How the world suffers from the absence of the Chinese

While his employees used to show thousands of people past glittering necklaces, rings and bracelets every day, his spacious exhibition area is now almost deserted. China’s strict travel restrictions mean that almost no Chinese are leaving for Thailand.

“It hurts to see the store like this,” says Phattaraphon, whose annual sales say they have plummeted by more than 95 percent. He feels particularly sorry for the sellers, who can hardly earn commissions. “We can only hope that the Chinese will soon be able to travel again,” says the entrepreneur.

The emptiness in Phattaraphon’s jewelery business is part of one of the most profound changes in the course of the pandemic, which is being felt around the globe: the world’s largest people has withdrawn from the international public in one fell swoop.

The effects can be seen around the world: in Paris, luxury goods groups are suffering from the loss of wealthy customers. US universities have lost an important source of income.

Thailand: A holiday country lacks the best guests

In Thailand, the absence of the Chinese is particularly noticeable – even outside of Phattaraphon’s gem shop. The Southeast Asian holiday destination was the most popular international travel destination for Chinese before the pandemic. Thailand’s tourism industry counted twelve million of them in 2019. More visitors came from China than from any other country.

But that’s history: Thailand allows vaccinated holidaymakers to enter the country almost without quarantine. For Chinese tourists, however, this is unattractive because they have to spend between two and three weeks in quarantine facilities on their return home. “Mass tourism will not return quickly as long as China is still isolated,” predicts the Thai hotelier Bill Heinecke, who heads the Bangkok tourism group Minor International. “No one knows how much longer that will be the case.”

Chinese worry about infection abroad

Chinese people’s attitudes towards travel have changed. Just like Chen Shu. Normally, the 38-year-old would have left China at least four times in the past two years. Chen likes to travel frequently, mostly to Thailand in the cold winter months, plus a second destination a year, somewhere in South America, for example. But Chen hasn’t traveled abroad for two years – and with her hundreds of millions of other Chinese who normally love to explore the world or educate themselves abroad.

More on China’s approach to the pandemic

Above all, Chen is afraid of contracting the corona virus. In China, the number of infections has so far been largely stable at a very low level due to the Chinese government’s draconian zero-case strategy. The probability of getting infected was negligible. It’s different abroad. “I don’t want to be a burden on my country and infect other people,” says Chen. So she prefers to stay at home.

In addition, the Chinese authorities have almost stopped issuing passports for Chinese citizens due to the pandemic. According to the latest data from the National Immigration Service, just 630,000 passports were issued nationwide in 2021, mostly for study, work and business trips abroad – a fraction of what was the norm before the pandemic. Only in February did the responsible Chinese authority confirm that it would still not renew or issue passports unless the trip was absolutely necessary.

The decline in international air traffic to and from China is dramatic. In 2019, from January to November, 68 million people still traveled in and out by plane, according to the China Civil Aviation Administration (CAAC). In 2021 it was just 1.3 million.

France: luxury without buyers

The fashion retailers in Paris are also experiencing that the Chinese are staying at home. There used to be queues of people waiting in front of the Louis Vuitton flagship store on the Champs-Élysées. But now there is emptiness. The luxury department store Galeries Lafayette near the old Garnier Opera used to be crowded, but now it’s very quiet. With the absence of Chinese customers, an important source of revenue in the luxury industry has disappeared.

According to a Paris tourism association, in the year before the pandemic began, the Chinese had spent 265 million euros in the region just on shopping – especially clothes and bags. The large Parisian luxury department stores Galeries Lafayette, Printemps and Bon Marché as well as the other luxury shops benefited from the above-average willingness to spend on the part of East Asian customers.

As the tourism agency Atout France puts it, the Chinese made up 2.5 percent of holidaymakers in France, but accounted for seven percent of tourist income – a total of four billion euros a year. “The impact on the hotel sector and the luxury industry is huge,” says Jean-Pierre Mas, President of the Confederation of Travel Companies in France.

The manufacturers of luxury goods are confronted with profound changes. Tourist purchases abroad have fallen by 80 to 90 percent since 2019, in large part due to the China Effect, according to an industry study by consulting firm Bain & Company released in December. The Chinese accounted for around a third of global luxury purchases before the pandemic. Instead of in Paris, the people of the People’s Republic are now increasingly shopping in their own country.

It is questionable how long this will remain so. The Bain study assumes that Chinese customers’ spending will increase again in the second half of 2022 or in the first half of 2023 “when tourist flows normalize”. For Europe, however, normality is not expected again until 2024. China experts, such as Nancy Dai from travel trends specialist Forward Keys, do not expect Chinese travel to return to pre-crisis levels until 2025.

USA shows significant decline in Chinese students

Academic operations in the USA are also far from normal. In the 2019-20 academic year, 373,000 Chinese students were still studying in the United States, and the following year the number of students fell by 15 percent. The figures for the current year are not yet available. But according to the application platform CommonApp, applications had already fallen by a further 18 percent.

This means that US universities are losing important sources of funding. According to the US Department of Commerce, Chinese students spent nearly $15 billion on tuition, room and board in 2019.

The reasons for the decline in students are the pandemic and the difficult visa regulations in the USA. Recently, attacks on people of Asian origin in the USA have also increased. There are also allegations of espionage against Chinese students and researchers. Many Chinese are currently looking to Canada to realize their American dream, where universities cost significantly less.

“We don’t shoot ourselves in the foot, we shoot something near our head,” criticized the Chinese-born Stanford professor and Nobel Prize winner Steven Chu recently. Above all, he demands that students should be guaranteed a green card after graduation.

“We will have to fight”

Meanwhile, in Thailand, gem trader Phattaraphon is looking for a new business model to keep its business afloat despite the absence of its key customers. But this is anything but easy, he explains. So he tried to sell more of the colorful stones to locals.

But Thais are almost exclusively interested in white diamonds, he says. But that’s not his company’s specialty. He is now trying to improve local marketing with a new offshoot of bridal jewelry. Nevertheless, Phattaraphon does not want to give up hope that his Chinese customers will return soon. “We may survive without them, but we will struggle.”

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