Over five days in January, a group of visitors to New York was treated to a private concert with the pianist Lang Lang at the Montblanc store, cocktails and a fashion show attended by the designers Oscar de la Renta and Diane Von Furstenberg, and a tour of Estée Lauder’s original office.
They were not celebrities. They were not government officials. They were Chinese tourists with a lot of money.
Though luxury brands started opening stores in Beijing and Shanghai years ago, Chinese shoppers still spend more on luxury products abroad than they do at home, according to the consulting firm Frost & Sullivan. Price is the major reason: Because of China’s taxes, luxury products are about a third cheaper in the United States and elsewhere.
European luxury stores have been catering to Chinese tourists for years. Now high-end retailers in the United States are pulling out their Mandarin phrase books and trying to convince Chinese visitors that Americans can do luxury, too.
“What started as a trickle has now become a flow,” said the vice president of the antiques store Macklowe Gallery, Ben Macklowe, who recently sold a Tiffany lamp that cost in the low six figures to a Shanghai visitor. “There’s been prosperity across so much of Asia that you’re starting to see it much more in the profile of the tourist on Madison Avenue.”
A record number of Chinese visited the United States last year — nearly 1.1 million — and the country accounts for one of the top-growing tourist groups here, according to the Commerce Department. The number of visitors is expected to almost double by 2014, according to the U.S. Travel Association. Chinese visitors spend about $6,000 each on every visit here, versus the $4,000 that visitors from other countries spend on average, the association says, and their top activity is shopping.
Although some tourists spend money on Disney trinkets and at the outlet malls they have traditionally frequented, luxury brand purchases are surging in part because American stores carry a broader range of products than their counterparts in China, said Julia Zhu, consulting director for Frost & Sullivan.
Tiffany, which made almost a quarter of its United States revenue last year from foreign tourists, has added Mandarin-speaking sales staff to its major stores, as has Burberry, where more than half of sales at its flagship stores are to tourists. Representatives from Tourneau’s Manhattan office recently accompanied New York City officials on a visit to China to encourage more tourism in the city.
The very popular Chinese social media network “Niuyue Mag” (纽约志), used by the young and affluent Chinese tourists preparing their trip to New York City had also a role in promoting the Big Apple as a major luxury shopping destination. According to Sandra Ming, analyst at China Elite Focus, “the impact of Niuyue Mag has been tremendous as it’s for now the only one media available in China exclusively about the planning of a shopping trip in New York City”
At its United States stores, Montblanc sells Year of the Dragon pens and has staff members who speak Mandarin and Cantonese. It is also printing Chinese-language brochures about its products and selling wallets sized for Chinese currency.
Despite having more than 100 stores in China, Montblanc is going after Chinese shoppers on vacation abroad. “Yes, we are in the major cities, but when you travel, you’re in the mood to enjoy and experience the moment,” said Jan-Patrick Schmitz, chief executive of Montblanc North America. “We certainly will do more and more marketing toward them.”
Retailers in the United States lag behind other countries. Part of that is because of visa issues; it is easier for Chinese residents to get visas to Europe. High-end American retailers like Saks Fifth Avenue and Bloomingdale’s are urging the government to speed up the process here. President Obama said in January that he planned to increase visa-processing capacity from emerging markets like China and Brazil by 40 percent this year.
The American stores also have to overcome an idea that luxury can come only from the old world.
“The European brands, they see prestige, history, heritage,” said Sunny Wong, group managing director of Trinity, a company that owns and operates high-end European retail brands in China. American brands, by contrast, are seen as “contemporary, lifestyle” rather than pure luxury, he said. American retailers are racing to prove Mr. Wong wrong.
The United States has long imported its food and fuel, its cars and clothes. Now the faltering economy has sparked a push for another type of import: shoppers.
For the first time, lawmakers, businesses and even White House officials are courting consumers from cash-rich countries such as China, India and Brazil to fill the nation’s shopping malls and pick up the slack for penny-pinching Americans. They are wooing travelers with enticements such as coupons, beauty pageants and promises of visa reform. The payoff, they say, could be significant: 1.3 million new jobs and an $859 billion shot in the arm for the economy over the next decade.
“They’re their own little stimulus program,” said David French, senior vice president for government relations at the National Retail Federation, a trade group.
