Chinese shoppers have already become the largest group of luxury shoppers in the world since 2012, now accounting for 32% of global revenue for luxury retailers. Here is another fact: around two-thirds of luxury products bought by Chinese (and often made in China) are purchased outside the country!
Go West, Chinese Luxury Shoppers
Chinese consumers play a primary role in the growth of luxury spending worldwide, and Europe is their favorite destination. Research shows Chinese tax-free purchases increased by 64%, particularly among the accessible and aspirational luxury segments, thanks to a weak Euro.
Specifically looking at personal luxury goods, Chinese shoppers also contributed most of the sales globally for the segment (32%), followed by Americans (24%) and Europeans (18%).
Over the years, Chinese customers spend far more abroad than in Mainland China, but what’s changing is that they’re spending little money in historically popular destinations, such as Hong Kong and Macau. Instead, Europe has drawn more attention from Chinese customers because they will benefit from currency fluctuations that drive favorable price gaps.
New Opportunity: Alipay In Europe
Soon there will be a new solution for Chinese luxury shoppers to solve currency exchange and tax refund issues. During Money2020 conference in Copenhagen, Alipay, China’s leading third-party online payment solution, has announced its official expansion into the European market.
Alipay is deeply ingrained in the lives of Chinese consumers and is used to pay for items in-store and online for goods and services ranging from taxis to restaurants and clothing. Alipay’s push into European markets will make it easier for Chinese tourists to interact with Western merchants when transacting overseas.
Last November, Alipay announced a partnership with German banking software company Wirecard AG. The move will allow Chinese users to pay with their smartphone and Alipay app at authorized POS retailers in Europe by using integrated barcode payment functionality from Wirecard, without the hassle of incurring currency exchange fees.
The shinning business opportunity is currently focused on the UK, France and German markets, as these are the most popular destinations for Chinese tourists to shop, both online and offline.
Getting Ready for Chinese Business
The consumption of luxury products by Chinese consumers is expected to grow by a double digit rate annually over the next few years. For European retailers, what are the things to do to seize the business opportunities?
The answer is: to know your customers. Chinese customers are active on mobile devices, hence Chinese-friendly mobile development will help your Chinese customer get a better understanding of your brand, and better turnover rate. Other than payment integrations like Alipay & WeChat Payment, there are many things one business can do to improve the shopping experiences for digital-savvy Chinese customers.
For example, luxury retails can benefit from QR code utilization. As shown below, Chinese customers can scan the QR code and get product info in Mandarin from your mobile site, with easy payment options. Similar solutions can be adopted by luxury industry.
As a leading technology provider in China, TMO Group is here to help.