traditionally, China's Lunar New Year is a time spent with families, but with the nation's rapidly expanding middle class, the holiday season is now considered a time to travel and spend money, with London being a popular destination. Designer fashion and accessories at considerably less expensive prices than back home make London a very attractive city for wealthy Chinese to visit. Li Chen, a young accountant from Shanghai who goes to London almost every year during the Spring Festival break, said: “Next Chinese New Year is the perfect time to for me to make my fifth trip to London. You know you won't buy anything that is fake there. Compared to China, most of the designer brands are nearly 30% cheaper in London.”

Dragon rising in the West

The United States Treasury Department has unveiled “Year of the Dragon” one-dollar notes as a special seasonal gift featuring the most symbolic icon of Chinese traditional culture, in celebration of the upcoming Chinese Lunar New Year. US Treasurer Rosie Rios said, “The Dragon is considered the most desirable zodiac symbols. We're offering 108,888 Year of Dragon notes, which is the highest number of notes ever offered for any of the lucky money products.” The product features an uncirculated one-dollar note with a serial number beginning with “8888” as the number eight is seen by many Chinese as a symbol of good fortune.

This lucky money product is exquisitely designed with decorative Chinese symbolism and is packaged in a red folder. Since their introduction in 2000, the Lucky Money products have been well received both domestically and internationally, according to the Bureau of Engraving and Printing.

Outlook

China's emerging baby boom will be further fuelled by Year of the Dragon as many families yearn for “dragon babies”. “The dragon is an icon for emperors and it symbolises power and wealth. The dragon year baby boom is almost a sure thing, boosting demand for infant products such as baby formula, diapers and clothes,” said Michele Mak, a consumer-sector analyst at BNP Paribas, a financial group specialising in corporate and retail banking. According to Euromonitor International, China's baby-food market will grow by about 22% to more than 68 billion yuan (US$11 billion) in 2011 and will almost double to 136 billion yuan by 2015.

 


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