Copenhagen Luxury Retailers Face Chinese Tour Guide “Kickback Culture”

“It’s Not A Phenomenon We Want In Denmark”

Copenhagen

While luxury retailers from Vegas to Venice have seen an influx of free-spending Chinese outbound tourists, store managers dealing with tour guides have come face to face with a less glamourous side of the business. According to Copenhagen’s Berlingske newspaper, in exchange for bringing busloads of tourist-shoppers, store owners have reported Chinese tour guides demanding a cut of five to ten percent of sales. While not illegal, and considered par for the course in Hong Kong as well as mainland China, the practice isn’t sitting well with luxury stores in the Danish capital or the tourism association Wonderful Copenhagen.

As Berlingske notes this week:

The practise was an industry secret in Copenhagen until several shops recently spoke out about how they were boycotted by the guides because they refused to pay the cut. […] “The phenomenon is widespread in countries where there is heavy competition for tourists,” Wonderful Copenhagen spokesperson Peter Rømer Hansen told Berlingske. “It’s not a phenomenon we want in Denmark.”

According to Berlingske, Chinese tourists spent over 200 million kroner in Copenhagen in 2011 and many luxury shops are so reliant on this income that 50 percent of their turnover comes from Chinese visitors.

One shop that refused to pay the cut is Ecco on Østergade in Copenhagen. The store’s manager, Micky Kastoft, told Berlingske that the guides asked for cash in exchange for bringing the tourists.

“We said ‘no thank you’,” Kastoft said. “Ecco already has a strong brand recognition in Asia so many Chinese still find their way in here. But for shops and brands that are less well known it’s more important to pay the guides in order to get the Chinese customers.”

Some of the shops that admitted to paying the guides included the jewellers Klarlund and the watch company Ole Mathiesen, though neither would reveal who much they paid.

But while the guides could earn thousands of kroner on their ten percent cuts from a day of accompanying wealthy Chinese tourists as they buy fur coats or exclusive watches the guides themselves reportedly have to pay tour agencies up to 150,000 kroner for the privilege.

In an attempt to cut back on the kickback culture, Wonderful Copenhagen recently announced a training program for Chinese guides slated to begin next year to boost transparency. Still, not every luxury retailer in Copenhagen is bothered by the practice. As board member Michael Hansen of the retailers association Københavns City Center (KCC) put it, “When guides and shops work together to get tourists into shops, it can only be a good thing. As I see it, it’s a type of marketing co-operation and there is nothing wrong with that. On the contrary.”

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