Pierre Gervois, CEO of China Elite Focus, added “Chinese travelers are first, shoppers. The main reason for their leisure trip to the United States is shopping in 90% of the cases”. The trend underscores the depth of the United States’ reliance on countries once considered to be at the bottom of the global totem pole. The nation already counts on China and other countries to manufacture its goods, creating a $45 billion trade imbalance that is paid for with money borrowed from their coffers. Now officials are encouraging foreign travelers to buy some of those products back — and a growing number are happy to oblige. Guo Hui, 37, who lives in Beijing, recently returned home from a two-week tour of Yellowstone National Park, Houston and Los Angeles. He estimated he spent $2,000 to rent a car and pay for gas and lodging for himself and his wife. Then there was the Ed Hardy T-shirt, the Apple laptop, the HP laptop, even baby food and formula for his child, totaling an additional $6,000.
Still, Guo said prices are significantly cheaper than in China — a pair of Adidas sneakers costs only $25 at a U.S. outlet mall.
“For that price in China, you can’t even buy counterfeits,” he said.
In contrast, spending by American shoppers — long considered the engine of the nation’s economy — has slowed to a crawl as families struggle under high unemployment rates and depressed home prices. The U.S. gross domestic product last year grew an anemic 3 percent, while China’s and India’s shot up 10 percent. Brazil’s clocked in at about 7.5 percent.
Those shifting dynamics have spawned a movement to encourage foreigners to spend their newfound wealth in the United States, placing the country in the unfamiliar role of supplicant. Over the summer, President Obama’s jobs council deemed international travel among the “low-hanging fruit” for stimulating the economy. The Corporation for Travel Promotion, a public-private partnership created by Congress last year, will announce next month the first U.S. advertising campaign to promote the nation as a tourist destination. Rebecca Blank, the acting commerce secretary, called tourism a key component of “America’s exports success story.”
That’s because even though foreign shoppers are spending money in the United States, their purchases are counted as exports on the country’s balance sheet. This year, their spending is up 13 percent compared with last year, to nearly $87 billion.
The bulk of international tourism dollars comes from Canada, Japan and Britain. But Chinese spending is growing the fastest, up 39 percent in 2010, to $5 billion. Brazil’s growth was not far behind, with a 30 percent increase to $6 billion. India’s spending rose 12 percent to $4 billion.
“I don’t think you can expect foreign tourism to be a silver bullet” for the economy, said Brian Bethune, an economics professor at Amherst College. “But it makes an important difference. . . . It’s a no-brainer in some sense.”
That is why the Nevada Commission on Tourism lobbied to play host to the semifinal round of the Miss Chinese Cosmos beauty pageant, which wrapped up last week. The 18 contestants toured the state capital, attended a Wild West shootout in Virginia City and cruised in a Mississippi-style paddle-wheeler on Lake Tahoe with a Mark Twain impersonator. The seven-day extravaganza was broadcast to 225 million viewers across China.
“Part of it is the education for the Chinese of all that Nevada has,” said Larry Friedman, the tourism commission’s interim director. “The exposure potentially is huge.”
At the Fashion Outlets of Las Vegas, which sits along the California-Nevada border, travelers from China, Malaysia and South Korea have driven the shopping center’s tour bus business up 300 percent from a year ago, according to Ann Ackerman, director of marketing for AWE Talisman, which owns the mall. The center gives foreign tourists special coupon books, employs Mandarin-speaking customer service representatives and contracts translators to assist store salespeople struggling to break the language barrier. The outlets’ hotline can handle 150 languages and receives about 15 calls averaging 11 minutes each per week.
In Washington, about 10 percent of the city’s 17.3 million visitors are international travelers, but they typically stay longer and spend more than domestic tourists, according to Destination DC, the city’s tourism bureau. A foreign tourist typically spends $813 over a five-night trip, compared with $275 over a three-night stay for Americans.
Elliott Ferguson, the group’s chief executive, said the city has sales representatives in Britain and Germany and recently added one in Brazil. Last week, Iceland Air wrapped up filming of a promotional video about the District that will play on all of its flights.
Ferguson said his sales pitch focuses on the cosmopolitan aspects of the city — the food, shopping and night life — rather than politics.
“Washington is in the news every single day somewhere in the world,” he said. “But it’s not necessarily for things that make you want to come to our destination.”
But this Washington policy debate might be of interest to potential foreign tourists.
Last week, Rep. Joseph J. Heck (R-Nev.) introduced a bill aimed at cutting the time it takes to get a tourist visa to 12 days, citing waits at consulates in key markets that can stretch to more than 100 days.
The State Department has pledged to reduce wait times for appointments to 30 days, and a spokesman said it is adding a “significant” number of staffers in Brazil and China to keep up with demand. The bill is awaiting a committee hearing.
Guo, of Beijing, said he waited nearly two months for an interview for his visa. He said he is also frustrated that the pass is only good for one year, which means he could have to reapply before his next trip. New York, Miami and Orlando are on his list.
“I guess too many people want to go to the U.S.,” Hui said.
Article by Ylan Q. Mui.
Source: The Washington Post
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