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A magazine from Global Blue issue 6 2012

Attract the World

A magazine from Global Blue issue 6 2012

Wang Jianlin
The founder and CEO of Wanda explains how he built one of Chinas biggest companies

globe shopper city index: europe


The definitive guide to Europes top destinations, for both shoppers and retailers

runway walks between gates

How airports have become hot spots for high-end fashion and shopping

future technologies
The innovations set to entice consumers offline and back into stores

At Global Blue, we give you the tools and insights needed to look further and attract a whole new world of lucrative foreign customers. Whether youre a small boutique or a large department store, we provide the inspiration and support you need to tap into new markets and develop the most compelling propositions. www.global-blue.com
www.global-blue.com

content
6 Whats up?
News and facts affecting your international customer business.

8Professionals

How do I get my retail business from 1 to 100 locations


With Retail Pro! From your rst shop, to a multi-channel multi-national business, Retail Pro gives you exible tools to manage your retail business easily, seamlessly, and entirely in a way that ts your vision for your business. Plan your inventory to always carry the right merchandise, ensure your stock always meets demand and your team has tools to exceed your customer experience goals. Manage sta , customers, vendors and processes. Develop pricing, promotions, loyalty programs and create an exceptional shopping experience for your customers across all touch points. With Retail Pro you can be as successful as only you can imagine. Be creative! Retail your way.

Two Global Blue customers explain the importance of accommodating international travellers.

12 Trend

Increasingly, consumers are shopping online. However, the latest innovations could see them return to shopping in physical stores.

t is quite remarkable to see how quickly shopping habits can change. The Internet transformed the retail industry, taking many customers away from physical stores. In this issue of Visitors, we look at some of the latest technological innovations, which will potentially help retailers reclaim consumers (p.12). Some of these concepts defy many of our basic assumptions such as shops without stock or payment via smartphones but many of the best innovations often do. Many people still see airports as transport hubs, but as youll see in this issue, airports have also evolved into world class shopping venues, too (p.16). Change is inevitable, and what distinguishes a business is its ability to adapt. Chinese entrepreneur Wang Jianlin, who we interview in this issue (p.21), is a great example. He has managed to build a remarkable business empire, on the back of the rapid changes that have taken place in China over the last 30 years. Keeping abreast of new developments and trends is vital for any business, and I hope this latest issue of Visitors helps to keep you informed of the latest changes in the industry. Enjoy!
Explore ways retailers across the globe use Retail Pro retail management solutions to achieve their goals

16 Insight

Airports have traditionally been gateways to destinations, but, with airport shopping, they are quickly becoming destinations in themselves.

21 Up Close

In a little over twenty years Wang Jianlin has built a huge business empire and is now one of the richest men in China.

26 Smart Business 28 Dreams

Square is an exciting new technology that brings new meaning to the term payphone.

Escaping the crowds at the worlds most southerly ski resort.

30 Global News

All the latest news from Global Blue.

34 Market Outlook

Per Setterberg, President & CEO, Global Blue

Take a closer look at the numbers that reveal much about who is buying what, and where.

www.retailpro.com

Photo: Gregory Boyd

This magazine is published by Global Blue. Website: www.global-blue.com Address: visitors@ global-blue.com Project manager Global Blue: Marie Bergfelt, mbergfelt@global-blue.com Editorial production: Spoon, gteborg, Sweden Editor: Susanne Magnusson, susanne.magnusson@ spoon.se. Designer: Charlotte Sundberg, charlotte.sundberg@spoon.se Website: www.spoon.se Repro: Spoon, gteborg, Sweden. Printed by: lenanders grafiska, Kalmar, Sweden. Translation: Sprkbolaget, gteborg, Sweden Advertising contact: Erika Olsson, eolsson@global-blue.com

Visitors

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Calendar 2012
Holidays affect spending, but they differ the world over. Ramadan will have a big impact on UaE in July, China will close for national Day in October, while many Japanese will take time off for the Obon festival in September.

people
Laure Pelloux Crepy
Marketing & Trade Marketing Director, Grupo Escada Espana

JApAn
July
July 16th Golden Week July 16th MArine dAy

chinA
July 15th to August 31st SuMMer School holidAy

uAe
July 22nd, sunday rAMAdAn

RussiA

Its important to understand the cultural habits of our foreign customers, and this is something Global Blue really understands.

AugusT

From August 11th to 18th oBon FeStivAl Week

SuMMer School holidAy

August 22nd to 24th, Wednesday, Thursday and Friday eid Al-Fitr (end oF rAMAdAn)

sepTembeR

From september 15th to 23rd Silver Week september 17th reSpect For the AGed dAy september 17th oBon FeStivAl Week september 22nd AutuMnAl equinox October 8th Sport dAy

september 30th to October 7th Mid-AutuMn FeStivAl

OcTObeR

October 1st nAtionAl dAy

October 25th, Thursday ArAFAt (hAj) dAy October 26th to 28th, Friday, saturday and sunday eid Al-AdhA (FeASt oF the SAcriFice) november 15th Thursday Al-hijrA (iSlAMic neW yeArS dAy) november 3rd to 5th unity dAy

14 12
Eric Fassbind
Owner and Director, Fassbind Hotels

nOvembeR DecembeR

november 3rd culture dAy november 23rd lABour thAnkSGivinG dAy December 23rd, 24th BirthdAy oF the eMperor December 25th chriStMAS dAy

December 2nd, sunday uAe nAtionAl dAy

December 31st to January 9th neW yeArS holidAyS

WATch OuT exTRA FOR ...


October 1st nAtionAl dAy, china

Wang Jianlin

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CEO, Wanda

september 17th oBon FeStivAl Week, Japan

With Currency Choice they know exactly how much they pay, and its another of those small things that contributes to an enjoyable stay
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Great companies are born, not developed, because each company has its own DNA.

July 22nd, sunday rAMAdAn, uAe

December 31st to January 9th neW yeArS holidAyS, Russia

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Whats up?

Florentia Village includes renaissanceera architecture and even a canal.

