WEBVTT - Kopi Time E128 - Payments trends with Mastercard's David Mann 0:00:05.969 --> 0:00:09.010 Welcome to Kobe Time, a podcast series on Markets and 0:00:09.020 --> 0:00:12.210 Economies from D BS Group Research. I'm Tamur, be chief economist. 0:00:12.220 --> 0:00:15.270 Welcoming you to our 128th episode. 0:00:15.670 --> 0:00:19.610 Today, we will talk about payment trends in Asia as 0:00:19.620 --> 0:00:22.809 well as some broader trends around the world. And we 0:00:22.819 --> 0:00:27.290 have a veritable source of data from the horse's mouth. 0:00:27.299 --> 0:00:30.659 If you will. Mastercards. Chief economist David Man is with us. 0:00:30.799 --> 0:00:33.129 David has been with Mastercard for a few years, but 0:00:33.139 --> 0:00:35.150 I have known David for a long time as the 0:00:35.220 --> 0:00:38.180 chief economist, both Asia, as well as global chief economist 0:00:38.189 --> 0:00:40.669 for Standard Charter. I think you spent over 20 years there. 0:00:40.680 --> 0:00:41.799 That's right. That's right 0:00:41.860 --> 0:00:42.330 time. 0:00:42.493 --> 0:00:44.423 But Mastercard also quite a few years now. 0:00:44.433 --> 0:00:46.714 Yes, it's close to four years now at Mastercard too. 0:00:46.723 --> 0:00:48.633 So yeah, it's been quite a ride. 0:00:48.644 --> 0:00:51.074 David Manne. Welcome to copy time. Thanks for having me. 0:00:51.083 --> 0:00:53.714 It's great to have you, David. Let's start with the 0:00:53.723 --> 0:00:57.433 data that we're going to talk about today. How large 0:00:57.444 --> 0:00:59.234 is the universe of Mastercard data? 0:00:59.513 --> 0:01:02.043 Well, it's something where it really is one of those 0:01:02.054 --> 0:01:05.674 truly global companies where if you think about payments in 0:01:05.683 --> 0:01:08.744 particular it's very hard not to think of mastercard as 0:01:08.753 --> 0:01:09.234 being a key 0:01:09.318 --> 0:01:11.458 part of that. But I would stress that it's not 0:01:11.468 --> 0:01:14.138 just to do with the card side in the same 0:01:14.148 --> 0:01:16.527 way that say Apple doesn't sell Apple. It's just the 0:01:16.538 --> 0:01:20.267 name of the actual company itself doesn't quite capture just 0:01:20.277 --> 0:01:22.788 all the different areas that it's actually in. But just 0:01:22.797 --> 0:01:27.987 for context, it has about 143 billion transactions. For example, 0:01:27.998 --> 0:01:31.557 there's about $9 trillion of gross dollar value of that 0:01:31.568 --> 0:01:34.657 actually is going through the system. And we also do 0:01:34.667 --> 0:01:36.047 have 100 million 0:01:36.141 --> 0:01:38.762 acceptance locations around the world. So it is a very 0:01:38.772 --> 0:01:44.842 significant sized business with more than 3.4 billion cards outstanding worldwide. Now, 0:01:44.851 --> 0:01:47.452 of course, it can vary country to country of just 0:01:47.461 --> 0:01:49.611 how many cards are actually in use. I would say 0:01:49.622 --> 0:01:53.022 in general advanced economies, you would see a much higher portion, 0:01:53.031 --> 0:01:55.882 for example of card use and therefore it's much easier 0:01:55.891 --> 0:01:58.171 to see it. But there are increasing numbers of different 0:01:58.181 --> 0:02:01.152 rails and payment rails. The mastercard is involved in, I 0:02:01.162 --> 0:02:02.891 would probably say even just beyond 0:02:03.125 --> 0:02:06.934 just actually confirming a transaction and having that ability to 0:02:06.945 --> 0:02:10.026 think of it. Like a tech company in the payments 0:02:10.035 --> 0:02:12.876 space is probably the best way to really go about it. 0:02:12.886 --> 0:02:15.234 So all the new things that you're seeing would say 0:02:15.246 --> 0:02:18.906 digital wallets, use of tokenization, anything that helps to make 0:02:18.916 --> 0:02:23.386 transactions secure online, all of these things mastercard has been 0:02:23.395 --> 0:02:25.585 involved with for a very long time all the way 0:02:25.595 --> 0:02:28.386 through to things like central bank, digital currency and even 0:02:28.395 --> 0:02:29.695 Blockchain applications, 0:02:30.139 --> 0:02:33.320 right? In terms of the different rails being used, I 0:02:33.330 --> 0:02:35.309 was in China a couple of weeks ago and I 0:02:35.320 --> 0:02:39.860 got to connect my Apple Alipay QR code to mastercard. 