It’s been a good two years since Chinese tourism to Europe was possible. The retail sector in Europe is still feeling the effects of the lack of well-funded Chinese travelers. The queues in front of the Louis Vuitton, Hermès and Balenciaga boutiques have gotten shorter and there are fewer Asian customers overall. Speaking Chinese, hitherto a plus for shop staff, is a skill that proves less useful for the more local customers.
Since the beginning of 2020, the Chinese government has hardly let anyone out or into its country. Not much has changed in the number of Chinese visitors abroad until well into the second half of 2022. The Financial Times reports that Chinese tourism will not return to pre-coronavirus levels until 2025.
A shift in purchasing power and retailers’ response to a more locally oriented clientele mean Chinese shoppers are unlikely to regain the high-street dominance they enjoyed in 2019. According to payments provider Pymnts, Chinese customers are expected to spend more in their home market and luxury brands are increasing their presence in China with new branches in regions and cities they have not previously served.
Before Covid, Chinese travelers bought their luxury goods in Europe and the US, where prices were lower than in China due to the tax exemption. There, retail surcharges are higher due to import duties.
Chinese customers account for two-thirds of tax-free sales
But Europe is missing the Chinese visit. Broken down by region, Chinese tourists are responsible for the highest per capita spend on luxury goods among all travelers. According to the management consultancy Bain & Company, they accounted for two-thirds of luxury sales in Europe from 2015 until the outbreak of the Covid pandemic. The data reflects data from Duty Free Global Blue and VisitBritain that in the UK, visitors from China account for just 5% of non-EU travelers but 32% of all tax-free sales.
Chinese visitors mean little effort for retailers because they come with the intention to buy. According to FT, they are already set in their intent and have a shorter window to make those purchases before returning home. Locals, on the other hand, can search for discounts and compare across multiple stores and have a chance to come back.
While China continues to bar entry into the People’s Republic of China, Europe is responding with reciprocity – local retailers need to come up with something.
This article was previously published on FashionUnited.uk. Translation and editing: Barbara Russ