Hit liSt
Which nations recorded the largest rise in Tax Free shopping during 2011?
1. China +57% 2. Taiwan +36% 3. Switzerland +36% 4. Russia +31% 5. Brazil +26%

the tax Free shopping

in the mood for MOOD

little italy in China


You dont need a time machine, or even a long-haul flight to experience renaissance Italy, thanks to Florentia Village, which is billed as Chinas first authentic Italian outlet village. It promises the ultimate shopping experience with nearly 200 famous Italian and international brands at discount prices. Florentia Village opened in summer 2011 and is designed to recreate Florence as it was in the 17th century, albeit a little shinier! The developers promise: beautiful Italian style architecture, authentic Italian and international cuisine, and entertaining public events - delivering the fashion, culture and spirit of Florence, Italy, without ever leaving Beijing. The site covers 60,000 square metres, including a canal running through the entire village with gondolas, bridges, fountains, romantic squares and porticoes, not to mention a variety of food from all over the world, as well as outdoor cafs. Florentia Village is located in Wuqing, a fast-growing town between Beijing and Tianjin. For further details visit: www.florentiavillage.com

New figures

4.5 MilliOn
the number of visa applications by Russians for european countries in 2010, 99.5% of which were granted.

MOOD Stockholm is one of the citys most ambitious retail projects for many years. The mall, situated between Regeringsgatan and Norrlandsgatan, hosts around 60 retail and leisure units. Several international fashion brands, including Armani Jeans, Napapijri and Scotch & Soda, are present. Scandinavian retailer Best of Brand is selling clothes from well-known brands including Polo Ralph Lauren, Gant and Tommy Hilfiger. According to the developers AMF Fastigheter the mall

delivers a new concept called Beyond Shopping, which can also be described as Fifth Avenue meets Meatpacking District. It combines carefully selected premium retailers with exciting and edgy retail brands and exclusive modern restaurants on all three levels. MOOD Stockholm will be the first mall in Sweden to provide a full concierge service, offering help with spa treatment bookings, dry cleaning, home delivery, a cobbler, as well as personal shoppers.

Vionnet opens its first store in Milan


Vionnet, the revived haute couture label, has opened its first Milanese boutique. Situated on the ground floor of Palazzo Premoli on Corso Monforte, the store is linked to the brands showroom and atelier on the upper floors. A salotto in the store is dedicated to Vionnets evening wear; discreet doors allow the area to become completely private, and it will also be used for the houses new demi-couture exclusive personalisation service.
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Your premium brand had better be delivering something special, or its not going to get the business.
Warren Buffett AMErICAN BUSINESS MAGNATE, INvESTOr, AND PHIlANTHrOPIST.

the number of chinese visitors to spain during 2010, only the ninth most popular european destination among chinese tourists, despite being europes second most visited country.

102,000

Mixed signals on london tourism in Olympics year


Tourists from China and Japan are reluctant to visit the uK this summer according to major tour operators in those countries. Fears of excessive prices during the Olympics are deterring many tours, with the exception of high-end, VIP groups. In Japan, some travel companies are not organising any groups at all to London this summer. However, flight bookings to London before and during the Olympics are up by a quarter compared to last year. Outbound bookings are down by 11%, contradicting forecasts that many Londoners would avoid the games. The figures indicate that Londons hotels, restaurants, and retailers are in for a bumper summer. Germany and America have recorded the largest increase in bookings to London, with significant increases also being recorded from Jamaica, Japan, and Brazil.

indonesian shopping paradise


Wealthy Indonesians have propelled the country to fourth in the league of global Tax Free shoppers. Around 90% of their spending takes place in Singapore, meaning they spend as much as the Chinese in this shopping paradise. In 2011 Indonesians spent more than EuR 300m on Tax Free goods, up 20% on 2010, and in 2012 they are expected to outspend even Japanese tourists.

the value of the brazilian luxury goods market in 2010, which is double the 2006 figure.

USD 9 BilliOn

WRitE tO ViSitORS

is there anything you would like to know more about? We would appreciate your opinion on global Blues magazine. Write to us at visitors@global-blue.com
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Professionals

No matter where they come from, international travellers appreciate exceptional service. Here are two businesses that make that extra effort.
ByniC tOWnSEnD PHOTO FRED MERz ,tOni MatEU

HOW i DiD it

Eric Fassbind

its the small things that make the difference


Eric Fassbind was born and raised with hotels theyre in his genes. His family has worked in the industry for six generations, and in 1962 his parents opened up the first Fassbind Hotel in Lausanne, Switzerland. Today, Eric and his brother Marc continue to run their parents business, which now extends to eight hotels in five cities, and is the largest familyowned hotel chain in Switzerland. Above all, guests want to feel relaxed, comfortable, and get a good nights sleep, says Fassbind. Its simple, but its something many hotels forget. All eight Fassbind Hotels are centrally located in Lausanne, Geneva, Zurich and Bern, and can be distinguished by their distinctive Swiss ambience and design. We dont want to be just another inter8

Owner and Director Fassbind Hotels

national hotel that could be anywhere in the world. On arrival, guests should feel a sense of being in Switzerland. A lot of business travellers will only be here for a short time, so we want to give them a unique Swiss experience. Being a small country located between France, Germany and Italy, means Switzerland attracts plenty of international guests, all speaking a wide variety of languages. Having multilingual staff is essential, and Fassbind Hotels tries to ensure that 45 different languages are available at reception at any given time. We try to welcome guests in their own language, adds Eric Fassbind. Its just one of those small things that help them feel more comfortable.

As with language, paying in your own currency is also comforting, which is why Fassbind Hotels use Global Blues Currency Choice service. Not many people know the Swiss franc, so theyre never completely sure how much theyre paying. With Currency Choice, they know the exact amount and its just another one of those small things that contribute to an enjoyable stay.

