Three ways Singapore businesses can cash in on the Chinese tourism boom

Here are three ways that Singapore businesses can tap the significant Chinese tourism traffic fanning out across Asia.

ASIA is fast becoming a popular short-haul travel destination for Chinese travellers. A recent Nielsen report found that 67 per cent of the Chinese consumers who went overseas in 2017 had travelled to Asian countries due to simpler visa procedures, more affordability compared to destinations outside of Asia, and convenient transportation.

In the same report, Singapore was revealed as the seventh most popular destination for Chinese tourists. Statistics from the Singapore Tourism Board showed that China was the top source market for Singapore - with 3.23 million visitor arrivals in 2017.

In terms of spending, Chinese tourists were the biggest spenders for the third consecutive year in 2017, topping the charts with overall spending of S$3.08 billion, a 10 per cent increase year on year. This is almost triple the amount of spending from Australian tourists to Singapore and even visitors from India.

Chinese tourists present a huge opportunity for small and medium-sized enterprises (SMEs), which make up 99 per cent of companies in Singapore. Chinese travellers were the largest contributors towards tourist receipts from January to June 2017, with more than 1.5 million of them spending US$1.4 billion (S$1.88 billion) - of which 45 per cent was on shopping. Moreover, Nielsen found that Chinese consumers spent an average of US$762 on shopping during their most recent overseas trip, which is 1.5 times more than their non-Chinese counterparts. To tap the huge potential of the Chinese tourism boom in a crowded space, SMEs will need to use technology effectively to court Chinese consumers. Here are three ways:

1. Provide a familiar shopping experience

Mobile payments are king in China, and in Singapore, the government is also encouraging shoppers to go cashless, such as via with mobile payments. Data from China's Ministry of Industry and Information Technology showed that mobile payments totalled 81 trillion yuan (S$16.9 trillion) in the first 10 months of 2017. Since Chinese consumers are so used to paying using their mobile phones back home, they expect the same convenience when they travel overseas. This is evident from 65 per cent of Chinese travellers Nielsen surveyed citing that they used mobile payments on their most recent trips.

Moreover, nine in 10 said that they are more likely to spend with overseas merchants that offer mobile payments. The availability and ease of using mobile payments is evidently becoming an important consideration for Chinese tourists - more so than before.

2. Enhance operations to offer a frictionless experience

Given Singapore's labour shortage, SMEs especially those in the retail and e-commerce space might be faced with long queues and slow checkouts especially during peak shopping seasons or the sales periods.

This not only frustrates customers, it also increases the chances of them abandoning purchases and the business ends up with one less sale or repeat customer. SMEs can prevent this by offering mobile payment options to eliminate the hassle of fumbling with cash and complicated exchange rates.

SMEs can also speed up the checkout process by leveraging mobile point of sale (mPOS) that enables payments to be processed from anywhere in the store. Since mPOS also puts inventory data in the hands of retail floor associates, it empowers them to upsell and cross-sell, leading to better customer conversion rates.

To take it a step further, forward-thinking companies can couple mobile tools with disruptive technologies such as biometrics to enable a cashier-free store.

For instance, customers are required to scan a QR code from their Taobao mobile app to enter the Tao Cafe in Hangzhou. They will then be tracked via cameras equipped with facial recognition technology.

Once they are done shopping, they can simply walk through the payment corridor that automatically detects the items they have taken and deducts the cost from their Alipay account.

By removing the need to pay at a cashier, the store is able to assign employees to higher value tasks that could help improve the customer experience, as well as provide a hassle-free shopping experience even if it is short on staff during peak periods.

3. Offer the right products at the right price

Even though the above-mentioned digital tools will deliver massive customer data, SMEs need to extract actionable insights from that data to actually benefit from it.

Machine learning can help by picking out patterns buried in large volumes of non-relational data - this is something traditional analytics tools find challenging.

Thanks to data analytics, merchants can gain insights on products that are popular with Chinese travellers such as skin care and beauty products, as well as local specialities. With this information, SMEs will be able to expand their product offerings, forecast product demands more accurately, prevent stockouts and reduce inventory costs.

Machine learning can also help SMEs fine-tune their pricing strategy. The technology can analyse a customer's transaction history, classify which segment the customer belongs to and quickly advise merchants on the right price and discounts to offer the customer.

This is vital as the Chinese tourists surveyed by Nielsen cited discounts (41 per cent) and price (40 per cent) as top factors affecting their overseas shopping habits.

Since implementing these technologies independently can be daunting and costly, merchants can instead leverage a mobile payment platform already offering these capabilities to enjoy the same benefits.

For example, Nanyang Old Coffee - a coffee house in Singapore - experienced a two-fold benefit by adopting Alipay. Firstly, it was able to offer a frictionless customer experience as transactions via Alipay only take five seconds to be processed.

Secondly, since the mobile payment platform removes the worry that travellers have of not having enough Singapore dollars, it indirectly encourages Chinese consumers to spend more, such as buying a box of coffee as a gift for friends or family back home.

Cross-border business is expected to continue fuelling South-east Asia's tourism, and Chinese tourists are playing a huge role in the region. SMEs that want to successfully capitalise on that will need to have the right tools that address the specific needs of Chinese consumers.

Merchants will also need to have a strong and sustainable mobile platform as Chinese travellers expect to be able to carry out day-to-day, lifestyle activities from their phones even when they are overseas. The three points mentioned above will help guide Singapore SMEs to effectively attract Chinese tourists hungry for their products and services.

The writer is general manager of Cross-border Business for South and South-east Asia, Alipay.