Harrods boss criticises Chinese visa proposals for the UK

harrods Chinese tourists - China Elite FocusThe boss of Harrods, the prestigious London department store, has warned that proposals by the Coalition to simplify visa applications for Chinese tourists are “smoke and mirrors”.
UK retailers have pressed the Government to overhaul the Chinese visa system because of concerns that the UK is missing out on spending to other European countries.
However, Michael Ward, the managing director of Harrods, said that measures unveiled by George Osborne, the Chancellor, during a trade mission to Beijing are likely to have little impact.
Speaking at a breakfast for the chief executives of luxury brands organised by trade body Walpole, Mr Ward said the Chancellor’s proposals were “smoke and mirrors” and would not help wealthy tourists travelling independently.
Business leaders have warned that the UK is losing £1.2bn of sales each year because Chinese visitors are put off by the complex visa process. Tourists travelling to Europe from China must apply for a separate UK visa alongside the Schengen visa system, which is cheaper and allows Chinese tourists to visit more than 25 other countries in the EU including France.
In October, Mr Osborne introduced a new pilot scheme that will allow tourists to secure a UK visa by only submitting the EU’s Schengen visa.
However, the scheme only applies to selected Chinese travel agents and Mr Ward said the proposal will “do nothing” because the government in China is clamping down on tour groups.
As part of a corruption crackdown, Chinese authorities have passed a law restricting tour groups because of concerns that the tour guides were taking bribes to take visitors to certain places.
Mr Ward said that regulations should boost the UK, but that it means the visa proposals will have minimal impact.
The Harrods boss said that most of the company’s Chinese shoppers were young consumers travelling independently of tour groups. “The Chinese consumers are very young, aged 20 to 25,” he added.
Giles English, the co-founder of watchmaker Bremont, also called for the Government to streamline the visa process for Chinese visitors.
“Anything that makes it easier is only going to help us all,” Mr English said.
The UK China Visa Alliance, which has led calls for the system to be reformed, has calculated that only 6pc of Chinese visitors to Europe obtain two visas, while 85pc obtain only a Schengen visa and just 9pc get a UK visa.
“Chinese tourists oftenly hesitate to choose London as a luxury shopping destination because of the complexity to have a visa for the UK” said Pierre Gervois, Publisher of the Shanghai Travelers’ Club magazine, a luxury travel magazine for affluent Chinese tourists. Mr Gervois added “London luxury retailers should be more proactive in lobbying the UK government for a simpler visa process for independent Chinese travelers willing to go to the UK”.

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Wealthy Chinese invest in Commercial Real Estate

Wealthy Chinese family - Shanghai Travelers Club - CEFChinese investors, the second-biggest overseas buyers of US residential real estate, are building up portfolios of US commercial property as they look for new avenues of diversification. Chinese entities announced more than $5.89 billion in projects in January-October, nearly six times the $996 million for all of 2011 and 2012 combined, data from New York-based consultancy Rhodium Group show.
“There is a lot of upside,” said Thilo Hanemann, Rhodium’s research director. “We are at the beginning of a structural increase of Chinese investment in US commercial real estate.”

“Chinese investors have understood that U.S. retail has a great potential with the flow of high spending Chinese shoppers, and want to get a share of this huge market”, said Paul Martin, Editor in Chief of The New Chinese Tourist.
Greenland Holding Group Co completed a deal that will give the Shanghai-based developer a 70 per cent stake in Forest City Enterprises Inc’s Atlantic Yards, a 22-acre commercial and residential project in Brooklyn, New York. The deal, which is expected to require $4.8 billion worth of investment over eight years, is the largest property transaction by a Chinese company in the US.

China’s push into US property is underpinned by declining investment returns at home, a growing desire by wealthy individuals and developers to diversify their holdings overseas, and property companies looking to capitalize on offshore migration.
“Some investors want to diversify their assets, and some are looking for different growth opportunities,” said Julien Zhang, international director in Beijing for property consultancy Jones Lang Lasalle, which is advising three Chinese conglomerates on property deals. “Others want to learn how to enter mature and developed markets.”
A rebound in US real estate pricing, tight inventory in major cities, and continued low interest rates also are attracting Chinese buyers, said Gary Locke, the US ambassador to China. Locke was speaking at a forum in Beijing sponsored by the US Embassy to promote Chinese investment in US property. Chinese investment in the US has surged to $18.5 billion over the last two years, more than the combined total of the previous 11 years, Locke said.