FASSBind hotelS, SWitzerlAnd


Established: 1962. Hotels: 8. Employees: Approx. 200. Global Blue services: Currency Choice. Global Blue customer since: 2006.
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Marketing & Trade Marketing Director, Grupo Escada Espana

laure Pelloux Crepy

CM

MY

CY

CMY

HaiR anD MaKE UP COURtESy OF iVan gOMEz, lOla MaKE UP

Quick and easy tax refunds help us to increase sales


Escadas stores attract women of all ages and nationalities, but one thing they share is the appreciation for elegance, style and quality. What distinguishes Escada is that we can dress the 24-hour woman. From casual and business wear, to red carpet attire. We offer a rich collection of highend fashion, says Laure Pelloux Crepy, Marketing & Trade Marketing Director, Grupo Escada Espana. We have a loyal customer base, who value the quality of our products. Escada was founded in Germany in 1976, and quickly expanded to become a top global luxury brand. All of its stores and franchises in Spain and Portugal come under Grupo Escada Espana. Having a strong global brand means its stores
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often attract many international customers, particularly its branches in popular tourist destinations such as Barcelona, Marbella and Majorca. Nearly half of its international customers are Russian, which Laure Pelloux Crepy puts down to the strength of Escadas brand awareness in Russia. To improve customer service, Escada even employs native Russian staff. Its important to understand the cultural habits of our foreign customers, and this is something Global Blue really understands, adds Laure Pelloux Crepy, who feels that quick and easy tax refunds help facilitate additional sales. Escadas new system is very helpful. Previously, it was all manual whereas now it is done online. We can now tell our customer, weve just arranged for

200 to be redeemed, so maybe youd be interested in another item? So it helps increase our business. Escada Espana also advertises in Shop magazine, and subscribes to monthly business insights, which Laure Pelloux Crepy believes have helped improve their business. These insights are very useful for tracking data and comparing our performance with the competition, while Shop magazine also helps us to reach new customers.

eScAdA, BArcelonA, SpAin


Established: 1987. Employees: 300. Stores: Over 75. Global Blue services: Tax Free Shopping, Market Intelligence, Marketing services. Global Blue customer since: 2005.

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Trend

With the rise of internet shopping, bricks and mortar stores are starting to look a little dated. across Europe and north america in particular, many retailers are struggling to excite jaded customers who are enthralled by the internet. But retailers are fighting back, and Visitors takes a look at the latest innovations that are enticing back tech-savy consumers.
By SiMOn OCOnnEll

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FUTURE TECHNOLOGY IN RETAIL

5
TRenDs

House of fraser Buy & Collect concept stores offer over 1,000 brands, yet have nothing in stock.

Shoppin g online , while

in store .

WHEn IS A STORE nOT A STORE?


at the uKs largest chain of department stores, which are then either delivered to your home, or can be picked up in store the next day. The stores feature a luxurious environment with personal advisers on hand to help with payment and navigation, 46 touch screens, and a free coffee bar. Inspired by the level of service given by hotel concierges, an assisted sales service is offered with advisers helping customers to navigate House of Frasers online offering, helping with everything from product selection to online payment.
Visitors

Answer: When it has no stock. The new House of Fraser Buy & Collect concept stores blur the lines between on and offline retailing. They feature large touch screens on which customers can order from over 1,000 brands available

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ROBOT COnCIERGES In THE MAll


Dhabi National Exhibition Centre last year, where 20 robots were ordered. PAL Robotics is backed by the Abu Dhabi based Royal Group and it plans to introduce them in a mall in the Emirate later this year. They plan to produce a dozen robots a month. PAL Robotics marketing manager Jorien Guijs says: REEM has been prepared for use at exhibition centres and shopping malls. In the future we will also focus on healthcare, airports, museums and other public spaces. Each REEM will cost around 200,000.

Ever got lost in a giant mall? Cant find that shoe store you read about? Fear not, for if youre shopping in Abu Dhabi later this year, you may get assistance from a new breed of humanoid robots called REEM, with touch screens built into their chests, and cameras in their heads allowing them to recognise users, remember their names, and carry their heavy shopping. These robots, designed by Barcelona-based PAL Robotics, can even lead you to your destination. REEM debuted as a guide at the Abu

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BODy SCAnnERS
Take the guesswork out of clothes sizing by having your exact measurements taken by a 3D body scanner. Body scanners have been available in the jeans department of stores like Londons Selfridges for a while, but PrimeSense, the next generation from Bodymetrics, uses 3D sensors to give a more accurate map of your body, and the ability to match the size of a a garment to your body shape as closely as possible very useful when sizes vary significantly from brand to brand. The implications for off and even online retailing, where up to 40% of orders are returned because of sizing issues, are massive. Now you can store your body shape and order the garments that most closely correspond to it. Bodymetrics PrimeSense scanner allows you a virtual try on of outfits both in store and online, enabling a more accurate fit. The body is

attach a video message to your bottle of Pepsi.

WHAT TO GIFT?
recipient also gets a video message from the sender. In Target stores, undecided adults can check which video game should please young gamers via the Gaming Kiosk, which offers advice on age suitability and user reviews. A similar service is available at Mastermind toy stores, where video reviews advise unsure gift seekers. On the Kobo bookstore website you can gift an eBook and it will automatically be emailed to the recipient.

With the Starbucks app you can gift a coffee to a friend by adding funds to their card, but its also possible to use the latest technological advances to improve the accuracy of your gifting in myriad ways. Take Pepsis social media vending machine, at which users can purchase a Pepsi for a friend, which can then be picked up at any other social-media enabled vending machine, where the

With the Starbucks app, consumers in the uK and uS can now pay for their coffee using their smartphones.

BuyInG COFFEE WITH yOuR PHOnE

the last piece of information to go digital. Most of your life is already digital your friends, your music, your bank account all are accessible online but your body is not. This enables consumers to store and access all their body information online and link this to retailers. Now, body scanning becomes a powerful platform for retailers to provide the personalized fit and service their customers have always wanted, says Suran Goonatilake, CEO, Bodymetrics.

Starbucks is one of the first companies (outside Japan) to offer the option of paying for things by simply waving your mobile phone in front of a scanner. The system relies on relatively simple technology combining the stores existing pre-paid value card, a Starbucks app, and a bar code. When you get to your local branch, open the app on your smartphone, and the cashier will scan the barcode from your phone you dont even need to be online at the time. Smartphone payments were introduced in the uK in early 2012 following a successful launch in the uSA.

PrimeSense uses 3D sensors to determine your exact size.

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Insight

SHOPPing BEtWEEn gatES


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airport retail is a seriously profitable business, with many airports containing as impressive a range of stores as you would find in most upscale malls. So why do airports devote so much time and space to retail? and why do retail outlets want to be seen at airports?
By SiMOn OCOnnEll

AiRpORTs ReTAil shOpping


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Madrid-Barajas Airport is one of the busiest in the world, with nearly 50 million passengers passing through every year.

Not surprisingly, MadridBarajas provides a huge array of shops, restaurants and entertainment venues.

