Wealth Blog

Chinese travellers wooed to spend big at European airport

PUBLISHED : Thursday, 06 December, 2012, 11:46am
UPDATED : Thursday, 06 December, 2012, 11:46am

Although the Germans currently have the greatest number of registered patents in the world, proving, surprisingly, that they are the leaders in global invention, it’s unusual to hear of them coming up with great retail ideas.

But this week we read of the freshly-minted personal shopper service at Frankfurt Airport. They have gone to some trouble to recruit and train these chaps. Not only is personal shopper Wassim Hussein clearly not a German native, his fluency in Mandarin allows him to expertly guide mainland Chinese shoppers around the airport’s duty free aisles making sure their shopping wish lists are fulfilled.

You don’t have to be Chinese to enjoy this service; Hussein also speaks English, French and German. Such a simple idea. You can almost sense the credit cards of Chinese consumers twitching with excitement in their wallets at the chance to have the subtleties of luxury brands explained to them in a familiar tongue. Never mind if the person doing it is probably from Turkey or the Middle East.

A million Chinese travel through Frankfurt each year, making the customer group the airport’s biggest by far. The equivalent in Hong Kong would probably be a strapping African explaining Chinese brands to Europeans in French. Either way, it just shows that if you go the extra mile it can pay off, handsomely.

Reverse cash flows

This is just one example of how Europe’s retailers are trying to tap the seemingly bottomless pockets of mainland tourists. Mainland Chinese travellers spent US$73 billion last year, up 32 per cent from 2010, with growth running at similar levels this year, according to the World Tourism Organisation.  They are now set to overtake the Germans as the world’s biggest spenders.

In the third quarter alone, duty and tax free spending by Chinese travellers increased by 58 per cent, according to Global Blue research. They already top the spending charts in London, Paris and Frankfurt airports. They must be dead serious in their mission, as anyone who has tried to have an enjoyable shopping experience at Heathrow Terminal three or Paris Charles de Gaulle airports can tell you. It’s no fun pushing and shoving through the droves of passengers herded like cattle into the chaotic shopping corral. One wonders when China will wake up to the big lost opportunity here.

Tax in mainland China on luxury items runs at over 20 per cent, which explains why people are so keen to shop in Hong Kong, where not only do they save on tax, but also gain from the strength of the renminbi versus the Hong Kong dollar. This means they get a lot more bang for their buck. Taken a step further to Europe and the RMB looks even more robust against the puny euro. Added to that is the fear of being sold counterfeit products in China and you can see why they hang on to their cash till they head overseas. Chinese travellers spend on average US$1,000 when abroad. That’s a lot of money leaking out of China.