In the first half of 2012, +46% of visa applications processed at U.S. Embassy for Chinese leisure travelers

President Barack Obama’s initiative to boost international tourism has pushed the US government to process a record 1 million visa applications from China so far during fiscal 2012.
“This extraordinary accomplishment represents visa processing growth of almost 43 percent over the same period last fiscal year, when we had processed just over 675,000 visa applications in China,” the State Department announced Thursday.
The US federal government’s fiscal year begins Oct 1 and ends Sept 30, so the department was referring to visa-processing totals through the end of the third quarter on June 30. As China Daily reported in April, through the first half of fiscal 2012, the State Department had processed 453,000 visa applications from Chinese citizens, up 46 percent from the first six months of fiscal 2011.
To reach the 1 million figure through the current fiscal year’s first nine months, department staff at the US Embassy in Beijing and the four consulates across China processed at least 547,000 visa applications from Chinese citizens in the three months from April 1 through June 30 – reflecting especially high demand for the busy summer travel season.
The State Department credited the opening of more windows for interviews, expansion of consular office space and better-maintained waiting areas for visa processing at the Beijing embassy and its consulates in Chengdu, Guangzhou, Shanghai and Shenyang. Furthermore, it said the average waiting time for a visa interview has been reduced to about a week from the several months it used to take to get an appointment.
According to Pierre Gervois, CEO of China Elite Focus and the author of the Book How U.S. Retail, Travel and Hospitality Industries Can Attract Affluent Chinese Tourists “This initiative is the direct result of a very successful lobbying campaign organized by the retail, travel, and hospitality industries that were the first-hand witnesses of the incredible purchasing power of Chinese tourists in the last few years. Roger Dow (president of the United States Travel Association) and Joe McInerney (president of the American Hotel & Lodging Association) have done a fantastic job of explaining to Washington the vital necessity to the American economy of finding ways to increase the number of Chinese leisure visitors.”
Dong Xue, a senior at Purdue University in Indiana, has just returned from China and it took her only a week to get a visa, even at the peak of summer. As a repeat traveler to the US, Dong was able to use a bank drop-off service to renew her visa. Without having to go for a personal interview, she submitted her paperwork through the bank and got her visa in five business days.
“As the Chengdu consulate (nearest to her hometown of Chongqing) was very busy then, their colleagues in Guangzhou processed my application,” Dong told China Daily. “It’s so fast. Usually it will take two weeks.”
The Obama administration, pointing out the value of travel and tourism to the US economy, introduced in January a strategy to make the United States the top destination for foreign visitors. More than 1 million jobs could be created over the next decade if the US increases its share of the international travel market, Obama has said.
In 2011, about 1.18 million Chinese visited the United States and the number is expected to reach 2 million in 2015, according to the National Tourism Administration of China.

Euro 2012 soccer tournament expects Chinese tourists

Poland is hoping to attract Chinese tourists to visit the European country when it hosts the Euro 2012 soccer tournament later this year.

Authorities are hoping that Chinese people, who tend to choose more familiar western European countries as their destinations for shopping and sightseeing, will turn their attention to the culture-rich and soccer-mad nation from June 8 to July 1.

Some hard-core fans and Europe-oriented companies have joined tourism agencies to provide trips to Poland that will include Euro 2012 matches.

According to Shankai Sports, a sports marketing company providing sports business solutions and services for international organizations and companies, it has the right to provide VIP reception packages for Chinese businessmen and major companies that are interested in using Euro 2012 as a platform to expand their influence as well as to entertain important clients.

“Chinese companies are aware of the importance of taking advantage of major sports events,” said Gong Hua, senior vice-president of Shankai Sports. “Euro 2012 is a huge chance for them to expand their brand and have exchanges with potential partners from Poland and other European countries.

“Many members of the Chinese media are also going to Poland to cover the event. We also provide services in terms of visa application and accommodation for them.”

The Polish Embassy in China has also been making efforts to use Euro 2012 to promote the image of the nation.

“I have to confess – I am not much of a football fan myself. I prefer golf and skiing. But I can tell you – it is going to be a great, joyful festival, even for those who are not really crazy about football,” the Polish ambassador, Tadeusz Chomicki, told a press conference in the embassy recently.

“For a month our country will transform itself into a meeting place for people from all corners of the world.

Chomichi said Poland hopes to emulate the success of the Beijing Olympic Games.