0:02:39.869 --> 0:02:41.978 Oh, that's great. Well, that was actually one of the 0:02:41.990 --> 0:02:45.169 most exciting times actually is in the last few months 0:02:45.179 --> 0:02:47.339 and even just in the last week or two where 0:02:47.350 --> 0:02:51.380 we actually have just launched the domestic switching as AJ 0:02:51.389 --> 0:02:54.948 V in China and we're adding huge amounts more I 0:02:54.960 --> 0:02:58.538 would expect of the acceptance locations because previous 0:02:58.727 --> 0:03:00.878 you would have been say having a card issued in 0:03:00.888 --> 0:03:03.627 China that was being able to be used internationally on 0:03:03.638 --> 0:03:06.077 the Mastercard Rails. Now it would be one where that 0:03:06.087 --> 0:03:09.638 same uh the Mastercard switch which is doing all of 0:03:09.647 --> 0:03:13.277 the uh the, the I would say the approval and 0:03:13.287 --> 0:03:16.377 the clearing and the settlement. Now all of that can 0:03:16.388 --> 0:03:18.197 be done too. And that just means that we're able 0:03:18.207 --> 0:03:22.117 to really understand even more about what's going on domestically 0:03:22.127 --> 0:03:23.498 as well as internationally. A 0:03:23.526 --> 0:03:25.957 little later, I want to talk a little more about 0:03:25.968 --> 0:03:27.197 what took China so long 0:03:27.546 --> 0:03:29.345 and now that they've done it what it means. But 0:03:29.356 --> 0:03:33.376 before that David in mid June, you spoke at NRF 0:03:33.386 --> 0:03:35.475 2024 National Retailers 0:03:35.485 --> 0:03:38.216 Federation. Ok. Yes, that's right. So it was, it was 0:03:38.225 --> 0:03:42.255 very exciting in that the folks from the, from the 0:03:42.266 --> 0:03:44.925 NRF that were organizing, the event were saying they were 0:03:44.936 --> 0:03:48.785 planning to have this first major event outside of the 0:03:48.796 --> 0:03:51.076 US where it's been running for more than 100 years 0:03:51.085 --> 0:03:53.945 and it has thousands of participants and anyone in the 0:03:53.955 --> 0:03:55.856 retail space seems to know all about 0:03:55.934 --> 0:03:59.533 conference even around the world. But then COVID happened and 0:03:59.544 --> 0:04:01.184 so they had to wait until they got to the 0:04:01.194 --> 0:04:03.414 right time when it would feel a bit easier to 0:04:03.423 --> 0:04:05.934 be going ahead with something like this. And so it 0:04:05.944 --> 0:04:09.574 was thousands of people at the Marina Bay sands coming 0:04:09.583 --> 0:04:13.033 in from, as the organizers told me around 40 different markets, 0:04:13.044 --> 0:04:13.914 people were coming in 0:04:13.923 --> 0:04:15.994 from not just American retailers. Oh no, 0:04:16.003 --> 0:04:18.813 this was retailers from, you name the place, there was 0:04:18.824 --> 0:04:22.674 someone there from literally anywhere I could think of. They 0:04:22.683 --> 0:04:24.514 were like, yep, there's someone who's come in from there 0:04:24.880 --> 0:04:27.260 and you had this sort of the, the, the sort 0:04:27.272 --> 0:04:29.891 of set up where you have the whole exhibition hall 0:04:29.902 --> 0:04:33.371 with the various vendors and people from all types of areas. 