Advertisement Tower - Gervois Hotel Rating May 2017 featuring Pierre Gervois“Chinese investors are now looking to purchase entire luxury shopping malls in Los Angeles, Las Vegas and New York City”, said Pierre Gervois, Publisher of the Shanghai Travelers’ Club magazine. “As the new generation of affluent Chinese consumers prefer to buy luxury goods overseas, Chinese investors know that it’s now better to invest in luxury retail in the U.S. rather than in China, where foreign brands have opened too many deserted outlets” Gervois added.
Chinese nationals bought more than $8.1 billion worth of real estate in the year ended March 31, representing 12 per cent of the estimated $68.2 billion of domestic property purchased by overseas nationals and second only to Canadians, according to a survey by the National Association of Realtors.
“Real estate is finally becoming a global industry and you will see capital flows on a cross-border basis, just like every other investment class,” said Rob Speyer, co-chief executive of Tishman Speyer Properties LP, which partnered in February with China Vanke Co Ltd to build a $620 million apartment project in San Francisco.


Speyer, whose company is also developing commercial, residential and retail projects in the Chinese cities of Shanghai, Chengdu and Tianjin, said he courted Vanke’s Chairman Wang Shi for more than two years, and inked their deal only 45 days after first introducing the project to him.

Not everyone is convinced that Chinese investment in the US property market will continue uninterrupted. Other options for expansion include Europe, Australia and Singapore, which account for about two-thirds of offshore Chinese real estate investment, according to Jones Lang Lasalle.
Zhang Xin, chief executive of Soho China Ltd, who paid $700 million through her family trust to buy a stake in the General Motors Building in Manhattan, said that while the US regulatory and legal environment remained attractive, valuations were getting expensive. “I would not feel as comfortable today putting in money as I did a few years ago,” Zhang said.

Source: Chinese Tourists in America

By 2015, Chinese tourists could spend more than all the world’s luxury shoppers combined

Chinese tourists Hermes - Niuyue MagIn two years, Chinese tourists could be spending as much as $194 billion a year in Europe, the US, Asia and other vacation spots. That’s according to Morgan Stanley, in a research note on luxury companies.
That figure speaks of the growing economic clout of China’s middle class—but also the irony that so many are spending their wealth abroad when one of the country’s priorities is boosting consumption at home. Last year, Chinese travelers became the world’s biggest spenders, shelling out about $102 billion overseas, according to the United Nations World Tourism Organization (UNWTO)
There will be an estimated 100 million Chinese traveling abroad by the end of 2015, according to the UNWTO. Morgan Stanley compared the spending of these Chinese travelers with estimates from McKinsey of the luxury goods market, and found a remarkable result: by 2015, total Chinese spending abroad will exceed total global luxury sales, having been only one-third of the total in 2008.
Many of these travelers buy Western or designer goods abroad because import duties and other taxes add up to 60% to their prices in China, compared with cities like London, Paris or Hong Kong. Chinese business leaders have been calling on the government to cut taxes to lure luxury shoppers back home, but there are few signs it will do so. Its reluctance may be partly down to the association of designer goods in China with corrupt officials.
Campaigns against government graft and conspicuous consumption have also played a part in sending luxury spending abroad. In 2012, the year that then-prime-minister Wen Jiabao called for a crackdown on corruption, growth of luxury sales in China slowed to 6%, but Chinese luxury spending abroad increased 37%, according to estimates from the consultancy Bain. This year, amid president Xi Jinping’s crackdown, luxury sales have tumbled for high-end liquor, watches, and more.
Even if they’re not appreciated at home, wealthy Chinese shoppers remain coveted the world over. The city of Paris released a manual to try to help locals understand and appeal to the visitors. In Australia, a coastal town near Sydney is building a $500 million theme park that includes a full-size replica of the gates leading to Beijing’s Forbidden City.

Mandarin speaking sales associates are not enough to attract Chinese affluent shoppers: A good digital strategy is more efficient.

