Chinese visitors to Australia add major value to economy

08 December 2017 Authored by Consultancy.asia

A study into Asian tourism has highlighted how Chinese travellers significantly benefit the Australian economy. Annual visitor numbers from China have grown to more than a million, while value per visit has jumped to $5,300. Many also indicate various intentions to invest in Australia, particularly in housing and businesses, with visits tending to positively increase their perception of the country.

Tourism remains a staple of economic activity for a host of nations across the globe. Australia and New Zealand offer Western-style democracies coupled with wild, untamed vistas. While New Zealand, in particular, buckles under tourist numbers and the current limitations of infrastructure, Australia is grappling with the effects of climate change – as one of its most stunning wonders faces an uncertain future from climate change.

In a new report from L.E.K. Consulting, the authors explores the effect of tourism from China on its economy. China has experienced rapid growth to its middle- and wealthy classes in recent years, many of whom are keen to invest in holidays to the continent.

Study participant breakdown

81% of the Chinese respondents surveyed did not have a residency visa for Australia, while in general, respondents were relatively evenly split between male and female, and were aged between 26 and 55. The vast majority of respondents had relatively high post-tax incomes, 21% at more than $40,000, 27% with more than $65,000 and 13% above $105,000.

Visiting Australia

China is currently Australia’s largest trading partner, accounting for 28% of Australian exports and 17% of Australian imports. In total the countries engage in around $150 billion in commerce, with CAGR of 11% over the past five years. In 2011 this accounted for around 200,000 jobs created in Australia through the trade, which has only grown since. The trade is increasingly in high-value goods, such as food, services and tourism.

Impact of trade on Australia

Visitor numbers from China have grown rapidly between 2011 and 2015, at CAGR of 19%, following a period of more modest growth, at 6% between 2005 and 2010. In 2015, there were around a million visitors to Australia from China. The number of Chinese nationals in Australia on holiday has increased slightly, from 45% in 2005 to 53% in 2014, while those arriving for education has remained stable at 13%. The number visiting friends and family has increased slightly, from 12% to 20%.

Visitor spending

The spend of visitors to Australia from China has increased significantly, to around $5,300, the highest among visitors, with those from South Korea and Hong Kong the next biggest spenders, at around $4,400 and $4,000 respectively. However, if the total spend on educational short-term education is excluded, the figure drops to around $3,800 – of which around 28% of their spending goes to shopping.

Potential value of Chinese visitors

Tertiary education is a major cash cow for the Australian economy, at $74 billion from stated opinions, or $148 billion in 2025. Real-estate investment and business investment are the major drivers however for money entry into the economy – valued at $194 billion and $408 billion in 2015 terms. The firm notes that, even if only 10% were to follow their stated opinions, it would still result in inflows of $70 billion and $140 billion respectively.

According to the study, the value of Chinese visitors to Australia may be considerably higher when other types of spending are considered. For instance, the percentage of visitors that said that they would probably or definitely pursue a repeat visit stood at 73%, which, given their respective spend, would add an additional $4 billion or, assuming visitor numbers double by 2025, $8 billion to the Australian economy.

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