BizChina

Yesterday I sat down with the irrepressible Jean-Claude Biver, head of Hublot SA, for an afternoon chat at the Four Seasons Hotel. It was a brief meeting–Biver was on his way to Paris later that evening–but we covered good ground about Hublot’s prospects in China and what counterfeiting means to the watch industry (more on that later).

A dynamic gentleman who prefers navy mechanic-like button-up jackets to the traditional suit and tie approach, Biver was born in Luxembourg but moved to Switzerland when he was a child. He loves the tradition of Swiss-made timepieces–and says China is the emerging market for Hublot, which is the only Swiss watchmaker without a real presence there. China currently accounts for 0.9% of Hublot turnover, while Asia on the whole accounts for 12%; Europe about 40%; the Americas about 40%; and the Middle East the rest.)

General Electric (GE) said today it is planning to invest more than $2 billion to expand its business in China through 2012.

GE said it plans to expand its research & development and customer support capabilities in China, and also will create joint ventures with China in technology and financial services.

Following the diplomatic spat that flared up between China and Japan after a Chinese fishing vessel collided with Japanese coast guard ships near a group of islands claimed by both nations, the number of Chinese tourists visiting Japan has plummeted, much to the chagrin of tourism authorities and retailers, who previously had projected a record number of Chinese to visit Japan this year. This June, Jing Daily reported that Japanese tourism officials expected an “explosion” of Chinese tourists this year, following the easing of visa restrictions that took effect July 1 and would have brought an estimated 150,000 extra Chinese visitors annually.

However, in the wake of the Senkaku/Diaoyu island clash and resulting protests on both sides of the East China Sea, one thing that has been largely overlooked in the travel industry is that the outbound tourists who had planned to visit Japan this fall still want to go somewhere, and in many cases that “somewhere” has become South Korea.

As Malaysia’s Bernama news recently reported, Korea–famous for its “Korean Wave” of cultural exports–is seeing a growing “Chinese wave” of tourists, lured by Korea’s proximity to China, its luxury-friendly atmosphere, the appeal of its television shows and films, and high-end shopping. Even before last month’s diplomatic spat with Japan, Chinese tourist-shoppers in Korea had increased exponentially in recent years, with these shoppers outspending Japanese tourists 2-to-1 at luxury shopping malls last year. According to figures released by the official Korea Tourism Organization, Chinese tourists also outspend Japanese in general, spending US$1,547 each on average, compared to the $1,084 spent by individual Japanese tourists. In addition to outspending Japanese tourists, however, in the last two months, Chinese arrivals in South Korea may have outnumbered those from Japan. From Bernama:

“We have yet to receive statistics for September, but I heard tourism to Japan has dropped significantly,” said Choi Hyo-jung, a publicity official at the China National Tourism Administration’s branch in Seoul. “Korea may have surpassed Japan in terms of tourist arrivals from China.

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The number of visitors from China has grown at a surprising pace in South Korea in recent years — as much as 45 percent year-on-year during the January-August period — prompting Korea’s tourism industry to shift its marketing focus from Japan to the world’s most populous country.

Stores in shopping districts like Myeongdong have added Chinese-speaking staff, their headquarters are using Korean celebrities popular across China and Southeast Asia in advertisements, and glitzy duty-free stores are dropping European luxury brands to give more space to Korean cosmetics chains that are less expensive but more popular in the Asian region.

The potential for more Chinese tourists in South Korea is huge, barring any unforeseen diplomatic rows that could flare up in the future. Last year, 1.3 million Chinese tourists visited South Korea, a significant rise over the 1 million who visited in 2007 and 710,000 in 2005. Driven by the Japan dispute, “Golden Week” and a stronger yuan, the growth rate has risen steeply in the last few months.

Some 1.34 million tourists from China visited South Korea last year, compared to 1.07 million in 2007 and 710,000 in 2005. The growth rate has been even steeper this year, with 1.26 million already counted as of August. In response to the increasing number of Chinese tourists — particularly wealthy tourist-shoppers who have buoyed the Korean cosmetics industry this year — the Korea Tourism Organization will introduce its “Korea Travel Card” to high net-worth Chinese tourists this December. In addition, more Korean retailers will begin accepting UnionPay and other Chinese cards, much as their Japanese counterparts have, in the coming year.

“Foreigners have an out-dated misconception about Chinese-made products,” Mr. Li begins as I lean forward in his car to listen closely. “Foreigners believe that all Chinese products are poor quality and inexpensive. But this just isn’t the case anymore. This is what I am going to show you today, and what our company is going to show the world.” We pull into a large parking lot facing three giant connected buildings. We have arrived in Yiwu, the self-proclaimed commodities capital of China.

I first heard about Yiwu, a city with a population of about 1.2 million in China’s Zhejiang province, from the Greater China head of a large multinational e-commerce company. He had just returned from a day trip there, and I could tell from the excitement in his voice that the marketplaces of Yiwu were unlike those anywhere else in China. I waited eagerly for months until I had the opportunity to visit. Finally, during a brief stay in Hangzhou, I reached out to an old friend to make introductions to set up an ‘insiders tour’ of the city.