Chinese tourists- China Elite FocusOver two-thirds of luxury spending by mainland Chinese was made overseas in 2013, an increase from 2012, according to the China Luxury Market Study from consultancy firm Bain & Company released on Monday.
Chinese shoppers often wait for trips abroad, plan shopping sprees to Hong Kong or get friends or specialist “daigou” agencies to bring back luxury items from overseas because they are often cheaper due to China’s high import taxes.
“Sometimes I’ll go to a China store and look online for details about things I’ve liked, or try something on for size I’ve seen online. But when it comes to actually buying it I’ll always get a friend to bring it back from abroad,” said Fang.
China is the number one luxury spender worldwide, making up 29 percent of total global luxury spend this year, according to the Bain report. So Chinese consumers – wherever they may be – are a key battleground for firms from LVMH Moet Hennessy Louis Vuitton SA and Gucci owner Kering Holland NV to trench coat maker Burberry Group PLC , cosmetics giant L’Oreal SA and Cartier watchmaker Compagnie Financiere Richemont SA .
Chinese luxury spending slowed at home in the wake of a crackdown on corruption and shows of wealth, prompting warnings of a sales slowdown from liquor maker Pernod Ricard SA and Volkswagen-owned Bentley Motors and Lamborghini.
Luxury brand store openings dropped significantly in 2013, according to Bain, which estimated China’s luxury market will grow two percent this year versus seven percent a year earlier.

On London’s Bond Street and Fifth Avenue in New York, luxury stores have been getting ready to welcome Chinese shoppers, boosting China know-how ahead of peak seasons such as the week-long Lunar New Year beginning January 31, 2014.
London’s Harrods department store is planning a themed display for the festival, with special products and menus designed for the occasion, it said.
Chinese visitors spent 300 million pounds ($488.34 million) in Britain in 2012, while the British government has relaxed visa rules to attract more people from the world’s second-largest economy.
“Having a strategy for Chinese visitors makes a massive difference. Chinese spending in the UK was up 132 percent in the first half of 2013,” said Jeremy Gordon, London-based director of China Business Services, which helps UK firms target Chinese shoppers.
“That’s obviously going to have a massive impact on your bottom line at a time when overall retail sales are not growing at anything like that rate.”
On Fifth Avenue, jeweler Tiffany & Co said it employs Mandarin-speaking staff. Tiffany has seen strong growth in the China market as the allure of diamonds grows, and said last month that sales at its flagship New York store were driven by Chinese and European tourists.
Around 1.5 million Chinese travelers visited the United States in 2012, a more than five-fold increase from 2005, according to the U.S. Department of Commerce.

“Western luxury brands have now fully understood the necessity to have Mandarin speaking sales associates in their New York and London stores, but it’s not enough. The purchase decision is made well before the trip, when future Chinese travelers are checking their luxury travel magazines on their iPad and luxury lifestyle Weibo pages. The irony of this is even if the sales associates do not speak Mandarin, Chinese shoppers will still buy”  said Pierre Gervois, author of “How U.S. Retail, Travel and Hospitality Industries can attract affluent Chinese tourists”
Saks Fifth Avenue, the department store unit of Hudson’s Bay Co , has a Lunar New Year strategy to focus on beauty products, while the flagship store of Macy’s Inc has a visitor centre with Chinese-language material.
Barneys, meanwhile, is launching its first Lunar New Year-themed marketing campaign in 2014. The department store has increased adverts in Chinese magazines and is testing campaigns around Chinese payment system Union Pay, it said.

Luxury firms are also going online to woo Chinese shoppers. Tiffany has a Chinese engagement ring app while Chanel offers an online make-up “classroom”. Italian fashion house Fendi has held talks on China’s Twitter-like Weibo, while Prada SpA and Christian Dior SA have Chinese videos online.
Luxury travel clubs for wealthy Chinese travelers have also their iPad App: The Shanghai Travelers’ Club has its own App, entirely in Chinese Mandarin, and features articles about US$50M private jets, gold plated hand made laptops, or entire private islands for rent for discerning (and rich) Chinese tourists.
Luxury leather goods firm Coach Inc has a U.S.-focused campaign in Mandarin using popular Chinese social media app WeChat. The app, developed by Tencent Holdings Ltd , has 272 million users worldwide.
Coach tailors some of its U.S. products for Chinese shoppers, a spokeswoman said. Chinese are the fast-growing segment of the firm’s North American tourist sales, which make up a fifth of total sales in the region.
“This trend is going to continue because the Chinese are a lot more integrated in the global economy and really informed, especially about price,” said Bruno Lannes, Shanghai-based partner with Bain and lead author of the luxury market report.
“At the end of the day it comes to the same thing: shoppers will either travel or go online to buy abroad.”

Chinese shoppers have become the highest-spending overseas visitors to the U.S.

