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Consumer

Holiday blues: Chinese shoppers set to snub 70th National Day

Travel and retail merchants brace for slow sales as consumers tighten purse strings

People arrive at a high-speed rail station in Shanghai to go on trips ahead of the National Day holiday.

SHANGHAI -- The People's Republic of China will celebrate the 70th anniversary of its founding starting Tuesday, but the country's economic malaise fueled in part by its trade war with the U.S. has soured consumers to shopping or taking vacations during the annual break.

Instead, many appear to be saving money for Singles' Day, China's answer to Cyber Monday that takes place on Nov. 11. The mass belt tightening has unnerved retailers as well as the travel industry.

The weeklong National Day holiday, also called "Golden Week," is typically a time when friends and family go on trips. Roughly 800 million are expected to travel both at home and abroad this year.

But there are signs that traffic will be slow this year. During the three-day mid-autumn festival break in September, 5.29 million people traveled outside the country, according to data from China's National Immigration Administration, marking a 7% decrease from a year earlier.

"This is the first time I've seen the number of travelers fail to rise for National Day like this," said an agent from leading Chinese travel company Spring Tour.

A 38-year-old office worker from Shanghai said he vacationed in Japan last year for National Day, but the weak yuan -- which hit an 11-year low just shy of 7.2 at one point in August -- has made him stay home this year. "I'll only make a day trip to tourist spots around Shanghai," he said.

This trend has hit the hospitality and airline industries too. BTG Hotels Group, a Beijing-headquartered chain with over 3,000 locations, reports that occupancy rates are consistently underperforming year-earlier figures. China's Big Three air carriers -- China Southern Airlines, China Eastern Airlines and Air China -- are experiencing low-growth passenger traffic as well.

The economic slowdown sparked by the U.S. trade war has led to more frugal spending among would-be travelers. Geopolitical factors come into play as well.

In August, China halted individuals from traveling to Taiwan. Although people are still allowed to go in groups, "Taiwanese tours are not selling at all," a travel agent said.

Tourists from the mainland are also shying away from Hong Kong after viewing protest footage hours upon hours on their television screens. "I don't want to go there for a while because it's too scary," said a woman from Shanghai.

Consumers spent 1.4 trillion yuan ($196 billion) in retail and food sales during the National Day holidays last year. Now retailers are in bracing for the worst.

"The era of National Day raising customer traffic sharply has ended," said a clerk at a Shanghai electronics store run by the chain Suning.com. Long lines would form during this season in each of the past five years or so, but now "customer numbers are no different from a typical weekend," he added.

Not just for singles: a screen shows the value of goods sold during Alibaba's huge shopping event in November 2018.   © Reuters

Retailers are now pinning their hopes on Singles' Day, when Alibaba Group Holding, China's biggest e-tailer, oversaw a record 213.5 billion yuan worth of transactions last year.

"I'll purchase what I want on Singles' Day," said one expectant shopper. "I won't force myself to buy during National Day."

But such online sales events tend to cannibalize future demand. This is on top of the mass migration of consumers from brick-and-mortar stores to online markets. The two factors have contributed to dimming sales during the National Day.

The dynamic has affected Lunar New Year holiday sales as well. A survey of 100 retail outlets by the China National Commercial Information Center shows a 1.3% drop in sales during the February holiday despite retail, food and travel sales growing during the same period.

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