Social Media & Shopping Influence for Chinese tourists

Chinese shoppers spendingXiaoyan Mao had not yet collected her luggage after landing at Charles de Gaulle Airport from Shanghai recently. But she and a friend were already mapping out a game plan for the three days they would spend in Paris before continuing a 10-day European blitz with additional stops in Switzerland, Italy and Germany.
Their to-do list included visiting the Louvre and the Eiffel Tower. But what were they looking forward to most on their first trip to the region?
Ms. Mao, 28, a sales manager, smiled broadly. “Chanel,” she said. “Prada.”
Tourists like Ms. Mao are part of a growing wave of newly affluent Chinese taking advantage of more direct flights to the shopping capitals of Europe. The Lunar New Year holiday is now underway, a time when a big part of the 110 million Chinese expected to travel abroad this year will be packing their bags — and their wallets — for luxury expeditions.
And purveyors of European luxury brands, anticipating the arrival of this important clientele, stand ready to embrace it, whether by offering guided tours, in Mandarin, of flagship showrooms; providing backstage access to couture runway shows; or engaging in a variety of other flourishes tailored for the Chinese tourist-shopper.
Storied European brands like Burberry, Hermès and Dior can be bought in high-end shops and shopping malls of major Chinese cities, of course. But for reasons including higher taxes in China and lower prices in Europe, Chinese consumers, who buy more luxury products than shoppers of any other nationality, prefer to do their buying abroad. Of the more than $80 billion in Chinese purchases of personal luxury goods last year, two-thirds were made outside China.
Flagging demand in China itself was a factor cited last week by the Paris-based LVMH Moët Hennessy Louis Vuitton, the world’s largest luxury goods group, for the company’s flat profit last year. That is all the more reason the company and many of its peers are starting to plow more money into European showcases and shift investments away from the Chinese mainland.
Last year, for example, Louis Vuitton opened a three-store, 10,000-square-foot “townhouse,” complete with spinning glass elevator, atop a Selfridges department store on Oxford Street in London.
“There is a major shift happening now with brands,” said Manelik Sfez, head of marketing for Global Blue, a tax-refund company in Geneva that tracks luxury purchases. “They are starting to reconsider their whole structure and the ways they market themselves.”
In catering to the Chinese shopper, some European makers of luxury goods seek to leverage their brands’ heritage and savoir-faire by conducting tours of their landmark European stores — or even setting up museums in them, as Vuitton has done with its “Espace Culturel” on the Champs-Élysées in Paris. Others organize invitation-only demonstrations of the craftsmanship that goes into the products, which companies and analysts say holds a particular appeal for Chinese visitors.

