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How to maximise retail opportunities from Chinese New Year24 January 2019

2Housekeeping

• Today’s webinar is scheduled to last 1 hour including Q&A

• All dial-in participants will be muted

• Questions can be submitted at any time via the Go to Webinar ‘Questions’ screen

• The webinar recording will be circulated after the event

3Agenda

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Marho Bateren, Market Intelligence Analyst, Planet

• Introducing Chinese New Year

• Chinese New Year Shopper Behaviour

• Tourist Arrivals Forecast

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May Yang, Marketing Manager, UnionPay International

• Features of Outbound Tourism in 2018

• Performance of Key Markets in Europe

• Mobile Payment for Outbound Travelers

• Travel Destination Campaign - Europe

3 Q&A Session

4About UnionPay International

UnionPay International (UPI) is a subsidiary of China UnionPay focused on the growth and support of UnionPay’s global business.

• In partnership with more than 2000 institutions worldwide,

• Established card acceptance in 174 countries and regions

• Issuance in 50 countries and regions.

• UnionPay International provides high quality, cost effective and secure cross-border payment services to the world’s largest cardholder base

• Ensures convenient local services to a growing number of global UnionPay cardholders and merchants.

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May YangMarketing Manager, UnionPay International

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Marho BaterenMarket Intelligence Analyst, Planet

31Shopping and Arrivals Growth - Summary – 2018

-1%Total Sales

-6%Total

Vouchers

+6%Total ATV

+3%Total Arrivals

Top 5 Destination Markets

Top 5 Source Markets

Tax Free Sales

Turnover

Vouchers /

Transactions

Avg. Transaction

Values (ATV)

Arrivals

France 3% -2% 5% 4%

Italy 7% 3% 4% 6%

United Kingdom -10% -11% 1% 3%

Germany -4% -9% 6% -1%

Spain -8% -5% -3% 2%

Tax Free Sales

Turnover

Vouchers /

Transactions

Avg. Transaction

Values (ATV)

Arrivals

China 6% -5% 11% 3%

Russia -18% -15% -3% -8%

USA 12% 3% 8% 7%

Hong Kong -11% -7% -5% 5%

Taiwan 10% -5% 16% 5%

32Shopping and Arrivals Growth – Chinese Tourists – 2018

6%Total Sales

-5%Total

Vouchers

+11%Total ATV

+3%Total Arrivals

Tax Free Sale Turnover

Vouchers/Transactions

Avg. TransactionValues (ATV)

Arrivals

France 13% 8% 6% 6%

United Kingdom -13% -14% 2% 3%

Italy 15% 3% 12% 3%

Germany -5% -17% 14% 3%

Spain -4% -4% 1% -2%

Top 5 Destinations Markets

33Introducing Chinese New Year

What is it?

• A Chinese festival that celebrates the beginning of a new lunar year

• It is the most important celebration in the Chinese calendar

• Often referred to as the “Spring Festival”

• Each year is named after one of twelve animals, which feature in the Chinese zodiac.

• Each animal has certain lucky characteristics of which the year will be associated with.

• 2019 will be the year of the Pig

34Introducing Chinese New Year

How is it celebrated?

Chinese new decorations

Red is the main colour for the festival

Red is believed to be the colour of prosperity.

Family time and reunion dinner

Chinese New Year is a time for families to come together

The important New Year's Eve dinner is called 'reunion dinner’.

Firecrackers and fireworks

Fireworks have become an indispensable part of the festivities

Firecrackers were traditionally used to scare away evil spirits.

Red envelopes and New year gifts

A common gift is a red envelope containing money.

Like at Christmas, people exchange gifts during the Spring Festival.

