A shoe, a song and the promise of the West
I found myself at Selfridges this week, specifically in what the London retailer says is the world’s largest shoe department.
Slightly dazed by cornucopia of women’s shoes on slick display, I was roused only when the haze of muzak wafting over the PA system was suddenly dispersed by the jaunty strains of the Chinese New Year ditty ‘Gongxi Gongxi’.
A 1946 composition from Shanghai, the song has gone from classic to kitsch, evolving to become the most popular festive song in the Chinese-speaking world. Its ubiquity rests on the many — for me at least — teeth-grindingly cloying versions played all over shops and markets in Asia. (Click here for example and don’t say I didn’t warn you)
I was somewhat surprised by the song’s appearance in the British retail icon — not least because it’s still some ways off the Year of the Dragon. But then looking at the shoppers around me it all made sense.
Mainland Chinese travellers spent some £200 million on Bond Street last year. That’s a 155 percent surge from 2009, according to an association of luxury retailers in the London thoroughfare.
Never mind that these products are largely assembled back in their home country, Chinese tourists buy their designer bags on Bond Street and elsewhere in Europe to avoid China’s luxury sales tax. More importantly, these status-conscious buyers have the assurance that they are not being sold knock-offs — a risk rampant in a country notorious for its lack of regard for intellectual property.
Those reasons are similar to those that drive the wealthy elite in many emerging economies to London, a city that Goldman Sach’s Jim O’Neil has dubbed the “BRIC capital of the world“.
The power of Chinese international tourists
These days, streets of London, Paris, Tokyo and even Santorini are filled with Chinese tourists. In London’s Heathrow Airport Terminal 3, the queue for the tax refund is so long that one has to wait 3 hours to get his or her tax refund (my mother, on her recent trip to the UK, had to give up in the end).
But the potential economic impact of Chinese international tourists — estimated to be 100 million by 2020, or 6.4 percent of global outbound tourists according to United Nations World Tourism Organisation — is something that could boost sluggish consumer spending in the West.
Hong Kong and Macau, currently the top destinations for Chinese tourists, are reaping the benefits from Chinese tourists thanks to their rich offering of luxury goods. In Hong Kong alone, Chinese tourists spent HK$87 billion ($11 billion) last year — fivefold compared with 2000 — with shopping accounting for 74 percent of their total spending.
Europe is also catching up. In 2010, an estimated2.5 million Chinese visited countries in Western Europe. France, Italy, Germany and the United Kingdom are among the most popular European destinations.
“Luxury shopping is among the highlights for Chinese travelers to Paris due to the heavy luxury consumption tax imposed in mainland China and the superior quality of products in Europe,” writes Grégoire Biollaz, research analyst at Credit Suisse.
“Other attractions for Chinese tourists include art, culture, architecture and gastronomy. The trend from shopping tourism towards a cultural travelling experience still has further room to grow.”
And this trend — part of the rise of emerging market consumers — is something Credit Suisse is focused on.