Gieves & Hawkes, the 240-year-old London tailor, for example, lures Chinese groups away from the bustle of Bond Street to its store at 1 Savile Row, which houses an extensive archive of royal and military regalia dating to the 18th century. The visit, which is translated by a Mandarin-speaking guide, includes a stop in the store’s bespoke workshop, where the company still hand-sews 1,000 suits a year.
“In terms of seeing all the components of a luxury brand, it is very immersive,” said Simon Baker, marketing director for the company, which has more than 100 stores in China. “Our Chinese guests are looking to learn what being dressed by a Savile Row tailor is all about, and why it is more luxurious and prestigious.”
The Italian design house Ermenegildo Zegna works with boutique travel agencies, and hotels favored by affluent Chinese, to offer V.I.P. tickets and backstage passes to its European fashion shows.
Zegna has also followed brands like Louis Vuitton and Burberry, already active on the social media platform Sina Weibo, in creating an official account on the wildly popular mobile messaging service Weixin — known outside China as WeChat . So has Harrods, the London department store, which counts Chinese visitors as its largest foreign customer group.
Such efforts are part of the image burnishing that analysts say is as important in marketing to these visiting consumers as selling individual wares.
A Chinese tourist who returns home with a memorable experience to share can be a powerful ambassador for a brand, said Philip Guarino, co-founder of the consulting firm Emerging Market Luxury Advisors.
“You are dealing with a demographic, not a geography, so you need to think in nongeographic terms,” Mr. Guarino said. “Some brands have 150 store locations in China alone,” he said. “But their cash registers are in Europe and the United States.”
Just how dependent the European luxury sector has become on Chinese visitors became starkly evident late last year. In October, China passed a consumer-protection law prohibiting travel agencies from subsidizing group tours to Europe by including mandatory stops at high-end department stores like Galeries Lafayette in Paris or La Rinascente in Milan.
Beijing considered the practice — whereby mass-market agencies used commissions from retailers to offset deeply discounted package tours — to be misleading. Mr. Sfez, of Global Blue, estimated that before the law changed, such captive buying represented roughly 40 percent of all Chinese luxury purchases in Europe.
The law had a striking effect on Chinese tourists’ luxury spending in the fourth quarter, halving sales growth across the European Union to 9.5 percent compared with growth rates of 20 percent or more in the preceding three quarters of last year.
But analysts do not expect a reversal of the broader trend, because higher prices in China compel so many Chinese to prefer shopping overseas. Luxury handbags, which might sell for $1,000 to $5,000, cost on average nearly a third less in Europe than in mainland China, according to Renaissance Capital, a Russian investment bank. Markups by Western brands are common in China, where foreign companies must navigate a thicket of red tape to do business and pay high rents for premium retailing space.
The price gap is further widened by China’s high taxes on consumers. On top of an import duty of 10 percent, Beijing levies a value-added tax of 17 percent and sales taxes that can range from 5 percent to 20 percent, depending on the item. Some other Chinese cities add taxes as well.
Foreign visitors to the European Union who spend more than 175 euros, or $236, in the same store on the same day, meanwhile, are entitled to a rebate on the value-added tax, which in most member states hovers around 20 percent.
Chinese consumers’ embrace of the Internet and social media platforms like Sina Weibo has also increased access to information about luxury goods abroad, allowing them to comparison shop before they even board a plane. Applications like Weixin let people share their foreign shopping experiences in real time, check prices and send photos as they weigh their purchases — or even take orders on behalf of friends back home.
Digital travel magazines, such as the Shanghai Travelers’ Club, have also their Sina Weibo page and publish a curated content about little known luxury brands, as well as tips on how to purchase a private jet or a private island.
Armed with these digital tools, a growing number of Chinese travelers, particularly younger ones, are forgoing the classic group tours and venturing abroad independently. That trend, with the ban on commission-subsidized tours, is driving more tourists to explore beyond the big European flagship stores in the fanciest districts, analysts said.
It also exposes entrenched legacy brands to intense competition in China from increasingly popular rivals like Bottega Veneta of Italy or Mulberry of Britain.
That means the bigger design and fashion houses will need to be more nimble than ever in adapting to the changing habits of their Chinese clientele, according to Federica Levato, a luxury analyst in Milan at the management consultants Bain & Company.
“If they don’t catch up quickly, they will become less competitive,” Ms. Levato said. “Just as they anticipate fashion trends, they now have to anticipate changes in consumer behavior.”

Source: New York Times

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”.

Luxury brand boom anticipated as affluent Chinese shoppers head to UK for Chinese New Year

