UK missing out on the full spending power of returning Chinese tourists

UK missing out on the full spending power of returning Chinese tourists

The UK economy is set to miss out on the full spending power of Chinese tourists as they return to Europe, according to new findings from Planet.

In its latest intelligence report Planet reveals an increase in retail spend on Tax-Free shopping by Chinese shoppers across much of Europe. In November, Chinese shoppers were among the top five spenders in France, Italy, and Germany.

Nearly half of Chinese tourist spending in Europe took place in France, followed by Germany, Italy, and Spain. At the beginning of 2022, this order was reversed.

The momentum in Chinese visitor numbers first seen during the Chinese Golden Week, a seven-day holiday in early October, and continued throughout November as China further eased its zero-Covid policy. The number of Chinese tourists spending in Europe in the week of 28 November rose 46 per cent from the previous week.

But UK retailers are set to miss out on the full spending power of Chinese shoppers, one of the highest spending nationalities for internationally focused retailers, because of the decision not to proceed with the introduction of the digital Tax-Free shopping scheme in the UK. The significance of this was highlighted by Planet in a survey carried out in 2022 where 69 per cent of Chinese consumers said they’d be likely to spend more in the UK if Tax-Free shopping was available. 

And even though Chinese tourist spending in Europe is starting to recover, there remains massive pent-up demand for Tax-Free shopping from Chinese shoppers with VAT refunds paid to Chinese consumers across Europe still 90 per cent below the pre-pandemic level.

Black Friday saw a high street revival across Europe as international visitors flocked to stores in search of Tax-Free goods this year. This helped to bolster what is seasonally a slower month.

In particular, US shoppers kept the tills buzzing on the day as VAT refunds paid to US tourists shopping in Europe on Black Friday were up 40 per cent from 2019 and 110 per cent from 2021. Individually, they dug deep into their pockets, spending an average of €1,244 per transaction on this year’s Black Friday, compared with €500 per purchase three years earlier.

During November, daily sales excluding electronics averaged 3.3 per cent of the month’s revenue. Between 24 and 26 November that jumped to between 4 per cent and 4.9 per cent. Sales of electronics saw an even bigger boost. In that category, sales on 25 November peaked at 7.5 per cent of the monthly turnover, nearly double their daily average for the month.

Luca Cassina, president of retail at Planet commented: “The Tax-Free sales figures provide further impetus to introduce a new digital UK Tax-Free shopping scheme for foreign visitors. Had this been available on Black Friday, UK retailers would have been able to benefit more from the enormous spending power of international tourists, particularly those from the US who continue to visit Europe in high numbers.

“But it’s not just US visitors, as UK retailers stand to miss out on the full spending power of Chinese tourists who are well known for their high levels of spending when visiting Europe. We know from our previous research that almost 7 out of 10 Chinese consumers would be more likely to visit the UK if a Tax-Free shopping scheme were to be available.

“Introducing Tax-Free shopping in the UK would provide a much-needed boost to the economy and generate extra tax income for the UK Government on those goods and services which attract VAT.

“With retail spending across Europe by Chinese consumers still 90 per cent down on pre-pandemic levels, there’s still time for UK retailers and taxpayers to fully benefit from the return of Chinese shoppers. We, therefore, call on the UK Government to act quickly to introduce a digital Tax-Free shopping scheme before China fully re-opens its international borders.”


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