0:04:33.380 --> 0:04:36.682 But then also the actual main event space where they 0:04:36.690 --> 0:04:40.272 had speakers, for example, uh the head of Don Don Donkey, 0:04:40.282 --> 0:04:42.971 for example. And that was very exciting to uh to 0:04:42.981 --> 0:04:46.022 hear the story of how Japan and, and a company 0:04:46.032 --> 0:04:48.372 that's been so successful in Japan, how they've done it 0:04:48.541 --> 0:04:51.432 and also what their plans are for the future. Ok, 0:04:51.440 --> 0:04:51.601 we 0:04:51.611 --> 0:04:53.171 can probably spend many hours just 0:04:53.250 --> 0:04:55.279 talking about the scope of a conference like this. I'm 0:04:55.290 --> 0:04:59.220 super curious but give me some top line takeaways. How 0:04:59.230 --> 0:05:01.988 are the retailers feeling in the middle of 2024? 0:05:02.000 --> 0:05:03.290 Well, it's, it's, 0:05:03.299 --> 0:05:06.570 it's one of these times where there's plenty of reason 0:05:06.579 --> 0:05:09.399 for excitement in particular for this region, sort of things 0:05:09.410 --> 0:05:11.260 that we would have been talking about. So from a 0:05:11.269 --> 0:05:15.190 broader growth drivers perspective even say 10 years ago where 0:05:15.200 --> 0:05:17.920 it was quite clear, the center of economic gravity had 0:05:17.928 --> 0:05:20.549 been shifting east and it's not really changing. I would 0:05:20.559 --> 0:05:21.859 argue even with the slowdown 0:05:22.238 --> 0:05:25.048 in the trend pace of growth in for example, China, 0:05:25.058 --> 0:05:27.808 you do still have the strength, for example, in India 0:05:27.838 --> 0:05:30.847 and the contributions to global growth being so big. That 0:05:30.858 --> 0:05:33.798 exciting story, I think is something that retailers are still 0:05:33.808 --> 0:05:36.876 very focused on the rise of consumers, the growth in 0:05:36.888 --> 0:05:40.268 middle class and higher income consumers that I would say 0:05:40.278 --> 0:05:42.838 is the biggest long term part of the story that 0:05:42.847 --> 0:05:46.227 people were were really really wanted to talk about. But 0:05:46.238 --> 0:05:49.166 of course, there are shorter term challenges that come from 0:05:49.178 --> 0:05:50.488 the rise in the cost of living 0:05:50.565 --> 0:05:54.575 the higher levels of interest rates, the persistence of particularly 0:05:54.585 --> 0:05:57.235 us interest rates being as high as they are, how 0:05:57.246 --> 0:05:59.656 long and how quickly they come down. Of course, was 0:05:59.665 --> 0:06:02.395 a major question that was coming up quite often because 0:06:02.406 --> 0:06:05.555 it matters for markets in this region. Too take, for example, Indonesia, 0:06:05.565 --> 0:06:08.044 where we've seen interest rates going up, where really it 0:06:08.055 --> 0:06:11.216 was more about the external defense that the keeping the 0:06:11.226 --> 0:06:14.015 currency from going much weaker rather than it being for 0:06:14.026 --> 0:06:17.276 domestic reasons themselves. Even here in Singapore, we're seeing with 0:06:17.286 --> 0:06:19.145 say the retail sales numbers 0:06:19.450 --> 0:06:22.339 year on year have been softening and we know the 0:06:22.350 --> 0:06:25.450 cost of living, the cost of interest are major factors 0:06:25.459 --> 0:06:27.118 that are playing a role in that. So for a 0:06:27.130 --> 0:06:30.200 lot of retailers, what they're trying to do is navigate 0:06:30.209 --> 0:06:33.589 this challenging short term environment space. And a key way 0:06:33.600 --> 0:06:36.109 to do it is to think about how they can 0:06:36.119 --> 0:06:41.040 retain and gain new customers, draw customers in through personalization 0:06:41.049 --> 0:06:43.390 services or loyalty programs. 0:06:43.570 --> 0:06:45.790 What types of offerings they can actually come up with 0:06:45.799 --> 0:06:49.510 how to segment the customer groups and also how to 0:06:49.519 --> 0:06:52.178 think about what else they could be doing for alternative, 0:06:52.190 --> 0:06:55.769 not just marketing but direct sales channels getting involved in 0:06:55.779 --> 0:06:59.829 say marketplaces or directly selling and that role of ecommerce. 