Luxury stores are preparing for thousands of wealthy Far Eastern shoppers to coincide with the start of the Chinese Year of the Dragon.
The easing of travel restrictions in China means the turn of the year has become a time for international travel and shopping for the country’s elite.
They will be looking for British brands such as Burberry and Mulberry, and international brands such as Prada and Gucci.
Spending by Chinese tourists in UK stores rose by 64 per cent last year, say retail analysts Global Blue, and totalled £165million.
Bond Street shops have hired Mandarin-speaking staff while Harrods has installed 75 tills for Chinese shoppers and the UnionPay card, which is China’s only domestic debit and credit card.
And yesterday, the store unveiled commemorative investment gold bars, each incorporating an Oriental Dragon, in a bid to appeal to the tourists.
Richard Brown of Global Blue said: ‘Chinese New Year reflects an important cultural shift in China with families now travelling abroad as an alternative to celebrations at home.’
chinese-tourists-in-london-china-elite-focus‘Retailers are bracing themselves for a significant uplift in Chinese shoppers and hope to repeat staggering growth.
‘Luxury brands are set to benefit the most from this uplift, with Chinese shoppers spending on average £729 per tax free transaction favouring handbags, jewellery and watches.’
Mark Di-Toro, from VisitBritain, said: ‘The first half of 2011 witnessed a record high in outbound tourism from China. The UK is already benefitting from these high spending visitors who are coming to Britain to shop in their droves.
‘In the West End, Chinese shoppers are reported to spend an average £1,310 during a trip with half of Burberry’s sales in London coming courtesy of Chinese tourists.’
Burberry benefits from the fact that the Duchess of Cambridge has been seen wearing a number of the brand’s trademark coats.
Gordon Innes, chief executive of London & Partners, the capital’s official promotional organisation, said: ‘With its large population, strong economic growth and growing social mobility, China is viewed as a lucrative tourism prospect.
‘In the year ending September 2011 visitor arrivals increased by about 40per cent with the average stay length among Chinese visitors  twice the average of all overseas tourist  – making them prodigious spenders.’

Source : http://www.dailymail.co.uk/

London tailors ready for Chinese gentlemen

Whereas once they were almost exclusively the uniform of London’s elite movers and shakers, the legendary Savile Row cut of suit has slowly been making inroads into China. And a collection of the British capital’s finest bespoke tailors now has big plans to extend its reach across the nation.

Gieves & Hawkes – founded in 1771 and the oldest and largest bespoke tailor on Savile Row – has just announced plans to open 10 new stores across mainland China this year alone, to go with the 90 already established in the country. As the famous Shanghai Travelers’ Club reported to his Chinese members  ” Gieves & Hawkes is definitely the best tailor in the World”. Such a compliment coming for the club known for organizing luxury trips abroad for the Chinese Elite is indeed very valuable.

The company – which is these days owned by Hong Kong’s Wing Tai Properties – claims that China is now its number one market globally and that some of those new stores will for the first time be placed in “third-tier” – or developing – cities in an effort to tap into the country’s rapidly rising and cashed-up middle class.

gieves-and-hawkesSavile Row suits traditionally cost between 3,000 pounds ($4,880) and 8,000 pounds ($13,000) and boast the “best tailoring money can buy” – something the people at Gieves & Hawkes say is increasingly being appreciated across China.

“There are very sophisticated consumers [in China] and they learn very quickly,” Gieves & Hawkes’ chief executive John Durnin told the South China Morning Post.

Other Savile Row tailors are certainly hoping so. Henry Poole (established in 1806) has a Chinese partner in Hanloon Tailoring, which now pushes the Poole label alongside its own in Beijing and Hangzhou, Zhejiang. Meanwhile, Norton & Sons (founded in 1821) is apparently looking into selling its E.Tautz ready-to-wear line in Hong Kong.

For its part, Gieves & Hawkes is also trying in its own way to change the traditional notion that China is the home of the “quick, easy and cheap” suit. Following on from the success the company has had with similar services in its flagshop London store, Gieves & Hawkes’ Hong Kong outlets will in the near future offer such extra luxuries as shoe shining and a grooming emporium within their walls.

In the end, the tailors say, it’s all about luxury.

“I think there is a growing population of very discerning customers in China; men who understand that obvious, mass luxury is not luxury at all, because anyone can buy it; it’s available everywhere and produced in enormous quantities. Real luxury is about scarcity,” said Patrick Grant, director of Norton & Sons.