“It is an opportunity for the host country to showcase its achievements, its economic and cultural strengths, and the hospitability of its people. I hope that, just like the Beijing Olympics in 2008 helped to show the world the new, dynamic, modern face of China and overcome many stereotypes, Euro 2012 will help present Poland in a true light.”

Minister of Sports and Tourism Joanna Mucha also sent out a warm invitation to Chinese people and said she hopes they will come to know more about her country.

“Chinese football fans are invited to the modern stadiums to experience emotional football games, excellent Polish cuisine and tourist attractions.”

To make the trip simple and cheap, LOT Polish Airlines will open a Warsaw-Beijing route from May 30 using its Boeing 767 aircraft.

The flights will operate between Warsaw and Beijing three times a week, departing from Warsaw every Tuesday, Thursday and Sunday, and from Beijing every Monday, Wednesday and Friday.

Dubai, the new shopping destination for Chinese tourists

Xiao Tiang takes a Louis Vuitton bag gingerly in her hands from the gloved sales assistant, turning it over slowly and pointing out the lining and pattern to her shopping companion. She’s visiting Dubai from China for the second time, and shopping for luxury brands remains at the top of her agenda.
“In China, we have taxes on luxury brands, and sometimes fakes are so good they are sold in real shops, so here it can be cheaper, and we don’t worry about fakes,” said the 32-year-old, shopping with her sister in the Dubai Mall, the region’s largest. “It’s worth the flight to come here and shop and cheaper than going to Paris.”
She does a twirl in the crowded aisle in front of the store, pointing out her beige Christian Louboutin pumps and colorful Missoni dress.
Chinese shoppers, rare birds not long ago, are flocking to Dubai’s malls. Up to 25 percent of luxury goods sold in Mall of the Emirates are purchased by Chinese tourists, according to Iyad Malas, chief executive officer of the Majid Al Futtaim group, which has 11 malls across the Middle East including Mall of the Emirates, known for its indoor ski slope.
“So now, it’s about how we market to them,” Mr. Malas said. “For example, many stores are hiring Chinese speakers dedicated to these consumers.” Dior had two Chinese sales assistants in its shoe section on a slow Wednesday afternoon in Mall of the Emirates, both of whom had been there for about a year.
“We do surveys frequently and keep finding, especially over the last year or two, that Chinese tourists are the highest spenders per hit at our luxury stores,” said Peter Walichnowski, chief executive officer of Majid Al Futtaim properties, another division of the company. “Up to 40 percent of their purchases are gifts for family and friends, making them top spenders in our malls.”
Some 214,000 Chinese tourists came to Dubai last year, a nine-fold increase from 25,000 visitors a decade earlier, according to data from the real estate and hotel firm Jones Lang LaSalle. Over the last year alone, there has been a 50 percent increase in Chinese tourists. The retailers are paying attention. According to Pierre Gervois, CEO of China Elite Focus, a specialized PR agency targeting wealthy Chinese tourists “Dubai is a distinctive destination for Chinese travelers who have already been to New York, London, or Paris. They want to try a different kind of experience here”.
“We have a mix of sales associates from different nationalities in our boutiques, which enables us to provide the best service to visitors in Dubai, including Chinese travelers,” said Louis Ferla, Cartier’s managing director in Dubai.
Luxury brands including Dior, Chanel, Cartier and Louis Vuitton in Dubai are starting to cater more to Chinese consumers. Cartier’s spokesman said that sales to Chinese consumers were a “significant” of total luxury brand sales.
In addition to hiring Chinese sales staff, the malls in Dubai have begun to decorate for Chinese New Year and are making sure that Chinese tour groups stop at all the major malls.
“More retailers are accepting Chinese credit cards in shops, too,” Mr. Walichnowski said.
Data collected by the Majid Al Futtaim group from hoteliers shows that Chinese visitors are lengthening their average stay in Dubai. They are now spending four nights compared to three nights just two years ago. On one of the four nights, they will often stay at the $2,100-per-night Burj Al Arab hotel where 30 percent of guests were Chinese in the first three months of 2012. The remaining nights are usually spent in “obscure two-star hotels to maximize a visitor’s stay,” Mr. Walichnowski said.
“Staying at the Burj for a night is like visiting the Eiffel Tower,” meaning something one needs to do in Dubai, he said. “The Chinese visitors to Dubai are fairly affluent — the ones who like a bottle of wine and a night at the Burj.”
Over time, as airline connections with the east continue to improve, more Chinese travelers will discover Dubai, he predicts.
“With the help of airlines like Emirates, Chinese are becoming major contributors to retail and trade overall, and are coming to Dubai as a stopover to Africa and Europe,” said Hamad Buamim, director general of the Dubai Chamber of Commerce.
Analysts say that while European luxury brands are the hot ticket for Chinese consumers in Dubai, Chinese brands are also making their way into local markets.
“Chinese tend to be very brand-conscious luxury shoppers, so it is not surprising that they account for a big share of luxury purchases in Dubai,” said Ira Kalish, director of global economics at Deloitte Research in the United States. “But there is an increasing popularity for home-grown Chinese brands as well.”
Such consumers can go to Dubai’s bargain basement Dragonmart, the largest Chinese trading area outside of China. When it comes to Chinese shoppers, Dubai has them well-covered.