0:06:59.839 --> 0:07:02.339 Of course, all with these things coming up, talking to 0:07:02.350 --> 0:07:04.609 someone like mastercard was ok. We want to do more 0:07:04.619 --> 0:07:06.308 of this. But also how do we do it in 0:07:06.320 --> 0:07:07.469 a safe and secure way? 0:07:07.690 --> 0:07:11.799 Sure, I just hope they're not pushing BNPL more because 0:07:11.809 --> 0:07:14.049 this whole buy now pay later in my view at 0:07:14.059 --> 0:07:16.119 this time, the cycle was raised being where they are 0:07:16.130 --> 0:07:17.920 is a recipe for stress. 0:07:18.130 --> 0:07:20.279 Well, it's one of those things where you look at 0:07:20.290 --> 0:07:24.470 the different sources say B NPL, that had been certainly 0:07:24.480 --> 0:07:27.130 something that grew very strongly, I think at first in Australia. 0:07:27.179 --> 0:07:29.910 But what's interesting about it though? And I, I do 0:07:29.920 --> 0:07:31.709 agree that there are certain areas where you've, 0:07:31.809 --> 0:07:34.790 it's just got to be cautious on adding to the 0:07:34.799 --> 0:07:38.299 amount of what is effectively credit at times when consumers 0:07:38.309 --> 0:07:40.850 are more stressed. But at the same time, it was 0:07:40.859 --> 0:07:44.019 offering something where at least consumers were feeling ok. I 0:07:44.029 --> 0:07:47.059 just have four equal payments to make. There's no interest 0:07:47.070 --> 0:07:48.829 on it. But of course, it needs to be done 0:07:48.839 --> 0:07:51.200 in a way where people actually are able to do 0:07:51.209 --> 0:07:53.458 that and it actually just helps them with their cash 0:07:53.470 --> 0:07:55.829 flows rather than ends up seeing 0:07:55.929 --> 0:07:58.429 them in more stressed positions. But it is an interesting 0:07:58.440 --> 0:08:02.670 application of an older type of idea that's been reapplied 0:08:02.679 --> 0:08:05.519 with modern technology thrown in. And I think from that perspective, 0:08:05.529 --> 0:08:06.869 I think that's quite interesting, right? 0:08:06.880 --> 0:08:06.910 I 0:08:06.920 --> 0:08:10.540 mean, I think I've seen reference to installment payments, you know, 0:08:10.549 --> 0:08:12.970 in South Asia, you know, decades ago, even before the 0:08:12.980 --> 0:08:16.220 ecommerce was a thing. I also know that Apple recently 0:08:16.230 --> 0:08:18.959 discontinued doing B and P I think it came out 0:08:18.970 --> 0:08:19.910 just a week ago or so. 0:08:20.279 --> 0:08:24.179 Um So David uh from these, these retailers who have 0:08:24.190 --> 0:08:27.049 gathered from all over the world in Singapore, I mean, 0:08:27.059 --> 0:08:29.329 did they pick Singapore because it's just a nice comfortable 0:08:29.339 --> 0:08:31.170 travel destination or they see 0:08:31.589 --> 0:08:35.488 regional hub for retail being in Singapore as a business proposition. 0:08:35.789 --> 0:08:37.919 I think it was a little bit of both. Certainly 0:08:37.929 --> 0:08:40.270 the organizers that when I was talking to them, they 0:08:40.280 --> 0:08:43.349 did their homework on where should this be based? And 0:08:43.359 --> 0:08:46.960 they came back with the overwhelming feedback. It should be Singapore. 0:08:46.969 --> 0:08:48.849 That made the most sense. I think you're right. The 0:08:48.859 --> 0:08:51.780 ease of travel in and out is clearly playing a 0:08:51.789 --> 0:08:53.770 big role in that wherever you want to come from 0:08:53.780 --> 0:08:55.590 around the region, it's a, it's a 0:08:55.658 --> 0:08:58.987 key hub in that regard. And also I think the, well, 0:08:58.997 --> 0:09:01.757 the the the the actual conference space itself, the ability 0:09:01.768 --> 0:09:04.718 to network the sort of availability of of accommodations made 0:09:04.727 --> 0:09:08.047 it much, much simpler. Um But I think also it 0:09:08.057 --> 0:09:09.908 is a place where you still do see that bias 0:09:09.918 --> 0:09:13.418 on having regional hubs and picking Singapore as a location 0:09:13.427 --> 0:09:16.117 for that. I think that's something that is, is very, 0:09:16.127 --> 0:09:18.877 I think quite persistent