Companies rush to tap into China’s growing experience economy

This report is from CNBC’s The China Connection newsletter this week, delivering insights and analysis on the powerhouse of the world’s second-largest economy. You can subscribe here.

There’s nothing quite like the rush of Chinese New Year.

Beijing’s roads begin to become less crowded a few days in advance, as the majority of residents return to their hometowns or travel to other places. Instead of the usual tense atmosphere as people rush to work or school, there is a quiet calm.

So where do the locals go? Immersive experiences rank high.

Bookings for theme park hotels have nearly doubled from a year ago, and demand for trips involving traditional performances and crafts has increased by about 40%, according to preliminary statistics from its travel platform Friggi. alibaba.

“We’ve seen many young people delve deeper into cultural experiences and experiment with community arts activities in China,” said Kenneth Chow, principal at consulting firm Oliver Wyman.

These are all trends that companies are trying to capture in a tough economic environment.

So far, one thing is clear from the numbers. That means affordable trains and hotels are encouraging people to travel more in search of new experiences.

This year’s official holiday runs from February 15 to 23, but China’s broad travel season spans about 40 days from early February to mid-March. China counts trips in terms of “travels” rather than people, and predicts that this year will be a record 110 million trips in Beijing alone, and a whopping 9.5 billion nationwide. This indicates that most of China’s 1.4 billion people travel to multiple cities.

H World Group, which operates more than 20 hotel chains in China, said demand is rising in both “major transport hubs and leisure-focused cities such as Xishuangbanna, a remote area on the Myanmar-Laos border.” In addition to its rich natural beauty, the area is also known for its ancient Dai Buddhist temple, built hundreds of years ago.

More than 800 hotels have opened in the area in the past two years, including a Hilton Garden Inn and one of IHG’s new premium Voco brand spots, according to booking site Trip.com.

Last year, Xishuangbanna already reported more than 4 million visitors and 5.04 billion yuan ($730 million) in tourism revenue during the holiday period.

Entertainment companies are also finding ways to interact directly with their audiences.

Video streaming companies ahead of the holiday season icheeee has opened its first theme park in Yangzhou, a city just over two hours away by high-speed train from Shanghai. The indoor venue features live theater and an interactive virtual reality experience based on popular shows streamed on iQiyi, also known as the “Netflix of China.”

Founder and CEO Yu Gong has not been shy about emphasizing the importance of theme parks to his company. “With the demand for offline entertainment surging, we believe iQiyi Land will become a new driving force for our long-term growth,” he said in a press release.

This is a much-needed boost for iQiyi, which has struggled to retain paying subscribers against competition from short-form videos and programming from other platforms. The opening of the Yangzhou theme park was also delayed for several months.

This is the first theme park by a Chinese video streaming company. rival tencent, Biting Youku, owned by Alibaba, has not yet opened year-round experiences, but appetite for events is growing.

Shanghai-based Bilibili’s annual multi-day exhibition where characters from animated shows and games are brought to life sold out in seconds.

Seeking to capitalize on similar opportunities, Beijing Universal Studios announced ahead of the Lunar New Year that it plans to incorporate themes from major Chinese animated films, video games and other locally popular characters into visitor activities not only for the holiday but for the coming weeks.

Popmart, the toy manufacturer that developed the Love Dolls, also operates a theme park in Beijing.

All of this goes against a decline in overall consumer spending. China’s retail sales in December increased only 0.9% from a year earlier.

Still, Louis Vuitton has opened two new stores in the past 12 months, with a clear focus on fostering shareable experiences. European luxury goods giants have tapped celebrities to generate buzz about their brands, while opening cafes and using iconic store architecture to generate buzz on social media.

The mall is also home to many luxury brands displaying clothing and jewelry themed around next year’s zodiac sign, the horse.

But what a growing number of Chinese consumers are clearly paying for is an emotional journey to a new destination. That’s something companies need to adapt to.

Lunar New Year is a big-spending holiday in China, and luxury brands use it to connect with customers.

PIMCO portfolio manager Stephen Zhang explained why investors should continue to focus on China’s higher quality credit issuers. He also talked about his expectations for the Chinese yuan.

Exchanges in mainland China and Hong Kong were closed for the Lunar New Year holiday.

Trading in Hong Kong will resume on February 20th, and mainland exchanges will resume on February 24th.

The CSI 300 is down 1.2% year-to-date; hansen index During the same period, it rose by 1.4%.

February 24: Mainland China stock market reopens after Lunar New Year holiday