Thailand is expecting about 11 million Chinese tourists for 2018, a massive increase from 2010’s visits of 1 million, meaning that China is now Thailand’s biggest source of international tourists. Additionally, data from Thai government figures shows that these tourists are spending more per person, which is why the country’s food production and cosmetics industries have aimed their branding in Thailand towards this demographic, with more and more products targeted to these visitors.
This is all on top of the benefits that the country experiences like increased activity for hotels, tour operators and airlines, among others, and the profit is attracting investors, who are now driving up share prices in companies across the country, primarily those concerned with their price-to-earnings ratios. Security analysts, while appreciative of the profits, have pointed out that tourists’ preferences can change very quickly.
One company riding the trend, is Do Day Dream PCL, with their products like the Snail White cream, with their branding in Thailand aimed at Chinese tourists, with Snail White cream, for example, markets itself as being based on a snail secretion filtrate moisture system, which is not something that can be acquired back in mainland China.
The company’s product sales have skyrocketed since 2014, ever since foreign beauty bloggers, particularly those in Hong Kong and Singapore, put their products on the spotlight with rave reviews, according to their Chief Financial Officer Piayawat Ratchapolsitte, with their revenue hitting BT1.7 billion in 2017.
After You, meanwhile, is a popular cafe chain in the Thai capital, with its iconic Shibuya Honey Toast, bread served with ice cream, drawing in Singaporean and Malaysian customers, which was then followed by a tide of Chinese tourists, resulting in the long queue times currently seen in its branches. To capitalize on foreign appeal, the franchise now has ‘durian rooms’ for those that enjoy the fruit, often banned on vehicles and airlines in the region thanks to its smell.
Taokaenoi, a local snack company known for crispy seaweed, has also seen growth. According to Koosoon Rattanaporn, the company’s Head of Investor Relations, 20% of the company’s 2017 profits were domestic sales to tourists, while 60% of the year’s revenue was from exportation, nearly half to China.
Other companies are growing thanks to the Chinese tourist demand, and the economy’s share prices are clearly expecting more, with Do Day Dream’s shares worth 21x the industry average, After You at 79x, and Taokaenoi at 43x. According to CGS-CIMB Securities Thailand analyst, Uraiwan Tantisuwannakul,, this is because these companies are at their growth stage. He adds that domestic consumption has slowed in the past few years, which is why investors are now so willing to pay for shares in firms with plans to appeal to the Chinese demographic.