really, even though there's lots of 0:09:18.888 --> 0:09:19.638 other places that are 0:09:19.726 --> 0:09:22.585 looking to try and take some of that sort of role, 0:09:22.596 --> 0:09:25.476 it does look like Singapore is still in a leading position, 0:09:25.486 --> 0:09:28.906 especially at a time when there's been more problems and 0:09:28.916 --> 0:09:32.616 issues or questions over elsewhere, including say in Northeast Asia, 0:09:32.625 --> 0:09:33.434 including Hong Kong. 0:09:33.445 --> 0:09:33.656 That's 0:09:33.666 --> 0:09:35.546 right. And I hope I'm not wrong when I say 0:09:35.556 --> 0:09:37.806 that mastercards Regional Headquarters also Singapore. Yes, 0:09:37.815 --> 0:09:38.665 that's right. Yes. Yes, 0:09:39.856 --> 0:09:43.705 travel trends. 2024. You send me a link to the 0:09:43.794 --> 0:09:46.443 report. I found it really interesting. I wish we could 0:09:46.453 --> 0:09:48.723 have done like an interactive show where we can show 0:09:48.783 --> 0:09:52.392 off your charts. But this time audio podcast with, on 0:09:52.403 --> 0:09:55.624 the video, only us showing our faces tell me about 0:09:55.633 --> 0:09:56.693 travel trends. 2020 0:09:56.703 --> 0:09:59.294 four. Yeah, I mean, maybe next time next to this 0:09:59.304 --> 0:10:01.564 nice greenery in the background, we can put a screen 0:10:01.573 --> 0:10:05.054 up and I can start out with some of the Absolutely. 0:10:05.064 --> 0:10:07.773 And it's actually on the Mastercard Services website. It 0:10:07.861 --> 0:10:09.872 there's no gate gating on 0:10:09.881 --> 0:10:09.910 it. 0:10:09.921 --> 0:10:11.731 We'll put the link in the show notes of the great. 0:10:12.921 --> 0:10:15.392 So what we do each year is and I think 0:10:15.401 --> 0:10:17.660 it's now the fifth year that we've done this where 0:10:17.671 --> 0:10:21.021 we've done a travel report for the world. And what 0:10:21.030 --> 0:10:22.641 we try and do each time is think of what's 0:10:22.651 --> 0:10:25.122 the new view that we could build? What are the 0:10:25.131 --> 0:10:28.492 extra points that would reinforce some of the interesting thematics 0:10:28.502 --> 0:10:30.981 that are coming out. So part of the story, firstly 0:10:30.992 --> 0:10:31.790 on travel 0:10:32.099 --> 0:10:35.130 is that while there are challenges on broader consumer stories, 0:10:35.229 --> 0:10:39.059 we are still not done on the recovery of travel 0:10:39.070 --> 0:10:41.799 in this region that the pandemic since the pandemic, like 0:10:41.809 --> 0:10:45.440 levels of say just passenger volumes are not in general. 0:10:45.450 --> 0:10:48.440 Some exceptions, which I'll come on to especially the Japan story, 0:10:48.450 --> 0:10:50.690 which has been dominating a lot of the stories and 0:10:50.700 --> 0:10:51.919 and attention for good reason. 0:10:52.289 --> 0:10:54.530 Actually, we're not fully recovered. If you take the example 0:10:54.539 --> 0:10:59.650 of China, we're only around 83% recovered of passenger outbound 0:10:59.659 --> 0:11:04.530 international volumes versus 2019. You compare that to domestic volumes 0:11:04.539 --> 0:11:07.859 that had fully recovered even more than a year ago. 0:11:08.210 --> 0:11:11.099 So there's a big divergence story that we're seeing there. 0:11:11.109 --> 0:11:13.250 And of course, this matters the most because 0:11:13.474 --> 0:11:18.194 pandemic China was the most important spending traveler worldwide. It 0:11:18.205 --> 0:11:21.473 was actually even a big macroeconomic topic actually of just 0:11:21.484 --> 0:11:24.344 how much of the services balance on the current account 0:11:24.354 --> 0:11:28.194 actually was being dragged down by the expenditure of travelers 0:11:28.205 --> 0:11:31.344 abroad on a net basis right now. Interestingly, we just launched, 0:11:31.354 --> 0:11:34.465 relaunched the priceless Beijing experience 0:11:34.950 --> 0:11:38.049 uh just literally a few days ago. And part of 