We want to increase the value of our commercial activities, mainly by altering the passenger flow through the commercial areas.
lUIS TrIANA, aenaS HeaD of CommerCial DiviSion at maDriD BarajaS airPort Airport retail has come a long way since the first duty free store opened at Irelands Shannon airport in 1947, seeking to capitalise on the spare cash and idle hours of passengers waiting for their plane to refuel as they travelled between the uSA and Europe. Broadly speaking, airport retail has passed through three phases: first, general stores selling duty free alcohol, tobacco, and perfume; second, upInternational tourist arrivals grew by 4.4% in 2011 to 980 market stores selling million, up from 939 million in 2010, impressive in a year luxury accessories from characterised by stalled global economies, upheaval in global brands; and third, the Middle East and north Africa, and natural disasters in where we are now, both Japan. of the above combined As an inbound region, Europe (+6%) was the best with mainstream stores performer, while as a sub-region, South America (+10%) including H&M, Zara, topped the ranking. Contrary to previous years, growth and Dixons, as well as a was higher in advanced economies (+5.0%) than in emergplethora of food, bevering ones (+3.8%), due largely to the strong results in Euage, and entertainment rope, and the setbacks in the Middle East and north Africa. options.

intERnatiOnal aRRiValS

AENA, the Spanish Airports Authority, is very much at the forefront of this trend, but how do they choose their retail partners? Is it simply the highest bidder? No. There is a public auction, and the brands which are interested present their marketing strategy, and plans for investments in staff, etc. Were not solely interested in how much they are going to pay us, says Luis Triana, head of AENAs commercial division at Madrid Barajas Airport. Our aim is to keep passengers entertained whilst increasing commercial revenue. We take a percentage of turnover from each retailer, so its in both parties interest that the store succeeds. Given this profit sharing agreement, how do they monitor what each store is selling? We insist all outlets use our POS systems and software so we can monitor sales in real time, and know exactly how much they turn over. With space at a premium, every square metre has to count, and with this in mind AENA is about to be floated on the stock market, as the Spanish government seeks to raise money, whilst sharpening the commercial focus of its non-aircraft related activities. We want to increase the value of our commercial activities, mainly by altering the passenger flow through the commercial areas, says Triana. In

the future 100% of passenger flow will pass through the commercial areas. From the retailers point of view airport stores are a valuable opportunity to spread the word of the brand. However, they also need to turn a profit. The Folli Follie Group sees both sides of the story, holding both the exclusive rights to sell duty free products at all exit points from Greece (it runs 21 airport stores in Greece), and also operate stores for its brands at other airports around the globe. The groups flagship brand Folli Follie has airport stores all over the world, including locations such as Hong Kong, Shanghai, Seoul, Athens, Taipei, and Madrid. Airport stores are a combination of brand building, awareness, and pure financials, says Johnnie Voutsas, vice president international division, Folli Follie

Group. Having a presence in airports is an integral part of our global distribution strategy; it complements our local market channels, allowing a repetition of the brand message, giving our brands a strong international association.

For Voutsas the international element is a key factor. People think If its in an airport it must be an international brand, it gives an extra dimension to the brand; it gives credibility to the brand. Airports are truGlobal Duty Free sales will grow from $46bn during ly global channels, so you 2011 to $52bn in 2012, although this is dependent on get people from all differa continuation of strong sales growth in Asia and parent nationalities carrying ticularly China in 2011 sales in Asia grew +22.9%. the message of your brand. Highlight categories included luxury goods sales, up These people have a by +20%, while the beauty sector rose by +19% and higher disposable income tobacco by +11.6%. than that of the average

local market and there is also a strong element of word of mouth. So what makes airport stores different to high street or mall? The differences are not fundamental and are based on some limitations that we must work around, such as less space, third party sales staff or limited dwell time in some airports.

aSia DRiVES SalES gROWtH

this june will see the opening of the brand new berlin brandenburg Airport, which is set to transform the german capital into one of europes main transport hubs. After years of planning, construction of the new airport finally began in 2006, and when fully complete, it will have a capacity of up to 50 million passengers per year. The airport complex will also include over 40 acres of retail space, offering restaurants and shops.

Berlin replAceS three AirportS With one

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Luis Triana says that the key difference is one of size. The difference between a high street or mall store and an airport one is primarily the size of the shop. Take Zara: in a mall its shops are often more than 2,500 sq. metres. In an airport, you cant have a fashion shop that size. Its more likely to be 500 sq. metres. Maria Silva at AENA says that this is changing and that in the future airport stores will be closer to their high street counterparts. Retailers want to be able to sell a broader range of products. At present most stores sell a very limited range, but in future they will be much closer to the brands normal stores, selling almost the full range. In the future our retail services will be more like a normal shopping mall. Silva says that the focus is shifting from exclusive brands towards entertainment. We will focus more on entertainment, so, for example, to satisfy bored children there will be more toy shops.

the BeSt Airport ShoppinG in the World?


every year millions of air travellers from over 60 countries take part in the annual airport passenger satisfaction survey, which determines the winners of the World Airport Awards. in 2011, london heathrow Airport won the best Airport shopping Award for a second successive year. The selection and quality of brands on offer, combined with competitive prices, are believed to be the main reasons behind heathrows popularity. singapore changi and Dubai Airport finished second and third, respectively.

and the decision making process is made easier. What is the thinking behind this? We want to increase commercial revenues whilst also making it more comfortable for the passenger. We aim to retain passengers in the airport, so, for example, we no longer tell people which gate to go to as soon as possible, because then they go straight to the gate and miss out on the other areas of the airport, says TriLuis Triana of Aena says that its strategy ana. Now we say: We will inform you in is to focus on global brands. We intend 45 minutes which gate your plane will to increase the number of high street be leaving from. That way you know you brands and focus more on entertainment. have 45 minutes to do what you want, At the moment most of our brands are whether thats just sitting down, eating, not known outside the airport so passen- or doing some shopping. gers dont know what to expect. We want Johnnie Voutsas at Folli Follie says it to ease the decision making process so is important that its downtown stores passengers know what they are getting, convey the same message as its airport stores. Its important to have brand consistency: there must be a clear and consistent message between the types of stores, Spanish Travel retail sales are forecast to decline by 1% otherwise we confuse the from 2010-2015 according to Euromonitor. It says prices consumer. Customers must in many travel retail categories will decline in constant find the same elements, value terms, as low-cost products, last-minute offers albeit customised to differand falling demand drive prices down. It adds that price comparison websites such as Trivago will put pressure on ent markets. We also try to travel retailers to limit their prices. offer products that are exclusive to airports, to give

people a unique purchasing opportunity. Is opening an airport store a precursor to launching in that market? Today, and after experimentation, we feel that for us to open in airports we also need to have local market presence and the infrastructure to fully support it. This way we better establish and manage our brand in that market and we ensure brand consistency while delivering the financial performance, says Voutsas. Airports are like a high traffic shopping and communication venue for international passengers. They allow brand repetition to the returning traveller, but also brand propagation to a new market before we even establish any presence there. When opening an airport store there are many extra factors to bear in mind in comparison to standard retail outlets. The retailer may not be able to hire its own staff, so the airport authoritys staff must be trained in the brands message and service expectations. Stock cannot be moved easily so merchandising must be conducted very carefully. Despite these additional hurdles, there is no doubt that more and more retailers are choosing to open in airports, and airport authorities, including AENA, are more than happy to accommodate them. n

