Yuan spenders eclipse Arabs, Russians in UK
Weak pound lures Chinese shoppers to London
September 6, 2009
By Paul Adrian Raymond
Data from tax rebate companies suggests Chinese tourists are spending three to four times more than a year ago in London's chic shopping districts.
On Bond Street, famous for its designer boutiques and jewellers such as De Beers and Graff, figures from firms that arrange sales tax refunds for tourists suggest Chinese shoppers are overtaking big spenders from the Gulf states, Russia, the US and wealthy Nigerians.
"We are looking for good-quality branded stuff," said Lillian Wang, a 28-year-old bank worker from Beijing on Oxford Street. "I'm not as crazy as others, buying a dozen Louis Vuittons (bags), but I'm sure they are a lot cheaper here than in Beijing."
Differing habits
Thanks to a $585 billion (R4.5 trillion) stimulus package and record lending by the country's state-owned banks, China is likely to hit the government's target of 8 percent growth this year - the fastest rate of any major economy.
This has offset a slump in export demand and sustained the rise in incomes that made Chinese shoppers a rich seam of profit for Europe's luxury brands.
"Income growth - particularly the top end, also driven by wealth accumulation - remains robust in China," said Linda Yueh, a fellow in economics at Oxford University. "Thus, wealthy Chinese may find that the weak pound makes Britain an attractive place to shop."
Sterling has recovered from lows early this year against currencies such as the dollar and yuan, but is still far short of mid-2008 levels.
Britain has been in recession since the last quarter of 2008, when gross domestic product shrank at its fastest rate since 1980.
A survey by the Confederation of British Industry showed retail sales fell more sharply than expected last month. In this environment, tourists from China and other Far Eastern countries will have little impact on Britain's economy as a whole, says Richard Perks of market research group Mintel.
Wang's shopping bags reflect the different spending habits of the Chinese visitors compared with other wealthy shoppers: besides a £900 (R11 399.30) suit for her husband, she had a more modest £50 pair of shoes for herself.
As well as top labels, the Chinese are drawn to more prosaic items, and they are not as seduced by lifestyle offerings.
For example, top-end retailers have employed Mandarin-speaking sales staff to cope with the influx of Chinese customers but London's chic hotels have yet to benefit, says Charles Wang of tour operator Travco. Nonetheless certain items seem to hold universal appeal, according to Bruno Barba, a spokesman for Selfridges, who said: "Chinese, Middle Eastern and Russian customers all share a love of the luxury accessory - whether handbags, fine jewellery or watches."
Jewellery demand in China, the second-largest gold consumer, rose 6 percent in the second quarter of this year from a year earlier, against a 31 percent drop in India and a 9 percent decline in global demand for gold. Barba said Chinese customers ranked among the five top-spending groups at Selfridges, regardless of the season.
The trend is even more marked elsewhere. Global Refund, which arranges sales tax refunds for tourists, reported a 164 percent rise in sales to Chinese customers on Bond Street in the first seven months of this year from a year ago. Spending by Russians fell 27 percent although, at £1 295, their average spend was still higher than the Chinese shoppers' typical £972.
Spending growth
"In spite of the downturn, the growth in Chinese spending is a trend we expect to continue to the end of 2009," said Nigel Dasler, Global Refund's vice-president of UK sales. "Seventy percent of their tourism expenditure is on shopping." Similar figures from Premier Tax Free show sales for which it arranged tax rebates to Chinese shoppers soared to £3.9 million on Bond Street in the first seven months of this year from just under £1m a year ago.
That outstripped the combined £3.1m figure for visitors from the Gulf states of Kuwait, Qatar, Saudi Arabia and the United Arab Emirates and eclipses other big spenders such as the US at £1.8m and Nigeria at £1.2m. Last year's table-topper, Russia, dropped to £1.7m from £1.9m in the first seven months of last year.
The number of billionaires in Russia has shrunk by two-thirds over the last year after the downturn lopped more than 70 percent from the country's 100 richest people.
According to Travco the fallout from the 2006 murder of Russian dissident Alexander Litvinenko in a London hotel has been compounded by tighter visa requirements and Russian media coverage of Britain's swine flu outbreak.
What is not certain is whether the Chinese will, regardless of the exchange rates, keep coming back as the other perennial big spenders do. - Reuters
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