0:11:38.059 --> 0:11:40.539 the timing of doing it, one was uh with our 0:11:40.549 --> 0:11:44.309 operations in China growing in that way, more acceptance points 0:11:44.460 --> 0:11:47.210 uh that it was becoming a big story. But also 0:11:47.260 --> 0:11:49.270 you may be noting, I I certainly have been seeing 0:11:49.280 --> 0:11:52.989 more adverts uh for the wonderful things you can do 0:11:53.320 --> 0:11:56.400 on a trip as a tourist coming into China. And 0:11:56.409 --> 0:11:59.380 to your point earlier, the big challenge had been making 0:11:59.390 --> 0:12:02.469 payments as a foreign visitor in China has not always 0:12:02.479 --> 0:12:05.890 been so easy. It's changing right now. It's changing in 0:12:05.900 --> 0:12:08.119 a big way. You mentioned, you're able to say put 0:12:08.130 --> 0:12:12.280 your mastercard into big relief into your wallet that is 0:12:12.289 --> 0:12:15.049 accepted and that means all the acceptance points just light 0:12:15.059 --> 0:12:16.289 up straight away, but even 0:12:16.395 --> 0:12:18.664 directly to be able to just go in and use 0:12:18.674 --> 0:12:22.054 the mastercard directly in multiple more acceptance points. That's something 0:12:22.104 --> 0:12:25.603 that's growing very rapidly. So now what, so that net 0:12:25.614 --> 0:12:28.694 number might get a little bit more balanced if indeed 0:12:28.705 --> 0:12:30.854 we do start to see a lot more travelers coming in. 0:12:30.864 --> 0:12:33.864 There's certainly plenty of exciting, interesting things to do uh 0:12:33.875 --> 0:12:37.294 when visiting China, many cultural uh locations that I think 0:12:37.304 --> 0:12:39.604 many people would love to, to go and see. Uh 0:12:39.614 --> 0:12:42.294 now on the travel side though, coming back to it, 0:12:42.304 --> 0:12:44.525 the full recovery was seen in Japan. 0:12:45.179 --> 0:12:48.728 So inbound travelers in particular, coming from places where the 0:12:48.739 --> 0:12:52.419 FX had become particularly attractive. And a great example of 0:12:52.429 --> 0:12:55.369 this is Singapore into Japan as a corridor 0:12:55.380 --> 0:12:57.189 armstrong exchange rate vis over the yen. 0:12:57.200 --> 0:13:00.130 That's right, that sort of move that, that it's been 0:13:00.140 --> 0:13:02.669 a 38% move since early 22 0:13:02.724 --> 0:13:05.484 22. That type of move actually, not only did it 0:13:05.494 --> 0:13:09.593 attract that extra volume. So that corridor has been really booming. 0:13:09.604 --> 0:13:12.174 It's more than 40% above where it had been pre 0:13:12.215 --> 0:13:15.704 pandemic compared to other corridors that have not really come back. 0:13:15.715 --> 0:13:17.844 And we can talk about the Thailand story as well 0:13:17.854 --> 0:13:19.424 if you like a little bit later. But on the 0:13:19.434 --> 0:13:20.184 Japan one 0:13:20.820 --> 0:13:23.640 that F FX rate has not just been this big move, 0:13:23.650 --> 0:13:26.319 attracting people in to just go and have their holiday there, 0:13:26.330 --> 0:13:29.460 it's even changed what people do when they go there 0:13:29.469 --> 0:13:33.510 because in general, since the ending of COVID restrictions worldwide 0:13:33.520 --> 0:13:36.679 when it comes to travel, we have been seeing experiences 0:13:36.780 --> 0:13:39.478 dominating what people wanted to spend on. It was all 0:13:39.489 --> 0:13:42.650 about go to that fine dining experience or go to 0:13:42.659 --> 0:13:46.390 the restaurant be with people concerts. Of course, the Taylor 0:13:46.400 --> 0:13:48.780 Swift concerts were a big one. We've been focusing on 0:13:48.820 --> 0:13:52.179 a lot over the last uh last 6 to 12 months. 