Falling PRiCES in SPain

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Up Close

wanG jianlin

The DNA of a business empire


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Wang Jianlin started Wanda in 1988 with only 500,000 yuan and built it up to become one of the biggest private companies in China.

W
By tOM SPEnDER PHOTO gREgORy BOyD
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Our strategy was to develop into a large-scale company instead of just gambling some money and enjoying ourselves.
hile many Chinese entrepreneurs dream of getting rich quick, Wang Jianlin had something different in mind when he set up real estate developer Dalian Wanda in 1988 he wanted longevity. Great companies are born, not developed, because each company has its own DNA, says Wang. We had great ambition, not like other companies. Our strategy was to develop into a large-scale company instead of just gambling some money and enjoying ourselves. We wanted centennial development. Wangs current surroundings suggest he is succeeding in his aim. He is sitting in a vast office on the 25th floor of the Wanda Plaza in Beijings Guomao business district, a complex that also comprises a luxury Sofitel hotel and a cinema. Out of the windows on three sides can be seen rows of office and residential blocks, most of which have been built over the past 20 years, testament to the huge real estate boom that is still underway in China. Wang started Wanda with 500,000 yuan (about uS$130,000 at 1988 exchange rates) when he was in his early 30s. He had just spent more than ten years in the Chinese military before settling in Dalian, a developed port in northeastern China that was one of the first cities to open up to foreign investment. Today Wanda has mushroomed into a huge property group specialising in five main areas commercial property, luxury hotels, tourism, the cultural industry and a department store chain and with assets across more than 60 Chinese cities worth about $31 billion. The group operates 49 shopping malls, each of which is said to have created 10,000 jobs, and 40 department stores. It runs 26 five star hotels and has entered into partnerships with big hospitality names such as Hilton, Accor and Starwood. The group is also Chinas biggest cinema operator, with 730 screens in 86 theatres, including 477 Imax screens across 94 cinemas. In fact Wanda has become one of the five biggest private Chinese companies (many of the countrys biggest companies are huge state-owned groups) and is heading for the top 500 in the world. Wang himself is ranked as Chinas 15th richest individual by Forbes magazine, and has also topped the 2011 Forbes China philanthropy list, making nearly uS$200 million in donations, including big donations, including a large donation towards the reconstruction of an historic temple in Nanjing. But it hasnt been easy. Being an entrepreneur can be a rollercoaster ride anywhere in the world, and running a company in China as the country lurched chaotically from being a centrally planned Soviet-style economy to its current hybrid of raw capitalism and government control can seriously damage your health as Wang himself found out. Wandas toughest moment came in 1993, when the company was tasked with relocating about 6,000 households. At the same moment came the kind of wrenching change of economic policy that is hard for Western CEOs to imagine facing. The government ordered banks to stop lending money to real estate developers and said all outstanding loans had to be repaid immediately. Some 70 percent of real estate companies went bankrupt. The pressure on me was so intense that I fainted and had to spend a week in hospital in Beijing, he says. It was our most difficult moment but we learned a big lesson. Afterwards, there were several occasions when the government adjusted macro-economic policy but we survived because we had good cash flow, Wang says, who also took advantage of the chaos. Because of Chinas rapid development the rule of law is lagging behind, he says. Its a natural phenomenon. This irregular situation actually provides more opportunities, though they are risky. If the rule of law had been as developed as it is in the west, there would have been fewer opportunities and GDP growth would have remained at around three percent. Powering Wandas success is the emergence of the Chinese middle class. Estimates vary from about 40 million to about 400 million, depending on how middle class is defined, but what is certain is that their number is growing fast and they represent an enormous market. Market research firm Euromonitor estimates 700 million people nearly half the population will be middle class by 2020. Before, a large population was a burden to China but after economic development it has become a potential market. As with many Chinese statistics the numbers involved are bafflingly huge. During the five years to 2010, consumption in China more than doubled and investment bank Credit Suisse believes Chinese consumption will be worth uS$16 trillion by 2020, making China the worlds biggest service market. Chinese incomes are going up, people want to spend their new
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As a successful entrepreneur, Wang Jianlin now wants to encourage more Chinese youth to follow his footsteps and start their own companies.

money and Wang says this is the only way for the country to keep growing. Its a must. China used to focus on exports and investment. However the biggest export destinations, the uS and Eu, are experiencing a sluggish economic situation. Increasing domestic demand and consumption is the only way to go, he says. Wang himself is a discerning consumer every year he travels to Paris for clothes shopping. Now he has his eyes on bigger bargains. In the first half of 2012 you may see reports of two major Wanda acquisitions via M&A in Europe and America. Because of the sluggish economy in the west, there are some really good bargains, he says. These deals will mark Wandas first business interests outside China, although Wang hopes that over the next ten years the international market will become Wandas focus. We will integrate ourselves in local culture, abide by local law and retain the management team of the local companies, he says. In time we believe we will be well received by local people. Branding takes time. Wanda has been a brand for 24 years and people in China recognise it. We are ready to take another 10-20 years for the brand to be acknowledged internationally. Wangs decision to retain the manage24

