Lucrative: Chinese shoppers spend an average of £1,688 in Britain

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Chinese shoppers are responsible for a third of the world’s luxury sales, according to data by Bain & Co, the consultancy, and many enjoy treating themselves when travelling abroad. But the British luxury industry is missing out – and the UK government is waking up to the problem.

Bureaucracy is in the way. Chinese visitors to the UK and Europe are obliged to apply for two visas: one to visit 26 countries in Europe – known as a Schengen visa – and a second, separate visa for UK entry.

Research by the UK China Visa Alliance, a lobby group, found that just 6 per cent of Chinese coming to Europe bother obtaining the additional UK visa. And why would they, when the Schengen offers passage to luxury shopping destinations such as Paris and Milan without extra paperwork?

The UKCVA says that France attracts almost eight times more Chinese visitors than the UK.

Nevertheless, when they do make the trip to London’s West End, Chinese shoppers spend an average of £1,688 – three times more than overseas visitors from other countries, according to data from the New West End Company, which represents businesses in the area.

In 2012, the UK played host to 179,000 Chinese visitors, who spent a total of £300m, according to figures from Visit Britain.

“Chinese tourism is vital to Brand Britain,” says Mark Henderson, chairman of the London Luxury Quarter, a trade body. UK luxury industry lobbyists are acutely aware they are missing out and are trying to persuade the British government to change the visa system. Their efforts might finally pay off in 2014.

The UKCVA, founded by Walpole British Luxury, the New West End Company, Global Blue, McArthurGlen Designer Outlets and London First, has been working since 2012 to persuade the UK government of the benefits of encouraging Chinese visitors.

Last May, the alliance hosted a reception with Mark Harper, the immigration minister, at which 900 British luxury retail and hospitality businesses were invited to raise their concerns. And in October, it hosted a reception in China for tour operators.

A pilot scheme, launched last year, allows Chinese travellers to apply for the Schengen visa and the UK visa at the same time and place. Andrew Murphy, chairman of the UKCVA and retail director of John Lewis, is hopeful the government will roll the scheme out during 2014.

“If the visa process were streamlined it could boost the economy by £1.2bn and create 24,000 jobs,” says Mr Murphy. Preliminary findings from the pilot scheme are expected soon.

David Cameron, the UK prime minister, confirmed efforts are under way to set up a permanent “joint shop window” during a visit to China last month.

The British luxury industry is banking on the visa changes to transform the scale of its operations. “Attracting Chinese shoppers is not just about footfall and revenues,” says Jeremy Gordon, director at China Edge, a consultancy. “It can boost a brand’s value, whether it is fundraising, or preparing for an IPO or ... sale.”

His digital communications tips for UK luxury brands include creating a Chinese landing page on corporate websites and ensuring brand communications articulate clearly what a brand does best, without assuming prior knowledge.

Meanwhile, the Bond Street Association, representing dozens of Mayfair businesses, has signed up to a “China-ready” workshop series devised by China Edge to help retailers offer Chinese-friendly luxury shopping.

“This year, more than 100m Chinese residents will travel abroad seeking high-end luxury brands,” says Gordon Clark, UK manager for Global Blue, tax-free shopping specialists. “These goods can be up to 30 per cent cheaper to purchase in the UK than in China even before the tax-free refund.”

Tales abound among luxury industry insiders of the extravagance of Chinese shoppers. Last November, before “Singles’ Day” – China’s equivalent of St Valentine’s day – one Chinese man bought an engagement ring from 77 Diamonds, a London-based online jeweller, despite the fact that he did not have a girlfriend. He bought the ring “just in case”, the company says.

In February, Fortnum & Mason, the luxury London grocer, will for the first time host a private event and a promotion to celebrate the lunar new year – peak time for Chinese visitors.

Celebrating the forthcoming year of the horse, products with an equestrian theme are expected to spring up around London. De Beers, the jeweller, has created window designs for Harrods incorporating a red background and a horse silhouette in gold and will hand out red-coloured surprise gift packages to Chinese customers.

Some brands prefer to adopt a more cautious approach. Backes & Strauss, a diamond watch specialist, has not yet focused its marketing on Chinese visitors. But it awaits visa changes with interest. “We expect a significant impact on our UK sales to Chinese visitors at Harrods and our other UK locations,” says Vartkess Knadjian, its chief executive.

Copyright The Financial Times Limited 2017. All rights reserved.
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