0:13:52.190 --> 0:13:52.830 But I think 0:13:53.260 --> 0:13:56.440 this story of inbound into Japan was not just experience it. 0:13:56.450 --> 0:14:00.098 We actually were seeing the share of wallet going up 0:14:00.109 --> 0:14:04.869 quite dramatically, particularly on retail for the markets, the inbound 0:14:04.880 --> 0:14:07.710 markets say Singapore or us where the FX was so 0:14:07.719 --> 0:14:10.549 attractive because you can go there and it's really good 0:14:10.559 --> 0:14:13.090 value going to the stores. So it was not just 0:14:13.099 --> 0:14:15.169 about experiences. It was also about things 0:14:15.245 --> 0:14:18.726 when it came to Japan, the transaction volume sizes were there, 0:14:18.736 --> 0:14:21.145 the growth rate was clearly there. You could really see 0:14:21.156 --> 0:14:25.505 the impact of big FX moves in driving traveler behavior 0:14:25.515 --> 0:14:28.236 even actually, it was just in Thailand recently talking this 0:14:28.245 --> 0:14:31.166 through on that corridor and actually even Thai visitors to 0:14:31.176 --> 0:14:34.096 Japan were also breaking with the cliche of it all 0:14:34.106 --> 0:14:37.135 being about experiences and you were seeing there also retail 0:14:37.231 --> 0:14:40.411 spending doing particularly well because even though the Thai baht 0:14:40.421 --> 0:14:43.431 has not exactly been very strong, it has been against 0:14:43.442 --> 0:14:45.331 the yen. That's right. I think that's the other big 0:14:45.341 --> 0:14:47.502 one that along with the Korean one actually or two 0:14:47.512 --> 0:14:50.161 that have actually become quite attractive in that way because 0:14:50.171 --> 0:14:52.211 of the pricing moves in the FX 0:14:52.221 --> 0:14:55.252 rate, right? In my China trip. A few weeks ago, 0:14:55.262 --> 0:14:57.771 first thing I realized that Shanghai is only a couple 0:14:57.781 --> 0:14:59.132 of hours by plane from Tokyo 0:14:59.369 --> 0:15:01.830 and in Tokyo, if you go to a retailer coming 0:15:01.840 --> 0:15:04.270 from mainland China, they will immediately show you the price 0:15:04.280 --> 0:15:07.270 comparison that in RMB, you pay this much in yen, 0:15:07.280 --> 0:15:09.320 you pay this much. So it's of course, a value 0:15:09.330 --> 0:15:13.789 proposition you should buy. So to your point of patterns 0:15:13.799 --> 0:15:18.270 of spending changing and the orientation of tourists changing. 0:15:18.500 --> 0:15:21.030 Um Do you see this like as you just mentioned 0:15:21.039 --> 0:15:24.130 in Thailand, perhaps also if you can share some views 0:15:24.140 --> 0:15:28.599 on Indonesia, Philippines, Vietnam and so on that, this slowdown 0:15:28.609 --> 0:15:31.159 in Chinese outbound tourism into this part of the world. 0:15:31.419 --> 0:15:34.840 Um How deep is it uh is it being offset by, 0:15:34.849 --> 0:15:37.479 I don't know Russian tourism or American tourism? 0:15:37.900 --> 0:15:41.200 Well, certainly into Japan, the US inbound tourism has also 0:15:41.210 --> 0:15:44.719 been helping to make up for some of the, the 0:15:44.729 --> 0:15:47.479 the the gap left behind, let's say by not yet 0:15:47.489 --> 0:15:51.169 being fully recovered on the China inbound uh China tourists 0:15:51.179 --> 0:15:52.520 going in to Japan, 0:15:52.875 --> 0:15:56.174 that's for sure. Now, whether we're going to see with 0:15:56.184 --> 0:15:58.575 some of these changes, that's being also the long term 0:15:58.585 --> 0:16:01.515 story too. Uh I think actually we probably will where 0:16:01.525 --> 0:16:03.864 actually yes, the China side will come back. But the 0:16:03.875 --> 0:16:06.674 strength of the ASEAN demand particularly say it was just 0:16:06.684 --> 0:16:10.544 in Thailand, that corridor of other ASEAN economies with tourists 0:16:10.554 --> 0:16:13.664 coming into Thailand from the ASEAN has already 0:16:14.020 --> 0:16:16.859 exceeded where it was. And the spending numbers are quite 0:16:16.869 --> 0:16:19.030 strong too. And I think this actually comes back to 0:16:19.039 --> 0:16:21.130 the point I mentioned at the beginning about the excitement 0:16:21.140 --> 0:16:24.250 of retailers, which is, it's not all about just thinking 0:16:24.260 --> 0:16:27.299 of when global growth comes from thinking, oh, the US 0:16:27.309 --> 0:16:29.609 and then Europe, they're really thinking about, well, what's the 0:16:29.619 --> 0:16:33.200 India story? What's the story in Indonesia? And actually the 0:16:33.335 --> 0:16:35.905 a story another one again, in terms of inbound into 0:16:35.914 --> 0:16:39.395 Thailand has become exciting because for travelers from India, a 0:16:39.405 --> 0:16:42.635 number of markets had been easing off on visa restrictions. 