Consequences of the confrontation between the United States and China in shopping tourism

The trade war has an unexpected collateral damage for the United States: the drop in the visit of Chinese tourists.

Earlier this year, China issued an alert for residents organizing trips to the United States. The measure was extended “until the end of 2019” and warned of complications in “entering and staying” in Donald Trump’s country.

In a statement, Geng Shuang, responsible for communications at the Ministry of Foreign Affairs, said at the time that the explanation focused on “current circumstances” when asked if the decision was part of the dispute between the world’s two largest trading powers.

Photo; Cathy Williams
Photo; Cathy Williams

Months passed and the U.S. tourism industry is suffering the problem: hotels, restaurants, travel agencies and especially retailers, see that their sales are affected by the absence of Asian tourism, especially Chinese.

The most impacted retailers are those that specialize in the sale of luxury goods.

“The tension between the White House and Beijing is hitting the valuable arrival in the United States of tens of thousands of Chinese tourists, who are avoiding the country as a vacation destination. Companies like Tiffany and Hyatt Hotels are paying the cost,” The Financial Times reported.

Tourists coming from China have a special attraction for U.S. retailers because of the volume of money they usually spend on their trips. Including flight and lodging costs, each leaves an average of US$7,000 per visit, according to the U.S. Travel Association.

However, after several periods of double-digit year-on-year growth, the number of Chinese visitors increased just 4 percent in 2017 and declined for the first time since 2003 in 2018.

There were 2.99 million arrivals in 2018, a 6 percent drop from the previous year.

The reality worsened in the first half of 2019, according to top U.S. business executives, who say the slowdown is affecting their earnings.

“This is a serious concern given that China is responsible for much of the growth in international tourism in the last decade,” Adam Sacks, president of Tourism Economics, told Bloomberg.

The reality can be seen in the numbers of retailers’ finances. Like Tiffany, Macy this week blamed, in part, a 9% drop in poor sales to international tourists.

The company said the most affected stores were those located in popular tourist destinations, such as New York, where the company has its flagship stores Macy’s – Herald Square- and Bloomingdale’s – 59th Street.

Several factors explain the slowdown, according to analysts, from increased restrictions on the issuance of visas to Chinese citizens by Washington, until Asians no longer feel welcome in the United States. To this must be added Beijing’s warnings.

If we add to this the devaluation of the Yuan, everything will become more complicated from now on. Crossing the Pacific is more expensive since the Chinese currency lost value against the dollar.

From both sides of the dispute

In May, it became known that Americans working on R&D developments at Huawei’s headquarters in China were compulsively abandoning them. It was a form of retaliation by the Asian company for its inclusion on the black list.

Huawei ordered “to cancel technical meetings with U.S. contacts and repatriate Americans working at its Shenzhen headquarters.

Author: Pablo Petovel. Merca20