Fri, Sep 04, 2009 - Page 9 News List

PRC tourists: London’s newest big spenders

By Paul Adrian raymond  /  REUTERS , LONDON

Gloom-defying shoppers from China are flocking to the luxury stores of London’s West End, outspending Arab royalty, replacing Russia’s departing super-rich and lifting spirits after nine months of recession.

Data from tax rebate companies suggest Chinese tourists are spending three to four times more than a year ago in London’s chic shopping districts.

On Bond Street, famous for its designer boutiques and jewelers such as De Beers and Graff, figures from firms that arrange sales tax refunds for tourists suggest Chinese shoppers are now overtaking big spenders from the Gulf states, Russia, the US and wealthy Nigerians.

“We are looking for good-quality branded stuff,” said Lillian Wang, a 28-year-old bank worker from Beijing on Oxford Street, one of London’s mainstream thoroughfares. “I’m not as crazy as others, buying a dozen Louis Vuittons [bags], but I’m sure they are a lot cheaper here than in Beijing.

“A cheaper pound has also helped,” she said.

Thanks to a US$585 billion stimulus package and record lending by the nation’s state-owned banks, China is likely to hit the government’s target of 8 percent growth this year, by far the fastest rate of any major economy.

This has offset a slump in export demand and sustained the rise in incomes that made Chinese shoppers, especially the well-heeled, a rich seam of profit for Europe’s luxury brands.

“Income growth — particularly the top end, also driven by wealth accumulation — remains robust in China,” said Linda Yueh, a fellow in economics at Oxford University.

WEAK POUND

“Thus, wealthy Chinese may find that the weak pound makes Britain an attractive place to shop,” she said.

Sterling has recovered from lows early this year against currencies such as the dollar and yuan, but is still far short of mid-2008 levels.

Britain has been in recession since the final quarter of last year, when GDP shrank at its fastest rate since 1980. A survey by the Confederation of British Industry showed retail sales fell more sharply than expected in August.

In this environment, tourists from China and other Far Eastern countries will have little impact on Britain’s economy as a whole, says Richard Perks of market research group Mintel.

“It’s going to have a big impact on some stores, and it might have a perceptible impact on London’s retail sales. But it is hardly going to be significant for the country as a whole,” he said.

Wang’s shopping bags reflect a difference in spending habits among Chinese visitors from other wealthy shoppers: besides a £900 (US$1,470) suit for her husband, she had a more modest £50 pair of shoes for herself.

As well as top labels, the Chinese are drawn to more prosaic items, and they are not as seduced by lifestyle offerings.

For example, top-end retailers have employed Mandarin-speaking sales staff to cope with the influx of Chinese customers but London’s chic hotels have yet to benefit, said Charles Wang of tour operator Travco.

“You still find that the majority of Chinese shoppers stay at four-star standard hotels in London, but at the same time easily spend thousands and thousands of pounds on brands like Louis Vuitton, Gucci, Armani and Burberry,” he said.

Anecdotal evidence also points to a strong Chinese taste for sports equipment and furniture.

Nonetheless, certain items seem to hold universal appeal, said Bruno Barba, spokesman for department store Selfridges.

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