0:16:42.645 --> 0:16:44.715 Part of the reason being, well, that's a great way 0:16:44.724 --> 0:16:48.395 of making up for some of the relative underperformance of 0:16:48.405 --> 0:16:51.005 travelers coming in from elsewhere. And when you look at 0:16:51.015 --> 0:16:52.405 the sheer volume of say 0:16:52.849 --> 0:16:56.909 infrastructure build out air airplanes on order. Uh that we 0:16:56.919 --> 0:16:58.979 think about the India market, we think of the volumes 0:16:58.989 --> 0:17:01.849 of extra people, middle class and above that is just 0:17:01.859 --> 0:17:04.869 growing continuously over the next five years, more than 20 0:17:04.880 --> 0:17:07.589 million people we think will be added into say the 0:17:07.599 --> 0:17:10.209 middle class groups. It's not just for domestic travel that 0:17:10.219 --> 0:17:12.669 they'll want to do, they'll go beyond the things and 0:17:12.680 --> 0:17:16.000 into the experiences realm. It will be doing these international 0:17:16.010 --> 0:17:16.900 trips as well. 0:17:17.218 --> 0:17:19.917 It is absolutely fascinating. I fully agree with you, the 0:17:19.928 --> 0:17:23.279 increasing purchasing power of the upper middle class and the 0:17:23.288 --> 0:17:25.779 high income cohort of Indians. I think it's going to 0:17:25.788 --> 0:17:29.848 be if not as transformational as the Chinese wealth impact 0:17:29.859 --> 0:17:32.338 in the two thousands. But it will be pretty big 0:17:32.348 --> 0:17:37.619 up there. From a value proposition perspective, hosting a wedding 0:17:37.629 --> 0:17:40.808 in Goa is more expensive than hosting it in Phuket. 0:17:40.989 --> 0:17:42.718 So for Indian 0:17:42.826 --> 0:17:46.475 festival goers and people who want to arrange special family events, 0:17:46.526 --> 0:17:49.026 I think talent is a very good value proposition. Even 0:17:49.036 --> 0:17:51.005 though the bath is not as weak as the yen, 0:17:51.015 --> 0:17:51.776 they still offer great 0:17:51.786 --> 0:17:54.275 value. There's still good value in there. And actually you 0:17:54.286 --> 0:17:56.125 mentioned that story. I think I literally saw two or 0:17:56.135 --> 0:17:57.786 three weddings in the week and a half that I 0:17:57.796 --> 0:18:00.004 was on a holiday in one of the hotels in. 0:18:00.515 --> 0:18:00.546 There 0:18:00.715 --> 0:18:00.734 you 0:18:00.776 --> 0:18:03.035 go, there you go. Um Let's talk a little bit 0:18:03.046 --> 0:18:05.686 more about Singapore. If I'm not mistaken, Singapore is the 0:18:05.696 --> 0:18:08.326 only country in ASEAN where the travel 0:18:08.432 --> 0:18:11.371 tourism is basically back to pre pandemic levels everywhere else. 0:18:11.381 --> 0:18:12.251 It's still lagging. 0:18:12.261 --> 0:18:15.661 There is still, well, we had almost fully come back 0:18:15.671 --> 0:18:17.331 and then it eased off a little bit in the 0:18:17.342 --> 0:18:20.111 most recent data. So we're still below say 90% in 0:18:20.121 --> 0:18:22.531 terms of the volumes. But you're right in terms of say, 0:18:22.541 --> 0:18:25.832 total expenditure that's coming in from the inbound tourists. It 0:18:25.842 --> 0:18:29.322 has made that that pretty much full comeback, but we're 0:18:29.332 --> 0:18:31.501 not fully, we're not all the way over where we 0:18:31.511 --> 0:18:33.972 were in 2019, I would say part of the reason 0:18:34.219 --> 0:18:36.959 is actually the flip side of the Japan story. It's 0:18:36.969 --> 0:18:40.139