Over the last several weeks, Chinese shoppers on vacation for the Lunar New Year have crammed luxury stores along New York’s Fifth Avenue, Paris’s Champs Elysee and the endless aisles of Harrods department store. At the peak of their travel season, Chinese consumers were busily snapping up the sorts of goods that are heavily taxed in Beijing and Shanghai instead of snapping pictures in front of noted landmarks. The BBC, for example, took umbrage as Mandarin-speaking tourists laughingly referred to Big Ben as a “Big Stupid Clock.”
The international spending spree was great news for the prominent Western destinations that had long been preparing for the East’s nouveau riche. Reports described Bergdorf Goodman employees handing out traditional Chinese New Year cards, Harrods painting toilets more welcoming shades of brown and Charles De Gaulle Airport hanging Cantonese banners. But all those receipts were bad news for the Chinese government, which -- if state-run media editorials are any indication -- might be considering upending the global luxury travel market.
Both Xinhua and CCTV criticized the New Year indulgences in editorials over the weekend. They asked the same basic question: As Xinhua put it, “If you have the money to spend, why not spend it at home?”
The obvious reason, as The Wall Street Journal points out, is that tariffs on goods like handbags remain high in China. This is a fair point well taken, but it could well be that shopping is merely an ancillary benefit of touristic travel for the Chinese -– travel, after all, is seen as a luxury good by many Westerners.
Could the spending sprees just be a side-effect of the rise of the Chinese traveling class?
Not according to Global Blue, a tax-free shopping guide, which reports that the majority of China’s luxury tourists admit that their trips abroad are focused on shopping rather than sight-seeing. The fact that the top destinations -– style capitals like New York, Paris and Rome -– never seem to change backs up the conclusion that Chinese travelers aren’t tourists, they're shoppers.
Chinese consumers spent $85 billion abroad in 2012, a healthy chunk of a massive industry. If China were to lower taxes on luxury goods, as the government has publically considered doing in the past, then high-end hotels and destination restaurants could quickly feel the hurt. Fifth Avenue won't be given over to tumbleweeds, but the damage to the global luxury travel industry would be significant.
The only way to keep the tourists coming would be to ensure that foreign cities were attractive as something more than glorified shopping malls.
Some countries, notably New Zealand, are already walking down this road. New Zealand tourism is working with Chinese tour operators to prolong stays and increase the number of activities available to Chinese tourists who, studies indicate, prefer itineraries with limited leisure time. It isn't a sale, but it is a place to start.