New York City luxury retailers are welcoming Chinese tourists

Over five days in January, a group of visitors to New York was treated to a private concert with the pianist Lang Lang at the Montblanc store, cocktails and a fashion show attended by the designers Oscar de la Renta and Diane Von Furstenberg, and a tour of Estée Lauder’s original office.
They were not celebrities. They were not government officials. They were Chinese tourists with a lot of money.
Though luxury brands started opening stores in Beijing and Shanghai years ago, Chinese shoppers still spend more on luxury products abroad than they do at home, according to the consulting firm Frost & Sullivan. Price is the major reason: Because of China’s taxes, luxury products are about a third cheaper in the United States and elsewhere.
European luxury stores have been catering to Chinese tourists for years. Now high-end retailers in the United States are pulling out their Mandarin phrase books and trying to convince Chinese visitors that Americans can do luxury, too.
“What started as a trickle has now become a flow,” said the vice president of the antiques store Macklowe Gallery, Ben Macklowe, who recently sold a Tiffany lamp that cost in the low six figures to a Shanghai visitor. “There’s been prosperity across so much of Asia that you’re starting to see it much more in the profile of the tourist on Madison Avenue.”
A record number of Chinese visited the United States last year — nearly 1.1 million — and the country accounts for one of the top-growing tourist groups here, according to the Commerce Department. The number of visitors is expected to almost double by 2014, according to the U.S. Travel Association. Chinese visitors spend about $6,000 each on every visit here, versus the $4,000 that visitors from other countries spend on average, the association says, and their top activity is shopping.
Although some tourists spend money on Disney trinkets and at the outlet malls they have traditionally frequented, luxury brand purchases are surging in part because American stores carry a broader range of products than their counterparts in China, said Julia Zhu, consulting director for Frost & Sullivan.
Tiffany, which made almost a quarter of its United States revenue last year from foreign tourists, has added Mandarin-speaking sales staff to its major stores, as has Burberry, where more than half of sales at its flagship stores are to tourists. Representatives from Tourneau’s Manhattan office recently accompanied New York City officials on a visit to China to encourage more tourism in the city.
The very popular Chinese social media network “Niuyue Mag” (纽约志), used by the young and affluent Chinese tourists preparing their trip to New York City had also a role in promoting the Big Apple as a major luxury shopping destination. According to Sandra Ming, analyst at China Elite Focus, “the impact of Niuyue Mag has been tremendous as it’s for now the only one media available in China exclusively about the planning of a shopping trip in New York City”
At its United States stores, Montblanc sells Year of the Dragon pens and has staff members who speak Mandarin and Cantonese. It is also printing Chinese-language brochures about its products and selling wallets sized for Chinese currency.
Despite having more than 100 stores in China, Montblanc is going after Chinese shoppers on vacation abroad. “Yes, we are in the major cities, but when you travel, you’re in the mood to enjoy and experience the moment,” said Jan-Patrick Schmitz, chief executive of Montblanc North America. “We certainly will do more and more marketing toward them.”
Retailers in the United States lag behind other countries. Part of that is because of visa issues; it is easier for Chinese residents to get visas to Europe. High-end American retailers like Saks Fifth Avenue and Bloomingdale’s are urging the government to speed up the process here. President Obama said in January that he planned to increase visa-processing capacity from emerging markets like China and Brazil by 40 percent this year.
The American stores also have to overcome an idea that luxury can come only from the old world.
“The European brands, they see prestige, history, heritage,” said Sunny Wong, group managing director of Trinity, a company that owns and operates high-end European retail brands in China. American brands, by contrast, are seen as “contemporary, lifestyle” rather than pure luxury, he said. American retailers are racing to prove Mr. Wong wrong.

Will cuts on luxury goods taxes in China prevent Chinese from buying abroad?