ment teams of any companies Wanda purchases abroad was made after observing how different foreign companies behave when they enter China. Carrefour and Walmart have been very successful because they use local talent. However, some companies keep their senior management teams entirely foreign, are reluctant to integrate, and they fail. You need to adapt to China if you are to be successful, he says. But Wanda also aims to change China. In November, the company made an eyecatching deal with uS theatre arts production company Franco Dragone to build five state-of-the-art theatres capable of staging Las Vegas style shows in locations including Wuhan, east of Shanghai, Dalian, and Hainan island, Chinas emerging winter sun beach resort. Wang, an avid football fan, was in the spotlight in July when he provided uS$95 million to sponsor the Chinese Super League. His aim is to develop young Chinese footballers through its Chinese Football Star of Hope programme, in which gifted young Chinese players will be sent to train with Atletico Madrid, Villareal and Valencia in Spain. However, Wangs focus on youth also extends to entrepreneurship. From the beginning I have been thinking about what kind of company Wanda should be. Finally I decided to make it a company that belongs to society, he says. Charity in Wanda is systematic. Our major focus is not poverty alleviation but education, business funding and entrepreneurship. From a personal point of view, I would like to contribute most of my properties to a charity fund that can benefit people. For Wang, that means encouraging more young Chinese to take the plunge

and start their own companies (his son has launched an IT company that is not connected to Wanda). Although there is tremendous commercial energy in China, according to Wang just two percent of university graduates choose to start their own companies, with most aiming for a less demanding career in government. Chinas biggest problem is that there is much more emphasis on government officials than on entrepreneurs. We want to encourage young entrepreneurship, he says. Together with five other entrepreneurs, I have set up a fund to support young entrepreneurs, but regrettably, the budget cannot be allocated each year because of the lack of candidates. Chinas system is now more conducive to starting a business, although the market is more regulated. Decades ago there were more opportunities but things were also more chaotic and riskier. The experience Wang gained during those turbulent times will prove invaluable as he takes his company global. n

WAnG jinAlin
age: 57. lives: Beijing, China. Family: Wife and one son. Football team: Real Madrid. Favourite city for a holiday: Orlando for the theme parks. what do you like to buy abroad: Clothes. Every year I go to the Champs-Elysees in Paris to stock up on clothes. what is most important in a hotel: the style of luxury. Favourite city in China: Shanghai. Favourite brand of clothing: lanvin. what do you do in your free time: I dont have any free time!

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Smart Business

80% of shoppers decisions are made before they reach the high street.

Square might look small and simple, but its set to make a big impact.

Squaring the bill


A small white square device plugged into the top of a smartphone has emerged as one of the most exciting things to happen in the payment industry in recent years.
ByDaViD WilES

Square, one of whose founders is Twitter creator Jack Dorsey, has devised an innovative way for individuals and businesses to accept credit card payments on their mobile devices. Across the uS today, you can find cabbies, local farmers markets, pop-up shops and even Salvation Army bell-ringers taking money by swiping customers cards through the plastic device. The strength of Squares idea and technology can be seen in its list of backers:
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Virgin Group head Richard Branson has invested capital in the product, as has Visa. Square is an incredible technology that inspires and empowers everyone to be an entrepreneur, said Sir Richard. Square distributes the card reader and mobile application often for free and then makes its money by collecting transaction fees. Since launching in 2010, Square has shipped about 1 million card readers and is processing over $2 billion in payments annually. A new app update takes the next step and removes the need for swiping or even taking your phone out of your pocket altogether. While currently focused on uS growth, the company plans to go international this year. Many small businesses have in the past

been put off by traditional point-of-sale systems due to the upfront investment and monthly fees. However, many Square users have reported increased cash flow, while shoppers appreciate being able to use cards at establishments that previously only accepted cash. Square increases the prospect of closing a sale, chief operating officer Keith Rabois told AFP in a recent interview. In a tough financial time, we make it easier. We remove a lot of the pain from starting a business and growing a business. Competitors including Google are jostling for position but its a booming market: mobile-payment transactions doubled last year, with the number of people spending their money in this way increasing by 40%. n

The key to marketing effectively to travelling customers is catching them at the points in their journey when theyre at their most receptive whilst theyre at home planning their trip, at the airport ready to depart, or even in their hotel room. Marketing Services from Global Blue is the international marketing suite that helps you approach the traveller at these and many other carefully chosen moments, and because its highly targeted, its more affordable and offers higher returns on investment than most conventional campaigns. www.global-blue.com

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Dreams

Ski at the end of the world


If you think the Alps are too crowded and the Rockies just arent exotic enough, maybe you should turn your attention south. A long way south. Cerro Castor is about as far south as a skier can get. Located on the 54th parallel, Cerro Castor is the worlds most southerly ski resort, and Argentinas most exclusive. Its just 1,000 km from Antarctica, but still only three hours from Buenos Aires by air. With its low latitude and southfacing slopes protected from the sun, Cerro Castor boasts fantastic snow quality and one of the longest skiing seasons in South America, running from June until October. The slopes are excellent as the many national ski teams who train here in the pre-season can confirm and the lift queues are blissfully short. Away from the piste there is snow-shoeing, and dog sled rides, as well as the opportunity to explore the immense unspoilt landscape of this southern tip of the Andes. Castor Ski Lodge, at the foot of the main lift, offers luxurious log cabins with open fireplaces, set amongst beech forests. A short drive away the five star Las Hayas Hotel, beneath the Martial Glacier, has stunning views of the Beagle Channel. With its blend of the exotic, the luxurious and the adventurous, Cerro Castor is certainly worth travelling to the ends of the Earth for. n
By DaViD WilESPHOTO CERRO CaStOR

Cerro Castor
Established: 1999. Employees: 300. accommodation: 15 cabins (sleep 60 guests). number of guest nights: 4,232. Top visitor nationalities: Brazilian, Argentinian.

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Global News

EUROPES tOP tEn SHOPPing CitiES


1. london 2. madrid & barcelona 3. paris 4. Rome 5. berlin 6. lisbon 7. Amsterdam 8. prague 9. budapest

ViVa ESPaa!
The Spanish cities of madrid and barcelona may not have topped any of the indexs categories, but they performed consistently to score an unexpected joint second place. both performed well on climate, prices, their excellent cuisine and their convenient hotels and transport. The global success of spanish brands like Zara, loewe, Desigual and camper shows that this is a country that takes its shopping seriously. paris topped the culture and climate category and took second place for shops, putting it 3rd overall. The French capital also ranked high for hotels and Transport.

top of the shops


Globe Shopper City Index Europe is the definitive guide to Europes top destinations, based on the factors most important to tourists who like to shop. Compiled by the Economist Intelligence Unit and sponsored by Global Blue, this unique interactive index is an invaluable tool for both shoppers and retailers.
HOW it WORKS
... london! is the number one shopping city in europe. The english capital tops the globe shopper city index europe thanks to its huge variety of shops and shopping districts; the availability of international and local brands; its accessibility, and its sheer range of cultural attractions.

