Chinese Tourists Overtake Russians To Become Top Duty-Free Shoppers

Chinese Tourists Spent Average Of US$1,026 On Tax-Free Shopping

China is looking to boost investment in duty-free shops in places like Sanya, Hainan Province to compete with Hong Kong

China is looking to boost investment in duty-free shops in places like Sanya, Hainan Province to compete with Hong Kong

Re-affirming what has already been widely assumed, this week the Switzerland-based tax refund and shopping service provider Global Blue has named Chinese tourists the world’s top tax-free shoppers, surpassing Russian, Japanese and American big-spenders. Last year, Jing Daily reported on Chinese outbound shoppers becoming the top spenders at French duty-free shops, but this year their spending has risen to nearly double that by the formerly dominant Russian tourists.

According to Global Blue, the average spending of outbound Chinese tourists last year was US$1,026 (6750 yuan), while Russian, US, and Japanese tourists spent $508 (3339 yuan), $764 (5026 RMB), and $719 (4727 RMB) respectively. Chinese tourists spent 107 percent more, year-on-year, on duty-free shopping abroad in 2010 as compared to 2009, with shopping accounting for more than 70 percent of their total outbound consumption. Bolstered by the appreciation of the yuan and China’s growing economy, tax-free shopping has become one of the major motivations behind outbound tourism, and with visa restrictions loosening, the number of Chinese tourist-shoppers heading out of the country is growing fast. According to China Tourism Academy estimates, the number of Chinese outbound tourists reached 15.4 million in the third quarter of 2010, a rise of 23.5 percent year-over-year.

Considering that Chinese shoppers account for 17 percent of Global Blue’s total tax-refund transactions, it’s not terribly surprising that the company is bullish about the growing number of Chinese travelers we are seeing more and more in tourism hot-spots around the world. As Manelik Sfez, vice-president of global marketing, said this week, this trend could evolve into a tax-free shopping market worth $6.9 billion (45.3 billion yuan) by the year 2020 if the confidence in the Chinese economy and currency remain the same. Of course, projections are one thing and reality is another. Rising inflation and food prices back home may cause some middle-class Chinese to put off their big overseas travel-and-shopping plans.

Remarking on how retailers can best capture the opportunity presented by outbound Chinese tourist-shoppers, Global Blue’s Sfez said it’s important for companies to understand that “Chinese people are not spending machines.”

From Asia One:

“They are people. They want information. You cannot schedule a Chinese tourist group like scheduling a train or a flight,” he said. “This is just a different culture. It can be served just like any other: Europeans, Americans or Japanese.”

To cater to the rising number of Chinese travelers, the company brought European merchants to China to meet with local tour operators and get to know the market. In March, Global Blue invited a group of major luxury-brand companies from Italy, France, and the United Kingdom to discover the reality and operation of Chinese market, Sfez said.

Chinese travelers spent the most on fashion, jewelry and watches, and they like to shop at big department stores where more options are available, according to Global Blue.

According to Sfez, many Chinese customers do not know the heritage and history of certain brands. “They prefer brands that are very traditional – brands that everybody knows and sell the most,” he said.

Even so, Global Blue has noticed interest in quality versus well-known brand names, recalling Chinese travelers interested in boutique stores known for high-end craftsmanship. Global Blue has refined its China strategy by maintaining offices there since 2005, providing knowledge of the brands, laying out information for customers, and planning to branch out into areas like tax-refund services in China.

As Manelik Sfez commented, “We go where Chinese consumers go.” This seems to be the new mantra of many marketers nowadays.