CNBC’s The China Connection newsletter: Businesses scramble to reach China’s growing experiences economy

This report is from this week’s CNBC’s The China Connection e-newsletter, which brings you insights and evaluation on what’s driving the world’s second-largest economy. You’ll be able to subscribe right here.

There’s nothing fairly like the vacation rush in China for the Lunar New 12 months.

The Beijing metropolis streets begin emptying out a number of days upfront as the vast majority of residents return to their hometowns or journey elsewhere. A quiet calm replaces the usually tense environment of individuals speeding to work or college.

So the place are the locals going? Immersive experiences rank excessive.

Bookings for theme park resorts almost doubled from a 12 months in the past, whereas demand for journeys with conventional performances and artisanal crafts rose about 40%, in accordance to preliminary figures from Fliggy, a journey platform owned by Alibaba.

“We have seen lots of youthful era doing way more deep dive into the cultural expertise, testing native actions by way of arts in China,” stated Kenneth Chow, a principal at consulting agency Oliver Wyman.

These are all traits that companies try to seize in an in any other case difficult financial atmosphere.

To this point, one factor’s clear from the numbers: persons are shifting round extra seeking new experiences, thanks partially to inexpensive trains and resorts.

The official vacation runs from Feb. 15 to 23 this 12 months, however China’s broader journey season stretches roughly 40 days, from early February to mid-March. China counts journey by way of “journeys” quite than individuals, and is predicting information this 12 months: 110 million journeys out and in of Beijing alone and a whopping 9.5 billion journeys nationwide. That signifies that almost all of China’s 1.4 billion individuals will likely be touring to a couple of metropolis.

H World Group, which operates greater than 20 lodge chains in China, stated demand is up for each “main transport hubs and leisure-focused cities comparable to Xishuangbanna,” a distant area on the border with Myanmar and Laos. As well as to lush nature, the area is thought for its historic Dai Buddhist temples, constructed lots of of years in the past.

Reserving web site Journey.com reveals that greater than 800 resorts opened within the area within the final two years, together with a Hilton Backyard Inn and one in all IHG’s new premium “voco” branded spots.

Final 12 months, Xishuangbanna already reported greater than 4 million visits and tourism income of 5.04 billion ($730 million) yuan through the vacation.

Leisure firms are additionally discovering methods to work together with viewers in individual.

Forward of the vacation, video streaming firm iQiyi opened its first theme park in Yangzhou, a metropolis simply over two hours away from Shanghai by high-speed prepare. The indoor venue options dwell theater and interactive digital actuality experiences based mostly on widespread reveals streamed on iQiyi, generally known as “China’s Netflix.”

Founder and CEO Yu Gong did not draw back from emphasizing the theme park’s significance to his firm. “As demand for offline leisure surges, we see iQiyi Land as a brand new driver for our long-term progress,” he stated in a press launch.

It is a wanted enhance for iQiyi, which has struggled to retain paying subscribers towards competitors from short-form movies and reveals on different platforms. The Yangzhou theme park opening was additionally delayed by a number of months.

It is the primary theme park by a video streaming firm in China. Rivals Tencent, Bilibili and Alibaba-owned Youku have but to open year-round experiences, however there is a growing push for occasions.

Shanghai-based Bilibili’s annual multi-day expo, the place characters from its animated reveals and video games come to life, bought out in seconds.

In an effort to faucet into the same alternative, Common Studios Beijing introduced plans forward of the Lunar New 12 months to incorporate themes from a serious Chinese language animated movie, a online game and different domestically widespread characters into upcoming customer actions — not only for the vacation however the coming weeks.

Even Pop Mart, the toy maker behind the Labubu dolls, additionally operates a theme park in Beijing.

All these come towards a pullback in total shopper spending. Retail gross sales in China grew by simply 0.9% in December from a 12 months in the past.

That hasn’t stopped Louis Vuitton from opening two new shops within the final 12 months — with a transparent emphasis on cultivating a shareable expertise. The European luxurious big has used celebrities to generate buzz concerning the model, whereas opening a restaurant and utilizing iconic retailer structure to generate buzz on social media.

Purchasing malls are additionally stuffed with luxurious manufacturers exhibiting off garments and jewellery designed with the theme of the upcoming 12 months’s Chinese language zodiac image — a horse.

However what an increasing number of customers in China clearly can pay for is an emotionally wealthy journey to a brand new vacation spot. That is one thing companies will want to modify to.

The Lunar New 12 months is a giant spending vacation in China, and luxurious manufacturers are utilizing the competition to join with prospects.

Stephen Chang, portfolio supervisor at PIMCO, defined why traders ought to stay targeted on higher-quality credit score issuers in China. He additionally mentioned his expectations for the Chinese language yuan.

Mainland China and Hong Kong exchanges have been closed for the Lunar New 12 months vacation.

Buying and selling in Hong Kong will resume Feb. 20, whereas mainland exchanges reopen Feb. 24.

The CSI 300 is down 1.2% 12 months to date, whereas the Hold Seng Index rose 1.4% throughout the identical interval.

Feb. 24: Mainland China inventory markets reopen after Lunar New 12 months vacation