SMaRt DECiSiOn-MaKing FOR all


Global Blue CEO per setterberg says the globe shopper city index europe is a significant step in the companys strategy to become the go-to brand for everything to do with international shopping and spending. This index will help retailers and shopping brands make better business decisions, while the online globe shopper city index will enable travellers to discover their ideal shopping city based on their personal priorities, he says. Robin bew, editorial Director and chief economist at the economist intelligence unit, says the index highlights which european cities are best placed to take advantage of the continents reputation among international consumers. The findings show that the right balance between convenience, availability and price is essential for international travel shopping, he says.

anD tHE WinnER iS ...

The Globe Shopper City Index Europe is the worlds first detailed international shopping index, comparing the shopping strengths and weaknesses of 33 major european cities. The custom Research division of the economist intelligence unit rated each city in five categories that are important to travellers: shops, Affordability, convenience, hotels and Transport, and culture and climate. These categories are in turn broken down into 22 key indicators covering the priorities for globe shoppers. scores from 0 to 100 were based on quantitative data (such as average daily hours of sunshine) and qualitative assessments (such as convenience of using a foreign language). On the Globe Shopper City Index Europe website, globe shoppers can customise the ratings to find the destination that best meets their shopping preferences. The ratings can be customised by the shoppers priorities such as climate, affordability and convenience or by what type of shopper they are.

DiD yOU KnOW?


Kiev, Sofia and Dublin tie for the longest sales season in europe they each offer 12 weeks of reduced prices.

tiPS FOR REtailERS


The index is a useful tool for retailers and international brands looking for ways to boost the attractiveness of what they are offering to globe shoppers. For instance, it shows that longer opening hours and the possibility of obtaining discounts on goods could improve a citys performance in the convenience category, and therefore its rank in the overall index. To see the globe shopper city index europe in full, and to find the shopping destinations that best match your preferences, visit www.globeshopperindex.eiu.com.

e Judith Blue, Dam Yates, EO Global dent and C & Partners, Patricia tain. erg, Presi Per Setterb Chairman of London nications Visit Bri d Commu ew Jonas, Mayh trategy an irector of S D

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Global News

Best rate guaranteed


Travellers using Global Blues Currency Choice are now guaranteed the best exchange rates. Should they discover that their bank would have given them a better rate on the date of purchase using the same credit card had they not used DCC, Global Blue will refund the difference. Currency Choice allows international travellers to pay for purchases or hotel stays abroad in their payment cards currency. However, some users of the service have been concerned about what exchange rate they were getting. Our Currency Choice Best Rate gives travellers peace of mind and confidence when using Currency Choice while they are abroad, says Aurelie Totin, Product Analyst Currency Choice at Global Blue. Our rate guarantee means merchants can respond to travellers queries about the competitiveness of exchange rates with a simple and straightforward answer, thereby increasing the shoppers confidence and increasing the service acceptance.

pricewaterhousecoopers experts: Why Vat rates are rising


This general trend is visible when comparing the development of the corporate income tax rates (a direct tax) and VAT rates (an indirect tax) of Switzerland and the top eight European countries measured on their GDP. Between 2008 and 2011 three of the observed countries (uK, Sweden, the Netherlands) decreased their Central Government corporate income tax rates (see chart 1). Meanwhile, four countries (uK, Spain, Italy, Switzerland) increased their ordinary VAT rates during the same period (see chart 2). In view of the ongoing financial crisis it is not clear whether this trend will continue. However, it is safe to assume that governments will face growing financial needs and will have to expand their tax revenues. Accordingly, it is expected that the trend of decreasing corporate income tax rates is likely to fade, but VAT rates may continue to increase. Driven by the respective governments growing financial needs, the past trend of decreasing corporate income tax rates and increasing VAT rates, looks set to change. However, the one notable exception is Switzerland, which may follow the same general trend but also stands out since both corporate income tax and VAT rates are significantly lower than the other top eight European countries. The Swiss VAT rate of eight percent is by far the lowest, and competition amongst Switzerlands 26 cantons is also expected to ensure tax rates continue to decrease.

Fabio DellAnna, Partner, Tax Consulting & Simon Flckiger, Senior Manager, Tax & legal Services, PricewaterhouseCoopers AG, Switzerland

new app launched


Global Blues new smartphone app has been developed to simplify the tax refund process and make shopping in a new city more pleasurable. users can search for stores by name, by product category, or locate all the retailers nearby who offer Tax Free shopping in conjunction with Global Blue. The app allows them to call the store with one click, provides a checklist that simplifies the process of claiming a tax refund, and even provides step-by-step directions to each location. Happy shoppers can plan their route and itinerary, be notified of nearby events and promotions, and even explore a brands history and profile. For retailers this is an invaluable opportunity to connect in real time with foreign visitors who are in their city to spend, spend, spend! The first city app to launch will be London, launching soon, just in time for the Olympics.

The correlation between Corporate Income Tax and Value Added Tax (VAT) rates shows a European trend away from direct to indirect taxation. European tax rates in recent years are showing a general trend away from direct taxes (taxes that are paid by the taxpayer directly to the government) to indirect taxes (taxes that are passed onto a third party).

CHART 1
40% 30% 20% 10% 0%

comparison of central Government corporate income tax (cit) rates

CHART 2
30% 25% 20% 15%

comparison of ordinary vAt rates

Anthony donohue, MAnAGer MArket developMent

ch** de

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nl

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10% 5%

We try to make life easier for our retail customers


Having previously worked for Global Blue in his native Australia and in Singapore, Anthony Donohue is today Manager of Market Development at Global Blues OneInterface division in New York City. What is the OneInterface solution all about? Its about making life easier for our retail customers. We are a software system integrator between retail point-of-sale systems and different retail payment systems. We work with multinational companies and different point-of-sale companies to bring them a standardised methodology of payment software system integration. What does the Market Development department do? We work with expanding our offering to existing customers as well as developing new channels, new partners and new markets. I am responsible for executing the business strategy for the division, to ensure that we expand into the relevant markets, both in terms of our software partners as well as new physical countries. What do you do on a typical day? I dont know that I ever have a typical day, but at the moment I am working on a uS implementation for two customers. It is a matter of ensuring that we have the coordination throughout all the different partners, making sure that everything is going to run incident-free, which is our goal. Im kind of a jack of all trades. Whats it like working for Global Blue? I enjoy the global aspect the most. I get to meet people from cities that I have to look up on Google Maps to find out exactly where they are. This is the third country I have lived and worked in for Global Blue, so the company has been very good to me.

