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Asia update: rising middle-class Chinese change TFS spending dynamic


Global Blue is witnessing a paradigm shift in Asia as rising numbers of middle-class consumers, notably less affluent Chinese tourists, arrive from second-tier and third-tier cities to shop, but spend less overall on tax free purchases.

In Asia, the negative macroeconomic conditions (strengthening currency, softer economy) in Global Blue’s key Tax Free Shopping (TFS) destinations are impacting positive spend growth across the region. Overall in-bound tourist traffic has increased in North Asia in recent months; however average spend continues to decline and outweighs the transaction growth, dragging down regional TFS sales performance.

In October, Asia’s TFS sales performance is down -12% year-on-year (YoY), driven by a decrease in the average spending. Overall regionally, the number of transactions is up just +1%.

Japan and Singapore have been most affected by the drop in valuable TFS spend in Asia, posting -10% and -6% sales declines and +13% and -3% number of transactions for the October calendar year to date (CYTD).

Asia, a region of two trends

In the Asia region, we are seeing two trends: the overall negative currency dynamic is restraining Chinese tax free spend across all destinations, split by traveller behaviours in the north and the south.

In North Asia, traveller numbers have increased due to more value-driven packages or tours, negatively impacting average spend value. In South Asia, increased numbers of Free Independent Travellers (FITs) and wealthy tourists are allocating less budget to high-ticket items and discovering new ways to spend their money, seeking out cuisine and culture tourism instead.

Chinese globe shoppers from the mainland, Taiwan and Hong Kong are all contributing to a significant decline in average spend regionally, due to the new mix of value-seeker travellers and higher import duties at home. Global Blue has seen the biggest sales declines this month from Hong Kong (down -29%), Taiwan (-20%) and mainland China nationalities (-17%) YoY. However, Indonesian globe shoppers posted growth of +19% and Koreans were up +16%, due to favourable mixes of simplified visa access and positive currency FX respectively.

Singapore’s new tourist flow potential

Singapore’s 55% Chinese visitor increase in H1 2016, includes a significant portion arriving by land (now 26% of Chinese visitors, up 131.9% YoY according to the Singapore Tourism Board), and is a sign that the city state’s inbound tourism mix is changing for good, warns Jing Daily. One key reason to stop over is the city-state’s easy-to-obtain 72-hour transit visa, which comes with limitations on duty-free purchases. In contrast, Malaysia has a visa-free policy for Chinese citizens, driving more to visit the outlet centres in Kuala Lumpur as part of their tour.

Global Blue takeouts:

• In Asia, the number of travellers continues to grow, yet the TFS sales performance is still significantly limited by the decline in average spend due to recent changes in tax free spending thresholds and the growth in less affluent travellers across the region.

• Indonesians and Malaysians are sustaining TFS spend in Singapore, while Malaysia is a TFS destination to watch as increased numbers of Chinese tourists arrive by land and choose to shop tax free.


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