Chinese-shoppers - China Elite FocusMinutes after arriving by bus at an outlet mall in Cabazon, a dozen or so Chinese tourists hustled out to buy luggage that they planned to stuff with high-end clothes, shoes and bags.
But not Guoshing Cui, a Samsung supervisor from Guangzhou. He made a beeline for the Coach store, where he picked out three expensive handbags. He paid more than $800 from a wad of $100 bills.
The bags were gifts for family and friends in China, where Coach goods sell for two to three times the price in the U.S. “It’s a smart move,” he said of his purchases.
That kind of power shopping has made the Chinese tourist the highest-spending overseas visitor to the U.S. and one of the most valued customers for U.S. outlet malls, shopping centers and tour bus operators.
Chinese tourists spend an average of $2,932 per visit to California, compared with $1,883 for other overseas visitors, according to the latest statistics by the U.S. Office of Travel and Tourism Industries. A big chunk of their spending — about 33% — goes for gifts and souvenirs.

“What we know about Chinese visitors is they don’t like to lay on the beaches,” said Ernest Wooden Jr., president of the Los Angeles Tourism and Convention Board. “What they do like is shopping.”
The outpouring of Chinese money helped set a record for spending by foreign visitors to the U.S. — $168.1 billion in 2012, according to federal officials. Los Angeles is getting its share of the Chinese spending: Nearly 1 in 3 Chinese travelers to the U.S. makes a stop in the City of Angels.
“The Chinese middle class is growing and their No. 1 destination is L.A.,” said Los Angeles Mayor Antonio Villaraigosa, who has made two trips to China and will be in Beijing this week to promote trade and travel with L.A.

“Our magazine has featured many articles about California in 2013, due to the high demand from our readers, very affluent independent Chinese travelers who carefully plan their trip to the U.S. and don’t trust much the official group tours travel agencies” said Pierre Gervois, Publisher of Luxury Hotels of America, a mandarin-only luxury travel publication about the United States. Pierre Gervois added “There is often this misconception that Chinese travelers are interested only in cheap hotels: It might have been true five years ago, but the new generation of Chinese travelers are perfectly aware of the quality of U.S. hotels and shopping malls. The South Coast Plaza (Orange County), for instance, has perfectly understood how to welcome Chinese shoppers. It’s an example to be followed by the entire luxury retail industry”
China’s relatively strong economy and its growing middle class means more Chinese citizens have money to travel and spend, according to tourism experts. The middle class in China numbered 247 million people in 2011, or 18% of the population, and is projected to grow to more than 600 million by 2020.
Visitors to California from China are typically professionals, executives or managers, with an average annual income of $66,900 — compared with an annual per capita income of about $5,000 for all Chinese residents, according to statistics from the U.S. and Chinese governments.
To draw in more Chinese spending, store owners, hotel managers and tour guides in Southern California are going out of their way to welcome Chinese tourists.
At the Desert Hills Premium Outlets in Cabazon, 20 of the 130 stores employ Mandarin-speaking salesclerks such as Jeffrey Hsu, who works at the mall’s Ugg Australia store.

“I think we understand their customs,” Hsu said. “When someone comes to a foreign country they want to bring back gifts for their family and friends.”
Spending by Chinese travelers has grown so fast in the last few years that it has surpassed the per capita outlays of other high-spending visitors, including travelers from Japan, Australia, Brazil and South Korea.
The customs and unique characteristics of the local economy shape how foreign visitors spend their time and money when visiting the U.S.
Australians, for example, share a similar culture with the U.S. and are more likely than other overseas travelers to visit museums, art galleries and historical sites.


“We are fascinated by peoples of different cultures,” said James McKay, an engineer from Melbourne, whose recent visit to the U.S. included tours of Alcatraz island in San Francisco, the Pearl Harbor memorial in Hawaii and ground zero in New York. He also took a historic tour of Disneyland with his wife, Karen.
Japanese tourists, according to travel surveys, spend heavily at restaurants because certain foods, particularly red meat, are much more expensive in the island nation.
That may explain why Morton’s steakhouse in Beverly Hills has become hugely popular among Japanese tourists.
“Don’t even put fish or chicken in front of them,” Joanna Sanchez, a spokeswoman for the restaurant, said of Japanese visitors. “They come for steak.”
But Chinese tourists tend not to shop for themselves. Most of their purchases — usually high-end clothes and accessories featured in American movies and magazines — are gifts for friends and family.
Chinese tourists in the U.S. target brands such as Coach, Ugg, Polo, Nike, Tommy Hilfiger, Neiman Marcus and L’Occitane. Steep Chinese taxes make such brands two to three times more expensive in China, said Helen Koo, president of America Asia tours in Monterey Park.
“Many tourists feel that the savings more than pay for the entire trip,” she said.

Source: Los Angeles Times / Hugo Martin

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