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25 August 2015
When Ling Zhang, a 36-year-old engineer visited Europe for the first time she
did not hesitate to make Paris her first stop.
All my friends told me it was a must-stop. They told me it was romantic,
beautiful, full of elegant people, she said, adding she will definitely return
in the next five years.
France s capital is China s new favourite holiday destination. Between 600,000
and 800,000 Chinese tourists visited Paris in 2014, an increase of nearly 20%
on the previous year. The Paris region tourist board is confident this trend
will continue.
Even the recent devaluation of the Chinese currency looks unlikely to dent the
Chinese passion for luxury shopping. So while economists agonise over
deceleration of growth, retail analysts aren t convinced it will have a
significant or immediate impact on the buying trend.
BNP Paribas group chief economist William de Vijlder draws a distinction
between the super-wealthy, and other Chinese tourists in Paris. He said that
although the latter will be more impacted by stock market declines in China,
at this level it won t make a dent in their spending patterns.
de Vijlder added that once people decide to travel they have already looked at
the numbers, they don t then pause in front of a luxury shop considering which
purse to buy, or not to buy.
Paris has rolled out the red carpet for its shopaholic visitors. The city as a
whole has stepped up the charm offensive with hotel discounts; shopping
experiences; Mandarin-language mobile phone applications and luxury products
catered to Asian tastes from skin whitening creams to limited edition handbags
and Cognac, some specifically launched during Chinese New Year.
To improve communication with Chinese tourists, the tourist board has recently
published a booklet called Do you speak tourist for taxi drivers, hotels and
restaurants with advice on how to be more welcoming.
Born to shop
What makes the Chinese traveller so worth accommodating in particular is their
deep love of luxury shopping, from watches to leather goods and fashion.
And it s taken very seriously, planned like a strategic operation. I recall
the first time I went to Paris, our group spent more than eight hours in
shopping malls, including Galleries Lafayette, said Wang Wei, 37, who visited
in 2006 with a tour group and has since returned four times. Chinese tourists
look online, compare prices, see what products have not come out in China yet.
They know exactly what they want to buy .
The Comit R gional du Tourisme estimates that on average a Chinese tourist
spends roughly 1100 euros per trip, more than any other nationality, the only
other that comes close are the Russians, who spend around 1076 euros per
person.
It s compulsory for them to come back with gifts made in France. A Chanel bag
bought in Paris is just not the same as if it was bought in Beijing, said
Francois Navarro, the managing director of Comit R gional du Tourism.
Chinese tourists look online, compare prices, see what products have not come
out in China yet.
Other incentives for Chinese travellers to spend more overseas, include lower
sales tax, favourable exchange rates and the certainty that the product they re
buying is authentic.
Visitors can reclaim value added tax (VAT) back after leaving European Union
countries. And, as luxury products are heavily taxed in China (with levies such
as a consumption tax between 5-20% and import tariffs that can reach an
eye-watering180%) this means some luxury goods can be up to half-price in
Europe.
Spend-a-holics
Chinese tourists currently account for a staggering 40% of all luxury sales in
France, according to an HSBC report published in February, so many of Paris
retailers will continue to do whatever it takes to draw them in.
The grands magasins the equivalent of Harrods in London or Bloomingdales in
New York as well as the shops on the Champs Elys es, plus the luxury
boutiques and jewellers around Place Vendome are all using a number of subtle
and not so subtle tactics to cater to Chinese shopping whims.
They provide free wi-fi; Mandarin-speaking staff; VIP lounges and dedicated
express shopping lanes. The space is reserved specifically for tourists and the
lanes are decked with a selection of Chinese shoppers favourites. Often
Chinese tourists are in Paris just a day and half which leaves little time to
walk idly through the vast shopping malls.
All Chinese clients are personally welcomed by a hostess speaking Chinese.
Shopping items are delivered to their hotel directly. We continuously adapt so
that their shopping experience is tailored to their needs, said Marie Bart,
deputy director of relations with clients of the Bon March , a high-end
department store in the seventh arrondissement of Paris.
Their typical Chinese client is a high-net-worth individual who does not
hesitate to splurge on niche French luxury brands such as Roger Vivier shoes or
bags and accessories from Moyna, which are harder to find in China.
All Chinese clients are personally welcomed by a hostess speaking Chinese.
Shopping items are delivered to their hotel directly.
Bon March has created a VIP de-tax bureau, where certain shoppers can have VAT
reimbursed on-site in a dedicated lounge. The store even offers extended hours
in the in-house restaurant which allows continuous service for jet-lagged
shoppers who need to refuel.
Similar perks are offered at Paris other big department stores such as Le
Printemps or the Galleries Lafayette, (the latter is still considered the holy
grail for the first-time visitor). According to consultant, 3E, Chinese
tourists now represent more than 30% of the Galleries Lafayette s total
revenues. Galleries Lafayette declined to comment.
High-speed shopping lanes?
The months following Christmas and January sales used to be a slow time for
Paris. Not anymore. During Chinese New Year, Galleries welcomes as many as 100
busloads of Chinese tourists a day. That s potentially 4,000 tourists walking
through their doors daily.
Treated as VIPs, they re ushered through their own private entrance and offered
a personal assistant. The shop is thought to pay some commission to the agent
that accompanies these tourists but it declined to comment.
These shops are going towards a model where shopping space is more and more
segmented and efficient. There are the shopping tills for the first-time
tourist which only has an allocated amount of time and a shopping list to go
through, and the VIP lounge for the more wealthy consumer that does not want to
mix with the crowd , said Erwan Rambourg, head of consumer and retail equity
research at HSBC and author of The Bling Dynasty.
The way these mega-brands show off their new products has also changed over the
past five years, driven largely by Chinese buyers. These clients can now see
the same items in shop windows in Paris, Beijing and Shanghai.
Paris stores are selling very little to locals, and as travel restrictions
[from China] ease, I believe this will only go one way, Rambourg said.
He is confident the recent market volatility will have little impact on the
trend. A weaker currency obviously will have an influence on the propensity to
buy from Chinese tourists, but not much at the current levels as a less than
5% drop is likely to have a negligible impact given how much cheaper and how
much more exciting Paris will seem to the Chinese traveller, Rambourg added.
Some stores saw the Chinese takeover coming. A controversial redevelopment of
closed department store, La Samaritaine, purchased by luxury holding LVMH
(which owns Louis Vuitton), was proposed several years ago but has been mired
for years in a planning dispute.
The business had planned a major renovation project to create France s first
downtown, luxury, duty free store complex with Chinese tourists in mind, as
well as a palatial hotel. But this long-delayed 470 million euro ($559 million)
makeover has ruffled feathers and remains on hold, at least for now.