China the Future of Travel interviews: Renee Hartmann, China Luxury Advisors

Case Study 12: Shopping as Part of International Travel

Renee Hartmann is the co-founder of China Luxury Advisors, a company with offices in the U.S., France and China that counsels luxury brands and retailers on their China consumer strategy.

 

How important is shopping to the travel experience of most Chinese visitors to the U.S.? Would you say shopping is more important to Chinese visitors than other nationalities?

Shopping is the single most popular activity for Chinese tourists, and certainly more popular than for most other tourists. A close second would be Brazilian tourists. We are seeing trends of Chinese tourists spending more time sightseeing, dining and looking for more diverse activities during their travels.

 

Why do Chinese like to shop as part of their international travel experience?

One of the primary reasons Chinese tourists like to shop is price – all branded products will be cheaper in the United States, typically by about 30-40%. This is due both to import and Value Added Taxes in China, as well as a tendency for brands to position themselves higher in the China market and place a price premium on their brands and products. Other important reasons tourists like to shop overseas include: trust, product authenticity, positive shopping experiences, good customer service and gaining “face” by purchasing gifts and products overseas.

 

What kinds of things are most popular for Chinese shoppers to purchase in the U.S.? Are there certain brands or kinds of products that stand out?

Tourists always purchase vitamins and health products while shopping in the United States – primarily because Chinese customers do not trust the quality and authenticity of health and food in China. Other popular products include American brands such as Coach and Tiffany, as well as popular luxury brands such as Hermes, Chanel, Prada, Bottega Veneta and others.

 

Where do Chinese visitors like to shop? Are they more likely to go to a mall, a city’s downtown or an outlet?

Most Chinese visitors will go to an outlet during their trip, as well as a mall or downtown shopping location. Although outlets are cheaper, they don’t always have the range of products available, and many are either made directly for outlets, or are not from the current season.

 

What advantages does the U.S. have over Europe for shopping, especially when it comes to Chinese tourists?

Prices in the United States for clothing, health products and beauty tend to be cheaper than in Europe. Malls and shopping areas are widely developed in the United States, making shopping more efficient and economical in the United States than in Europe.

 

What are the disadvantages for the U.S. vis-à-vis Europe?

Europe has a very well entrenched VAT tax refund process, which the United States does not have. This provides a significant incentive for Chinese customers to redeem their tax, which is a very attractive quality. Additionally, many of the most popular luxury brands in China are from Europe, making it more interesting to purchase these brands in their country of origin.

What kinds of things should stores or shopping centers in the U.S. do to make themselves more appealing to Chinese shoppers?

Stores and shopping centers need to adapt their products and services to the Chinese customer and seek ways to reach out to this very important market. This includes the obvious solutions such as employing Mandarin-speaking staff and Chinese language information, as well as more subtle tactics such as merchandising, sales training and promotion strategies.

What kinds of things should retail brands do to make themselves more appealing to Chinese shoppers?

Brands need to build their brand image and reputation with Chinese customers. They need to bring their brand heritage to life and tell interesting stories about the brand and products. The Chinese customer’s habits and preferences are changing so quickly, it is no longer enough to just claim to be a famous international luxury brand and expect Chinese shoppers to flock to your stores.

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