Without the yearly influx of rich Chinese students, the department stores and high streets of Vancouver in Canada, Australia’s Melbourne and Boston in the United States would look desolate.
Even retailers in global hubs like London and New York are anxious about what damage an end to this much-needed cash-flow would do to their businesses.
More than 1.6 million Chinese are studying overseas, of whom at least 1.42 million remained abroad when countries closed their borders and airlines cancelled flights because of the growing pandemic. Some, stranded and concerned by rising incidents of xenophobic violence, initially regretted their decision to study abroad.
Earlier this week, the Trump administration announced that it would bar foreign students whose classes are online only from coming back to the US to resume their studies. Those already in the US will have to leave and take classes from their home countries. This recent development is likely to have an even larger impact on the decreasing number of international students from countries such as China who currently live in the US.
“The Chinese students who were stuck here [in London] tried really hard to get back home,” says Rocky Chi, the Britain-based head of planning for Emerging Communications, a marketing firm specialising in Chinese branding. “Some of them got on private planes, but the majority stayed and found that – after the initial panic – they enjoyed their quarantined life in Britain.”
Interestingly, initial statistics show that Chinese students based in Britain spent more in the last three months than they did in the same time period last year. “The numbers are really high,” says Chi. “We’re talking about a more than 50 per cent increase, all spent on online shopping for luxury goods.”
Much of this is because luxury stores in Europe and the US have been offering large discounts to lure in customers during the lockdown – and Chinese students, unable to go out, have been making the most of them. Even British property services and Michelin-starred restaurants doing takeouts have got in on the act, putting out messages in Mandarin to target them.
By September, things could look very different. Undergraduates already on the ground are likely to stay and finish their degrees, but far fewer first years will take up new places, particularly since most universities will be hosting lectures and tutorials online for the foreseeable future.
Global brands – while affected – will feel less of an impact from this change in affairs than local retailers. “If you are Balenciaga and you have fewer Chinese tourists shopping in London or New York or Brisbane, but more in Shanghai and Beijing, then that’s OK,” says luxury consultant Mario Ortelli. “But if I run a department store without a global footprint, then I am in trouble.”
But it is not only the actual purchases that count. While studying abroad, Chinese students are often introduced to new brands, ones that they then unwittingly advertise on social media to friends in China. Aspinal of London, a label with a very small presence in China but popular among Chinese students in Britain and experiencing rising sales in China, is an example of this.
Additionally, parents come to visit and spend extravagantly on local shopping trips, while students generally visit other cities in the country they’re studying in, propping up retail in a number of places.
“Young people who study abroad are more exposed to international brands and have a willingness to buy products that will help them fit in in their new environment,” Ortelli says. “On the other side, they are paying a lot on tuition and rent to live abroad, so by staying at home there will be more money to spend on fashion.”
Ultimately, the coronavirus has highlighted what we already knew – that outside London and Paris, domestic spending on luxury in Europe is weak, and that smaller brands that have failed to penetrate the Chinese market will need to work much harder on it in the years ahead.
“Demand driven by China is the heart of the entire fashion industry, whether it’s by students, tourists or at home,” Ortelli says. “This is a further wake-up call for brands – but to be honest, anyone who hasn’t heard it already should be out of business.”
For department stores and local boutiques in cities such as Vancouver, Melbourne, Brisbane, Austin and Boston – places where fashion retail would be the most affected by a drop in Chinese students – a focus on local customers and their needs is paramount, as is improving online portals for domestic customers.
However, it looks like this could be a short-term problem. While the number of Chinese students during the 2020/21 academic year will be significantly lower than usual, universities will be doing everything they can to lure international students back once the threat of the coronavirus is over – and given that studying abroad offers young people far more than just the course itself, it is likely they will return.
“To be honest, I think the current US-China relationship poses more problems than the coronavirus,” says Chi. “I believe that outside the US – which students will increasingly keep away from – the 2021 intake will see a record high number of Chinese students pouring in. Chinese parents start planning an elite education for their children from a very young age, and they aren’t going to let something like a virus derail it. In somewhere like London, families also buy second homes as an investment and somewhere their kids can live in. This is a long-term plan for them.”
Many Chinese students around the world are in a group on Chinese microblogging platform Weibo initiated and hosted by Chinese newspaper China Daily, which has triggered nearly 290 million discussions and 23 billion reads around studying abroad during the coronavirus.
“The whole of China is watching, and constantly comparing the conditions between different countries,” says Chi. “It will be a real factor on where students choose to go in 2021.”
It will also be a real factor in deciding which cities retain their department stores, glossy boutiques and Net-a-Porter next-day delivery options – and which don’t.
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