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ITA 3.9% of Sales in Store

ESP 3.8% of Sales in Store

Chinese New Year is the Key Shopping Event of Q1

Wk 1 Wk 3 Wk 5 Wk 7 Wk 9 Wk 11 Wk13

Wk15

Wk17

Wk19

Wk21

Wk23

Wk25

Wk27

Wk29

Wk31

Wk33

Wk35

Wk37

Wk39

Wk41

Wk43

Wk45

Wk47

Wk49

Wk51

Quarter Weekly SiS Average % Chinese National Sales in Store %

Total Chinese New Year3.2% of Sales in Store

Total Golden Week5.2% of Sales in Store

Spring Festival Sales 2018

GBR 2.9% of Sales in Store

FRA 2.9% of Sales in Store

DEU 2.4% of Sales in Store

Country % SiS for CNY

*Chinese new year 2018 dates 08/02/2018-22/02/2018 (includes week prior to festivities)

362018 CNY in Europe was hampered by many factors

4.6%

3.2%

2017 2018

CNY % Share of Sales in Store

Spring festival’s is historically bigger than in 2018

Number of terrorist

attacks in UK &

France during 2017

Chinese stock market & Real Estate

turbulence

Catalan Referendum

Narrowing of Price

Differentials

January Floods in

Paris

Sterling was at its

strongest since the EU referendum

37Chinese spending power reduced 6% YOY vs. Euro

£0.10

£0.10

£0.11

£0.11

£0.12

£0.12

£0.13

€ 0.12

€ 0.12

€ 0.13

€ 0.13

€ 0.14

€ 0.14

€ 0.15

Euro & GBP vs RMB EUR/RMB GBP/RMB

CNY 2017

CNY 2018

38Number of factors that COULD affect CNY 2019…

Will the Chinese still spend in the same way in Europe?

Slowing Chinese Economy

Although GDP growth is still strong compared to many countries, it has been slowing over the last 8 years.

GDP growth went from 10.6% in 2010 to 6.6% in the last quarter

US-China Trade Wars

As the trade war escalates, it will not be easy for the Chinese government to use public spending to boost investments due to its mounting debt.

Crackdown on Daigou Trading

From 1st Jan 2019, new regulations will require most online vendors to get approval from the relevant regulatory authorities before selling.

39…However, Chinese Arrivals for this Quarter are set to increase 12% YOY

Jan-18 to Mar-18Jan-19 to Mar-19

-8.0% +47.7%-5.1% +17.5% +7.7% +2.2% +8.9% +3.3%

AUT

+13.0% +15.2% +4.7% +17.2%

ESP FRA ITA

PRT CZE

IRL DEU-11.2% +7.7% +4.5% +11.2%

TOTAL GBR FIN+3.9% +12.0% +1.9% +22.8% +13.0% +15.2%

Chinese Tourist Arrivals Outlook – Jan-Mar 2019

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FRA €1,800 ATV

The week prior to CNY registered the 2nd highest ATV of 2018

Wk 1 Wk 3 Wk 5 Wk 7 Wk 9 Wk 11 Wk13

Wk15

Wk17

Wk19

Wk21

Wk23

Wk25

Wk27

Wk29

Wk31

Wk33

Wk35

Wk37

Wk39

Wk41

Wk43

Wk45

Wk47

Wk49

Wk51

Quarter Weekly ATV Average Chinese National ATV

Pre Chinese New Year

€979 ATV

Spring Festival ATV 2018

GBR €371 ATV

DEU €635 ATV

ITA €1,083 ATV

ESP €677 ATV

Country ATV for CNY

*Chinese new year 2018 dates 08/02/2018-22/02/2018 (includes week prior to festivities)

Total Golden Week

€834 ATV

4164% of high net worth individuals plan to travel for CNY

64%Plan to Travel

Abroad

36%Plan to Travel within China

Abroad of at home?

Source : Hurun Research Institute and ILTM China 2018

Africa - 29%

Americas - 36%

Europe - 39%

Japan & South Korea - 22%

South east & South Asia - 23%

Which Travel Destinations this year?(more than one destination)

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Sharing gifts768 Million users used WeChat to send digital red packetsThis represents 78% of active platform users & 55% of the entire population of China.

Digital is increasing in importance

Catching up digitallyDuring the six-day holiday period, 229.7 billion messages were sent on WeChat.2.8 billion posts and 17.5 billion minutes of voice recordings were also sent.

Source: The Drum & China National Tourism Administration

ResearchChinese Tourists like to research their purchases online, even before they travel.Attributes such as the brand’s country of origin and the story are very important.

Reunion dinner deliveredOn CNY eve, more than 300,000 Chinese families ordered reunion dinner delivery through Alipay and Koubei, a restaurant review and local services platform.

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Top Tips

44Top Tips for Chinese New Year

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Q&A

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For further questions or comments, please contact:Erin.hunter@planetpayment.com

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thank you