China Union Pay cards readers help Chinese shoppers in the UK

Wealthy Chinese tourists with money to spend don’t need an excuse to buy luxury goods, but they do need the plastic to facilitate their purchases. That’s why it wasn’t until Harrod’s installed special Chinese credit card readers in its stores earlier this year that the store could boast it had sold two bottles of £25,000 wine, and one £140,000 diamond to Chinese customers.
The store has seen a 40 percent increase in salesto wealthy Chinese tourists since installing 75 China Union Pay terminals into its London store.
Using data from VAT reclaim forms (UK sales tax can be reclaimed by visiting tourists at the airport), the luxury store has calculated sales to wealthy Chinese have risen to an average of £3,500 per tourist.
China Union Pay card - China Elite FocusAccording to the recent statistics released by the ultra high-end travel club for rich Chinese “Shanghai Travelers’ Club”, 37% of Chinese travelers to the UK are ready to spend more than £54,000, and 12% of them is ready to spend more than £70,000 in London!
The increase is largely due to the fact that Chinese bank cards are not recognised outside of China because they use a separate card processing method via China Union Pay card terminals. According to one Chinese saleslady at Harrods, Chinese tourists visiting from the mainland have to bring “a lot of cash” when they travel abroad because so few places have CUP terminals.
In London, the only other store that has the terminals is Selfridges where sales to Chinese shoppers have seen “double digit growth” since the installation of CUP terminals last June, according to a spokesperson.
Making it easy for Chinese tourists to spend money with their domestic cards seems to be a no-brainer. Looking around the store, small groups of Chinese customers now feature prominently. So too do tour groups, who arrive at the store en masse. Harrods’ Mandarin speaking staff say they handle on average 20 to 30 Chinese visitors a day. During Chinese holidays like New Year in February, and two week-long holidays in May and October, coach parties with up to 70 tourists is standard fare.
Joined by telephone from Hong-Kong, Pierre Gervois, CEO of China Elite Focus declared “Luxury retailers should install China Union Pay readers and hire more Chinese speaking staff” He added “It’s the key to success to increase sales with wealthy Chinese tourists”
One Mandarin-speaking sales assistant told beyondbrics that Hermes is the most popular brand, followed by Chanel, Louis Vuitton and Dior. Speaking about their Chinese clientèle another spokesperson said, “they are some of our most discerning customers.”
On a recent trip to the store, one young Chinese shopper from Chengdu, studying at Manchester University, said Chanel was her favourite brand. Her male companion, who was carrying a giant Chanel carrier bag filled with her purchases, quipped: “It used to be Arabs who were the richest shoppers. Now it is the Chinese, isn’t it? Next, it will be the Indians.”