Last year Chinese tourists bought almost two-thirds of luxury goods sold in Europe as they went on a record spending-spree. But while mainlanders are happy to splurge on foreign soil, what their government needs is for them to open the purse strings at home. Domestic consumption has shrunk to just 36% of gross domestic product and is increasingly the weak link in China’s growth.
One step to redress this spending imbalance is to cut penal mainland taxes on consumption and luxury goods. Analysts say such a move now looks likely.
This could have far-reaching consequences for one of the biggest investment stories of recent years — outbound spending by mainland tourists.
Everyone from retailers in Hong Kong, to London or Seoul could feel the fallout, while foreign luxury brands seeking to expand in China should be buoyed by any duty cut.
Expectations that a move is imminent were fuelled by widely reported comments earlier this month by former deputy commerce minister Wei Jianguo, to expect at least two rounds of reductions on import taxes on consumer and luxury goods. Then, this past weekend Finance Minister Xie Xuren promised to improve China’s consumption tax.
Among the spending habits likely to catch authorities attention say Credit Suisse is the revelation that Chinese residents spent 300 billion yuan ($47.4 billion) overseas on their bank cards in 2011, up 66.7% on a year earlier, according to data from China UnionPay.
And as well as accounting for 62% of all luxury consumer sales in Europe last year, mainland shoppers spent a whopping $7.2 billion during the recent Lunar Year holiday, up 28.6% on the previous year according to the World Luxury Association.
If you look at existing tax rates in China, it is easy to see why shopping overseas is so popular.
Import duties on general luxury products range from 10%-25%, and can be as high as 35%-60% on luxury cosmetic products and alcohol. Add on value-added tax (17%) and a consumption tax depending on the merchandise and prices on the mainland are penal. According to a survey by the Chinese Ministry of Commerce, prices for luxury goods in China are 45% higher than in Hong Kong, 51% higher than the U.S. and 72% higher than France.
If these taxes were designed to promote social fairness and curb bourgeoisie shopping habits by targeting rich consumers, they appear to be missing the mark — luxury spending at home is just being diverted overseas by globe trotting mainlanders.
Another reason to expect action on taxes is the government’s recent focus on boosting growth through domestic consumption. This past weekend in Beijing Vice Premier Li Keqiang said expanding domestic demand is a “strategic point” for economic development. Another official played up China’s readiness to import, predicting it may soon become the world’s largest importer.
This eagerness to import, however, comes at a time when China just recorded a monthly trade deficit in February of $31.5 billion. With export growth expected to remain relatively weak, this provides another reason for authorities to be less sanguine about yuan leaking abroad through unchecked tourist spending.
Meanwhile, it is also worth considering that for many mainlanders, shopping abroad is not just about getting a tax-free bargain.
China’s capital controls and limited domestic investment options mean luxury shopping often fulfills various secondary needs.
In Macau, for instance, purchasing luxury goods can be a handy way to access hard cash. A typical story is a mainlander shopper can buy an expensive handbag or watch on their credit card, which can then be sold back for something like 90% of the value in cash.
In fact, luxury handbags have almost become a money substitute. Milan Station Holdings Ltd. , a chain of shops that trades second-hand handbags even listed on the Hong Kong stock exchange last year, which gives you an idea how big this business is.
This, as well as a preference by many mainlanders to conceal conspicuous luxury shopping overseas, means old shopping habits could be hard to change.
If we do get a cut in luxury taxes, Credit Suisse, say luxury brands who import their goods into China will benefit such as Prada, Coach, Hugo Boss, LVMH or Tiffany.
The flip side, they add, is that for the retail and tourism industries that have benefitted from outbound Chinese tourists, any reduction in import tariffs will be incrementally negative.
But according to China Elite Focus, a Shanghai-based marketing and research firm specialized into reaching to affluent Chinese outbound tourists, these tax modifications will have small impact on the behavior of Chinese shoppers “Buying abroad luxury goods is first and foremost a sign of social status” said Pierre Gervois, China Elite Focus’ CEO. He added “ The fact that Chinese buyers will pay less their luxury goods if they buy in the U.S. or in Europe is a minor factor compared to the prestige of having bought a Tiffany diamond in New York City or a Louis Vuitton bag in Paris”
On the list of potential casualties is Hong Kong, Macau, South Korea to retailers in Europe. Hong Kong could be particularly vulnerable given 28 million mainland tourists visited last year (four times its population) and its huge concentration of luxury retail brands — Louis Vuitton has seven stores in the city, one more than Paris.

Source: The Wall Street Journal, Article by Craig Stephen