UK handed tax free spending boost as Chinese continue to travel

UK/CHINA. Demand for luxury goods among Chinese consumers will still be strong in 2016, according to research from retail intelligence company Global Blue.

The company’s “˜Tax Free Spend Index 2015′ showed spend by Chinese shoppers in the UK slowed to +1% year-on-year in 2015 – but China maintained its position as the top international tax free spending nation for the UK overall. The country accounted for 24% of total spend with individuals spending £742 per transaction.

Global Blue also said that despite fears of an economic slowdown in China, the devaluation of the Yuan, and stock market turmoil, demand for travel to the UK was still “rife”. Chinese New Year, which take places between 8 and 14 February, will boost international spend and optimism among retailers “who are anticipating a slower February” according to the company.

However, it warns that “with the strength of the Pound, UK brands must market more aggressively to capture demand over European neighbours”.

Recent research from GfK showed that 109 million Chinese travelled abroad in 2015, spending US$229 billion on shopping. This number is forecast to grow and by 2020 is set to rise to more than 200 million.

Global Blue noted that travel bookings for Chinese New Year indicated “strong demand for UK experiences”. It said online travel service Ctrip had reported that more than 60% of Chinese people travel overseas for the cultural celebration, while UK tour operators had forecasted that bookings would continue to grow throughout the first half of 2016 “as the shift to summer travel becomes a trend for these visitors”.

“Chinese New Year is still a key period for UK retail, proven by the rise of +72% year-on-year for the Chinese New Year period in 2015. The new two-year visa for Chinese visitors to the UK, which launched in January following a campaign by the UK China Visa Alliance, an initiative Global Blue joint-founded, offers a boosted incentive for shoppers to visit the UK this Lunar New Year over Paris or Milan,” said Global Blue Managing Director UK and Ireland Gordon Clark.

“However, UK brands must not be complacent and should focus on strategies and marketing campaigns executed in China that talk about their brand heritage, location of their stores, quality of their product range and any special services they can offer these customers. By doing so they will be able to entice this integral market to the UK to shop and stay, despite the strength of the Pound and China’s faltering consumer confidence to travel and spend abroad.”

Millennials with rising income

Intelligence company China Luxury Advisors noted that the majority of Chinese travellers are now Millennials with rising income, a trend also identified in the recent GfK report. The group “cannot be ignored” by UK retailers, China Luxury Advisors said, and noted a growing appetite for luxury goods and experiences and a strong social media presence among the Millennials.

“Continuing economic growth in China and the shift towards value as opposed to ‘bling’ will inevitably fuel great opportunities for affordable luxury purchases,” said China Luxury Advisors European Director Philip Guarino.

“Furthermore, as Chinese tourism to the UK continues to surge amidst a more flexible visa regime and a lower Pound, those brands that are “˜China-ready’ can expect a significant boost in sales this Lunar New Year.”

Global Blue added that the behaviours and preferences of Millennial travellers were changing fast. “UK luxury brands can look to social media to maximise engagement around Chinese New Year. Sharing on social media and partnering with key online influencers is central to any overseas travel experience for young Chinese travellers and an opportunity that luxury brands are yet to fully leverage,” said Global Blue Marketing Manager Kim Urbaniak.

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