Stores Push for Chinese Tourists

Posted 03/27/2012 by in

More than 800,000 Chinese visited the U.S. last year. Above, a New York tour bus that caters to Chinese.


The luxury business is counting on Chinese demand to drive growth—but a big chunk of that spending isn’t happening in China.

Chinese tourists are an increasingly important part of the equation, and U.S. retailers are feeling left out, thanks to a clunky visa process that can force would-be tourists to wait months for permission to travel.

Luxury retailers are trying to trim down the amount of time it takes to obtain a visa from China, in part because a Chinese tourist’s primary activity is shopping, WSJ’s Elizabeth Holmes reports.

Last year, 38% of Chinese travelers on long-distance trips visited Europe, according to the U.S. Travel Association. Just 13% came to the U.S.

Chinese visitors spend on average more than $6,000 apiece when they are in the U.S., more than twice their counterparts from the U.K., according to the travel association. With that in mind, U.S.-based retailers are lobbying the State Department to ease the visa process for Chinese visitors.

“There’s an extraordinary amount of luxury goods sold to Chinese in Europe and other countries,” Roger Farah, chief operating officer of Polo Ralph Lauren Corp., RL -0.51% said in an interview. “We’re not getting our full fair share in the U.S.”

U.S. retailers have rushed to set up shop in mainland China, where sales of luxury goods are expected to reach €11.5 billion ($16.9 billion) this year, a 25% increase from last year, according to consultants at Bain & Co. Yet the Chinese are expected to spend as much, if not more, overseas, according to Bain.

Aiming for a bigger share of that largesse, luxury companies including Polo and Saks Inc. SKS +1.67% are working through industry groups to press Congress for funding that would let the State Department process visas more quickly.

In an interview, Saks CEO Steve Sadove said he is cognizant of the hurdles, including national security concerns.

The groups’ goal is to get wait times down to 10 days by hiring more staff, reassigning them to high-demand markets, setting up a fast-lane process and expanding a waiver program.

Even with the visa hurdles, the number of Chinese visiting the U.S. has risen dramatically in recent years. Arrivals totaled 802,000 last year, more than four times the number of Chinese who visited the U.S. in 2003, according to the Commerce Department’s Office of Travel and Tourism Industries. Nearly all—94% — went shopping here, beating out restaurants, sightseeing and museums as the most popular activity.

The Commerce Department says Chinese tourists spent $5 billion in the U.S. last year, up 39% from the prior year.

“There are a lot of Chinese with money burning holes in their pockets,” says Erik Autor, vice president and international trade counsel for the National Retail Federation.

Active spending by the wealthiest shoppers has returned sales of luxury goods to pre-recession levels after several difficult years. China is delivering the fastest growth.

Handbag maker Coach Inc. COH -0.28% says it is seeing strong response by Chinese shoppers to its handbags and other accessories in China—where sales are expected to reach $185 million this fiscal year, more than three times its sales from fiscal 2009—as well as a lot of business from Chinese travelers in Europe and the U.S.

“The Chinese retail travel business is a very substantial opportunity for Coach,” says Victor Luis, president of Coach’s International Retail. Mr. Luis says the company supports efforts to strengthen ties between U.S. and Chinese governments, including “ties driven by easier access to tourism.”

Tour company AmericanTours International LLC, which has seen interest from China increase in recent years, includes shopping destinations as part of its travel itineraries for Chinese visitors. The cross-country package includes stops on Rodeo Drive and Fifth Avenue, as well as outlet malls in Middle America.

“They want to go there,” says co-founder Noel Irwin Hentschel. “It’s part of what they ask for.”