Britain luxury stores braced for influx from China

Oxford Street is anticipating a shopping spree from Asia today as Chinese tourists celebrate the lunar new year by snapping up luxury brands. Although the Chinese new year is traditionally a time for families to gather at home, a burgeoning middle class has the money and inclination to travel. Increasingly, the wealthy are using the holiday to get away, and Chinese tourist numbers are set to double by 2014. In London Chinese tourists make a beeline for the high-end shops. Wang Yanming, a Beijing publisher, is typical of the affluent visitors arriving in the UK. “I have always wanted to go to the UK. It is a beautiful country with a long history,” said the 32-year-old. “I did a lot of shopping, because it was so much cheaper. In outlets and factory shops, the prices for brands like Burberry, Mulberry, Vivienne Westwood and Ben Sherman were incredibly low. For some of them the price was not even half of that in China.” In all, she spent about 20,000 yuan (£2,816) on bags, clothing, shoes, souvenirs and chocolates – and another 15,000 yuan on designer handbags that three colleagues asked her to buy for them. The pound has lost about a third of its value against the renminbi in the past three years, adding to Britain’s attractiveness as a holiday destination. “Stores such as Burberry and Selfridges now have Chinese speaking staff assistants to cater to the huge number of Chinese customers,” said Jonathan De Mello, a retail analyst at the CB Richard Ellis consultancy. “Chinese workers take their holidays at the same time. They come here on tour groups, everything is done for them. They are taken to shops in the West End where they feel obliged to buy something. It’s very lucrative for both sides. They are the new Japanese.” De Mello said shoppers from mainland China and Hong Kong account for about 30% of the luxury goods market in Britain, followed by Russians, Arabs and Japanese, with British shoppers making up only about 15% of the purchases. One reason why luxury goods in the UK are popular with Chinese shoppers is price. Prices of luxury goods can be up to 30% higher in China because of import high tariffs and taxes. Well-known brands and local products such as Burberry, Clarks shoes and Scottish whisky are favoured particularly as they are less likely to be fake here. According to figures from the New West End Company, which represents retailers in Bond Street, Oxford Street and Regent Street, the Chinese were the highest-spending nationality last year, parting with £3m on fashion, cosmetics and confectionery. Britain is expecting a growing influx of Chinese tourists in the next few years. VisitBritain says trips to the UK are forecast to more than double by 2014, growing by 117% relative to 2008, with almost 130,000 additional visits (representing a 0.8% market share for the UK). This would make the UK the 14th most visited destination from China in 2014. It is easy to overstate the importance of tourists from China: in 2009 only 89,000 mainland visitors arrived in the UK, compared with 2.9 million US tourists. But Chinese numbers are climbing, while US arrivals are in decline. And the Chinese spent an average of £1,310, while their US counterparts spent £753. Luxury brands have done particularly well. Harrods recently reported that half of the crowds at the first day of its Christmas sale were Chinese. Travel companies say the UK should be well-placed to benefit further from China’s growing prosperity. “Top attractions include its unique scenery and culture, shopping, football, visiting children who are studying in the UK – and Harry Potter,” said a spokesperson for Titicaca, a Chinese travel company specialising in trips to the UK. Yet some Chinese are deterred from coming to Britain because a separate visa is required. Architect Yu Xiaoliang, 37 from Hangzhou is preparing to visit Amsterdam for work and will take the opportunity to visit other European countries. “I didn’t think about going to the UK because you need to apply for a separate visa, which is both expensive and troublesome,” he said. Source: Chinese Tourists Blog

Getting America’s retailers ready for the Chinese Tourist Boom

By Dr Xiang(Robert) Li, Professor at the College of Hospitality, Retail, and Sport Management, University of South Carolina, USA.

Thanks to their sheer number and spending power, “Chinese outbound tourists” has been the buzzword in the American tourism community for a while. Our recent study showed that the United States is the No. 1 “dream destination” of Chinese citizens; and there are at least 11.5 million Chinese who have been or are interested in traveling to destinations outside Asia.  Below are some suggestions for American destinations and business interested in turning this opportunity into business reality.

Build a unifying image.

The United States needs to centralize its promotions, create a clear brand identity, and deliver the message effectively. The fragmented efforts by different American destinations and businesses could confuse potential customers.

Become more visitor-friendly.

From visa application, customs procedures, to signage in major cities and attractions, the United States needs to show genuine hospitality and respect to Chinese visitors.

Understand your guests.

The new Chinese outbound tourists are savvy global travelers. American destinations and businesses need to better understand their preferences and expectations, which starts from conducting sophisticated marketing research.

Partner with Chinese travel trade.

At the current stage, most Chinese leisure tourists still travel to the U.S. in groups. Thus, the focus of marketing communication efforts is Chinese tour operators, travel agencies, and travel media.

Grab late-mover advantage.

The U.S. is unfortunately among the last couple of developed countries obtaining the ADS (Approved Destination Status). However, this also allows American destinations to observe and learn from other countries’ experiences and lessons.

(Article previously published in “The new Chinese Tourist”, March 2009)

For more information about Dr. Li, please visit his web site at
http://www.hrsm.sc.edu/hrtm/faculty-staff/li_xiang.html.

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