[Dongeul Dongeul] 'Only Photos Instead of Bulk Shopping'... Companies Struggle Amid Sudden Chinese 'Daka Fever' Shift

Changes in Tourism Culture Due to the Popularity of China Taka
Cosmetics Companies Face Sharp Decline in Travel Retail Sales
Poor Work-Life Balance Leads to Certification Shot Culture

Hwan Woo-jin (24), who works in export-related tasks in Guangdong Province, China, recently traveled to Hong Kong. He thoroughly searched the Chinese social networking service (SNS) Xiaohongshu and visited a beach near Kennedy Town, which has recently emerged as a popular tourist spot. Until a few years ago, this area was just a quiet neighborhood near the sea, little known to travelers. Hwan had visited Hong Kong every year to stock up on cosmetics, but this year he decided to keep his wallet closed. Instead, he focused most of his travel schedule on filming commemorative videos at tourist sites for SNS uploads.

Like Hwan, a so-called "Daka" craze has recently swept among China's MZ generation (Millennials + Generation Z). "Daka" literally means "to punch a card" in Chinese. Traditionally, it referred to office workers clocking in and out. However, in recent years, "Daka" has come to mean sharing daily records such as dieting or photos taken at famous tourist spots on SNS.

However, consumer goods companies that expected sales recovery after COVID-19 have shown a lukewarm response to the Daka craze. Chinese tourists (Youke) are so busy taking photos that they do not open their wallets. Today, we will explore why the Daka craze has become a trend and how it has affected companies.

Videos filmed by netizens at tourist sites are posted on Douyin, a Chinese SNS. Douyin provides a 'Daka Record' feature that allows users to leave travel photos and videos. [Image source=Douyin screen capture]

MZ Generation Shows Strong Tendency to Accumulate Travel Experiences... Prefers Taking Photos Over Spending Money

The Wall Street Journal (WSJ) reported that as the Daka craze began in China, Youke's tourism trend shifted from a culture of spending money to a culture of taking photos.

Chinese tourists are taking commemorative photos at tourist attractions in Hong Kong. [Image source=Getty Images Bank]

This change is led by China's MZ generation under 40 years old. According to China Trading Desk, a travel data provider, 63% of Chinese travelers are under 40, and they tend to seek experiences rather than shopping during travel.

The reason travelers focus more on taking verification shots than spending is largely due to the influence of Xiaohongshu, known as the Chinese version of Instagram. Xiaohongshu is a platform combining social media and e-commerce functions. Douyin, the Chinese version of TikTok and a short-form content platform, also contributed to the Daka craze. On this platform, a trend of posting photos of food tasted and tourist spots with hashtags has emerged, creating so-called "Daka tribes" who diligently take verification shots at famous tourist spots and post them on SNS.

With the rise of the Daka craze, travel agencies offering so-called "Daka tours" centered around tourist spots famous on SNS have appeared in China. The Economist pointed out that this trend stems from the desire to flaunt to others that one has visited famous tourist attractions.

Cosmetics and Luxury Brands Hit by Sales Decline as Youke Customers Decrease

As Chinese tourists focus more on taking photos than spending money, companies that earned significant sales from Youke have suffered major blows.

Tourists are passing by the Est?e Lauder store in Hong Kong.
[Image source=Bloomberg]

Cosmetics companies are among the industries hit hardest by China's Daka craze. The cosmetics industry had expected a significant sales increase in the Chinese market after the pandemic ended, as Chinese consumers used to purchase large quantities at duty-free shops and retail stores in popular tourist spots before COVID-19 spread.

However, Est?e Lauder announced on the 1st of last month that sales in the Asian market were disappointing compared to expectations. The Asian market accounts for one-third of Est?e Lauder's total sales. Due to the sales slowdown, Est?e Lauder lowered its fiscal year 2024 earnings per share (EPS) forecast from $3.50?$3.75 to $2.08?$2.35. The cause of the sales decline was attributed to poor retail sales targeting travelers. Even before the pandemic, travel retail sales, including duty-free shopping, accounted for 40% of total sales in China, but this ratio has sharply decreased.

As a result of the sharp sales drop, Est?e Lauder's stock price fell 18.9% on the 1st of last month compared to the previous trading day ($128.87), closing at $104.51 per share. This was the lowest in six years and marked the largest single-day drop since Est?e Lauder was listed on the New York Stock Exchange in 1995.

French cosmetics company L'Or?al also recorded a 4.8% year-on-year decline in sales in the East Asian market in the third quarter. The company's poor performance was due to travel retail sales in the Chinese market falling short of expectations. Japanese cosmetics brand Shiseido also lowered its fiscal year 2024 annual revenue forecast by 36%, citing a slowdown in the Chinese market and travel retail sales.

Not only cosmetics but the luxury goods industry also appears to have taken a significant hit from the Daka craze. Analysts from investment banks Barclays and Morgan Stanley downgraded Louis Vuitton Mo?t Hennessy (LVMH), owner of Louis Vuitton, from "overweight" to "equal weight," citing decreased demand from Chinese consumers.

Work-Life Balance-Lacking Office Workers... Obsession with Leisure Records Also Noted

While companies do not welcome the Daka craze, The Economist explains it as an inevitable change reflecting the lifestyle of Chinese youth. Chinese office workers generally cannot take paid leave except on public holidays within their first year of employment. Moreover, most workers suffer from overwork, including unpaid overtime. Spending most days of the year at work has become the norm.

Chinese office workers are working overtime in the office.
[Image source=Bloomberg]

Seizing this opportunity, Douyin, the SNS platform, targeted the weary Chinese population with the slogan "Value every moment." It sent a message to office workers to capture joyful moments like travel in photos.

Considering China's work environment where work-life balance is not maintained, the Daka craze is expected to continue for a long time. Companies that have earned huge profits in the Chinese market by relying on Youke will now likely need to adjust their sales strategies to keep up with changing trends.