China is the highest spending international nation in the UK, representing 25% of total international tax free spend and offering a huge opportunity for UK retailers.
Restrictions on visa applications and limited access routes has capped this opportunity causing the double digit growth in spend seen in previous years slowing to growth of just +5% YOY to date this year.
During Chinese President Xi Jinping's visit to Britain last week, we welcomed two key announcements that facilitate access for Chinese visitors looking to come to the UK – a new air route between Manchester and Beijing commencing in 2016 and an improvement in the visa application process for Chinese visitors.
Though London is the key source of Chinese spend in the UK, Manchester is rising in its position as the second most popular shopping destination for these visitors. As the third busiest airport in the country, Manchester is an important access route to the UK, and with an expanding city centre now home to top retailers including Selfridges, a favourite of the Chinese shopper, the new air path from China provides even more of an opportunity for retailers in the north of the UK to capture the spend potential of this market.
The series of initiatives to improve the visa application system for Chinese visitors was a result of the key recommendations of the UK China Visa Alliance (UKCVA). From January 2016, new visitor visas for tourists from China will be valid in the UK for 2 years, an increase from the standard 6 months and in addition, the Prime Minister has committed to introduce a new multi-entry 10 year visitor visa at no extra cost in succession. Finally, but significantly, the Chinese Government has granted to the UK alone the right to have mobile biometric services so that we can process visa applications throughout China, beyond the 12 official Visa Application Centres to 50 Chinese cities.
The announcements are an encouraging step in the right direction to drive a new burst of growth in spend from Chinese shoppers and it is now more crucial than ever for UK retailers to be prepared to welcome this lucrative market. Retailers should look to introduce tactical promotional strategies to maximise their spend potential.
Chinese shoppers spend an average £752 per transaction in the UK, favouring high-end jewellery, watches and fashion from luxury powerhouse and British designer brands. These items can be up to 30% cheaper in the UK due to high luxury taxes in China, and on the hunt for a good deal, shoppers look to gain the added benefit of Tax Free Shopping, so retailers should look to offer this service in-store. UnionPay payment terminals are also a beneficial instalment, as they allow Chinese shoppers to pay for their items in their regular payment method, eliminating the need for high quantities of GB Sterling and increasing consumer confidence in the transaction.
Chinese consumers are some of the most technologically advanced in the world and social media is a key part of their day-to-day life and the shopping experience. Retailers should look to make their stores as social media-friendly as possible as well as providing marketing materials translated into Mandarin to facilitate information sharing both directly to them, and for them to share with their network. Organising cultural training for staff to familiarise them with Chinese culture and service preferences can also be highly advantageous.
Finally, retailers should take advantage of the key influx periods when Chinese visitors are known to come to the UK. The Lunar New Year in February and Golden Week in October are top times for Chinese to travel abroad and the UK is a top destination of choice. Retailers can build their appeal over these periods by running special themed events, launching limited edition collections, decorating their stores and rolling out special promotions to mark the celebrations and entice Chinese shoppers to visit their stores.
Gordon Clark, Head of Commercial UK and Ireland at Global Blue