2008*

2011*

2012 Standard cit rate

0%

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*CH, DE IT: local government taxes not included. ** The 2012 standard CIT rate to be applied against profit before tax varies between 12.6% and 24.2% depending on a corporate taxpayers location in Switzerland. Source: Swiss Federal Tax Administration (FTA), www.estv.admin.ch: PwC, www.pwc.com

2008

2011

Source: Swiss Federal Tax Administration (FTA), www.estv.admin.ch

quicker transactions with Autofill


Global Blues new feature simplifies the process of filling in a Tax Free form at the point of sale. until now, Tax Free Shopping transactions have required shoppers to fill in their personal details on the Tax Free form. Some travellers find the form complicated and we often get incomplete forms, says Karine Grivet at Global Blue. As a result we cannot process the refund. With AutoFill, travellers details are automatically added to the form once an identifier such as a Global Blue card, a mobile phone number or a Global Blue barcode on a smartphone is presented to the retailer. This makes the process much easier for the traveller, says Grivet. As a result they will ask more often for Tax Free Shopping, and we know that when travellers want tax-free shopping they tend to spend more than other shoppers.
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Anthony donohue
Profession: Manager Market Development. age: 33. lives: Manhattan. at Global Blue: since 2005 Hobby: exploring Manhattan.

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Market Outlook

Global blue stats


SAlES AnD TRAnSACTIOn DEvElOPMEnT 2011 vS 2010
touriSt country
chinA ruSSiAn Fed jApAn indoneSiA united StAteS BrAzil SWitzerlAnd tAiWAn honG konG SAudi ArABiA other

TOP 10 MOST POPulAR CITIES FOR TAx FREE SHOPPInG


Measured in shopping amounts

TOP 5 COunTRIES
1. FrAnce
chinA ruSSiAn Fed jApAn united StAteS tAiWAn

Every day Global Blue processes tens of thousands (55,000) of Tax Free transactions from global shoppers the world over. A closer look at the numbers reveals much about who is buying what, and where.

% oF totAl SpendinG
20% 16% 4% 4% 4% 3% 2% 2% 2% 2% 41%

SpendinG developMent vS 2010


59% 33% 17% 24% 2% 30% 34% 38% 26% 12%

trAnSAction developMent vS 2010


12% 22% 4% 4% 3% 4% 4% 2% 1% 1%

AverAGe SpendinG per purchASe (euro)


813 360 534 579 579 358 257 493 747 771

The huge rise in overall spend by most outbound nations, led by China with a massive 59% rise, demonstrates the overwhelming desire to travel and to include shopping as an

integral part of that holiday. The transaction development broadly mirrors the growth in outbound tourists figures, whereas the spending development combines this international

tourism growth with economic growth and the sheer demand to acquire luxury goods.

1. Paris 2. london 3. sinGaPore 4. Milan 5. roMe 6. MuniCH 7. FrankFurt 8. Vienna 9. berlin 10.seoul
Paris remains the favourite destination for globe shoppers, with last years number one, London, finishing second. (http://www.global-blue. com/corporate/news/london-tops-for-shopping/). Singapore is benefiting from increased travellers from China, as well as Indonesia. Italian and German cities are very popular with Russian tourists.

% oF totAl
26% 11% 7% 5% 4%

SAleS vS 2010
49% 31% 15% 4% 41%

AvG Spend
1,472 1 015 860 903 1,089

2. uk
chinA kuWAit SAudi ArABiA ruSSiAn Fed uAe

% oF totAl
18% 6% 6% 6% 6%

SAleS vS 2010
62% 29% 25% 28% 6%

AvG Spend
783 637 958 748 1,283

3. itAly
ruSSiAn Fed chinA jApAn united StAteS BrAzil

% oF totAl
27% 14% 7% 7% 4%

SAleS vS 2010
30% 72% 9% 0% 36%

AvG Spend
638 834 603 724 587

4. SinGApore
% oF totAl
chinA indoneSiA MAlAySiA AuStrAliA indiA 26% 26% 6% 4% 4%

SAleS vS 2010
73% 18% 20% 14% 4%

AvG Spend
1,126 527 832 460 495

DEvElOPMEnT vS 2010
Spending delvelopment vs 2010
59%

nATIOnAlITy SPEnDInG 2010


chinA ruSSiAn Fed

33% 24% 17% 2%

30%

34%

38% 26% 39% 12%

20%

jApAn indoneSiA united StAteS BrAzil 16% SWitzerlAnd tAiWAn

TRAnSACTIOn DEvElOPMEnT vS 2010


22% 12% 4% 4% 3% 4% 4% 2% 1% 1%

5. GerMAny
chinA ruSSiAn Fed SWitzerlAnd uAe BrAzil

% oF totAl
27% 24% 7% 3% 2%

SAleS vS 2010
50% 33% 28% 1% 35%

AvG Spend
510 352 138 310 251

Si St A At e SW B S it r A z e zi rl l An tA d iW ho An n SA G k on ud G iA rA Bi A

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3% 3% 4% 2%

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other

Other strong risers in terms of overall spending include Taiwan +38%, Switzerland +34%, and Brazil +30%. In the long term, Brazil is the most exciting prospect because of its huge population, rapidly expanding middle class, and close cultural ties to Europe.
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The Chinese have extended their lead and now account for 20% of global tax free sales. With a far smaller population, and a far smaller number of travellers, the Russians have shown their astonishing spending power by extending their lead in second place.

The number of transactions grew modestly for most of the top ten nations, apart from China, which was up 12% and Russia, up 22%. This can be explained by the fact that there are many more tourists travelling overseas in the former case, and a strong economy in the latter.

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The Chinese are the top globe shoppers in all leading destinations apart from Italy, where Russias affinity with Italian glamour makes them number one. In Singapore, China has narrowly overtaken Indonesia, with Malaysia taking third spot, followed by Australia. Only 150,000 Chinese tourists visited the UK, yet they account for 18 percent of their total tax free spend.

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