By Paul Adrian Raymond
Gloom-defying shoppers from China are flocking to the luxury stores of London's West End, outspending Arab royalty, replacing Russia's departing super-rich and lifting spirits after nine months of recession.
Data from tax rebate companies suggests Chinese tourists are spending three to four times more than a year ago in London's chic shopping districts.
On Bond Street, famous for its designer boutiques and jewelers such as De Beers and Graff, figures from firms which arrange sales tax refunds for tourists suggest Chinese shoppers are now overtaking big spenders from the Gulf states, Russia, the United States and wealthy Nigerians.
"We are looking for good-quality branded stuff," said Lillian Wang, a 28-year-old bank worker from Beijing on Oxford Street, one of London's mainstream thoroughfares. "I'm not as crazy as others, buying a dozen Louis Vuittons (bags), but I'm sure they are a lot cheaper here than in Beijing.
"A cheaper pound has also helped."
Thanks to a $585 billion stimulus package and record lending by the country's state-owned banks, China is likely to hit the government's target of 8 percent growth this year, by far the fastest rate of any major economy.
This has offset a slump in export demand and sustained the rise in incomes that made Chinese shoppers, especially the well-heeled, a rich seam of profit for Europe's luxury brands.
"Income growth -- particularly the top end, also driven by wealth accumulation -- remains robust in China," said Linda Yueh, a fellow in economics at Oxford University.
"Thus, wealthy Chinese may find that the weak pound makes Britain an attractive place to shop."
Sterling has recovered from lows early this year against currencies such as the dollar and yuan, but is still far short of mid-2008 levels.
Britain has been in recession since the last quarter of 2008, when GDP shrunk at its fastest rate since 1980. A survey by the Confederation of British Industry (CBI) showed retail sales fell more sharply than expected in August.
In this environment, tourists from China and other Far Eastern countries will have little impact on Britain's economy as a whole, says Richard Perks of market research group Mintel.
"It's going to have a big impact on some stores, and it might have a perceptible impact on London's retail sales. But it is hardly going to be significant for the country as a whole," he said.
Wang's shopping bags reflect a difference in spending habits among Chinese visitors from other wealthy shoppers: besides a 900 pound ($1,472) suit for her husband, she had a more modest 50 pound pair of shoes for herself.
As well as top labels, the Chinese are drawn to more prosaic items, and they are not as seduced by lifestyle offerings.
For example, top-end retailers have employed Mandarin-speaking sales staff to cope with the influx of Chinese customers but London's chic hotels have yet to benefit, said Charles Wang of tour operator Travco.
"You still find that the majority of Chinese shoppers stay at four-star standard hotels in London but at the same time easily spend thousands and thousands of pounds on brands like Louis Vuitton, Gucci, Armani and Burberry," he said.
Anecdotal evidence also points to a strong Chinese taste for sports equipment and furniture.
Nonetheless certain items seem to hold universal appeal, according to Bruno Barba, spokesman for department store Selfridges: "Chinese, Middle Eastern and Russian customers all share a love of the luxury accessory -- whether handbags, fine jewelry or watches."
Jewelry demand in China, the world's second-largest gold consumer, rose 6 percent in the second quarter of 2009 from a year earlier, against a 31 percent drop in India and a 9 percent decline in global demand for gold.
Barba said Chinese customers now rank among the five top-spending groups at Selfridges, regardless of the season.
The trend is even more marked elsewhere.
Global Refund, which arranges sales tax refunds for tourists, reported a 164 percent rise in sales to Chinese customers on Bond Street in the first seven months of 2009 from a year ago. Spending by Russians fell 27 percent, although at 1,295 pounds their average spend was still higher than the Chinese shoppers' typical 972 pounds.
"In spite of the downturn, the growth in Chinese spending is a trend we expect to continue to the end of 2009," said Global Refund's vice president of UK sales Nigel Dasler. "Seventy per cent of their tourism expenditure is on shopping."
Similar figures from Premier Tax Free show sales for which it arranged tax rebates to Chinese shoppers soared to 3.9 million pounds on Bond Street in the first seven months of this year from just under 1 million pounds a year ago.
That outstripped the combined 3.1 million pound figure for visitors from the Gulf states of Kuwait, Qatar, Saudi Arabia and the United Arab Emirates and eclipses other big spenders such as the United States on 1.8 million and Nigeria on 1.2 million.
Last year's table-topper Russia dropped to 1.7 million pounds from 1.9 million in the first seven months of 2008.
The number of billionaires in Russia has shrunk by two-thirds over the last year after the downturn lopped more than 70 percent from the combined fortunes of the country's 100 richest people.
According to Travco the fallout from the 2006 murder of Russian dissident Alexander Litvinenko in a London hotel has been compounded by tighter visa requirements and Russian media coverage of Britain's swine flu outbreak.
"Some of my (Russian) tour operator clients have been calling and saying 'we know there is little risk from swine flu but our customers are all convinced that if they come here they're going to die,'" said sales manager Beau Manby.
What is not certain is whether Chinese visitors will, regardless of exchange rates, keep coming back in the same way as other perennial big spenders.
Visiting London is an annual tradition for many wealthy Gulf Arabs, including Kuwaiti journalist Muhammed Khaled. Drinking coffee on Edgware Road close to many of London's best known stores, he said he has been coming to Britain for the past decade to shop and escape the searing summer heat.
"I just have to come here every year," he says. "Kuwaitis absolutely adore London."