ITB 2020 Special Reporting
VAT refund as pull-factor for Chinese tourists, no need says German government
Wednesday, 9th October 2019
Source : Prof. Dr. Wolfgang Georg Arlt FRGS FRAS

China travel - hotel - hospitality newsCountries which offer VAT refund to Chinese and other international visitors enjoy a steady flow of Chinese shoppers happy to receive a special discount and retailers are equally happy to be able to offer a 'discount' of around 20% to the buyers which they do not have to pay for themselves.

During a workshop organised by Planet Payment systems in Munich last week, key players in the German and European retail industry discussed the latest developments in VAT refund.

Your humble author had the honour to be one of the two main speakers and to participate in the following panel discussion. COTRI also presented the brand-new CTT China Tourism Training RETAIL, which has been developed together with The Hong Kong Polytechnic University School of Hotel and Tourism Management specifically for retailers.

Key take-away points were according to Rebekka Sarah Baer, Head of Business Development of Planet,

  • Customized travel is becoming more and more important
  • Chinese tourists are searching for individual and unique experiences also when shopping
  • Chinese consumers’ brand loyality is not as strong as it used to be, they are better informed and are highly influenced by KOLs
  • Average transaction volumes are decreasing – reason for this is that as more and more Chinese travel themselves, the shopping lists from friends and family belong to the past
  • If you want to market to Chinese tourists Alipay, WeChat and C-Trip build the base- if you have the base you can try more target group specific marketing e.g. on Qyer, Xiaohongshu or KOL- or micro-influencer marketing

The German government, however, is ignoring the importance of VAT refund for international travellers. Based on the fact that many Swiss living close to the border are shopping in Germany and can get VAT refund even for small amounts and the administrative work resulting, the government plans to introduce a minimum level of value of shopping to 50 Euro.

This will result in sending out exactly the wrong signal to the visitors from the USA, Russia, China and the Middle East: You are less welcome here than before and less welcome than in other countries.

Hopefully the German parliament will understand this and vote for hiring a few more stamp-swinging customs officers at the German-Swiss border instead or, better still, moving the process from paper to electronic, as has been done in other countries.

Prof. Dr. Wolfgang Georg Arlt and the COTRI WEEKLY team

PS The October Revolution happened in November, so you will not be surprised that the October (Beer) Fest in Munich happens in September. The participants of the Planet workshop certainly enjoyed the visit in the evening.

Prof. Dr. Arlt and the COTRI Weekly team / www.china-outbound.com

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