Shopping Paradise: Rich Chinese and Russians Flock to Germany to Spend

By Maximilian Popp, Fidelius Schmid and Andreas Ulrich

Germany is increasingly becoming a destination of choice for wealthy shoppers from Russia and China with customs officials struggling to keep up. Exclusive jewelers across the country are quickly hiring and training staff to serve the new clientele.

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Working as a customs officer at Hamburg Airport is a job that requires good instincts, patience and tenacity. One quality, however, should be avoided: envy.

German customs officials have seen far more luxury goods pass through their checkpoints this year than they will ever be able to afford themselves. Take, for example, the Russian traveler who bought three Patek Philippe watches, together worth over €1.5 million ($2 million). Or another Russian who revealed a weakness for the relatively modestly priced watches from Lange & Söhne, each worth just €50,000. Still, the man had purchased no fewer than 18 of these timepieces. They weren't all for himself, the man explained: "These are for my friends I'm going to celebrate my 50th birthday with."

Likewise, it's not unheard of for an extended Arab family to bring through customs purchases of Louis Vuitton handbags and Hermès fashions worth over €100,000.

All these tourists come to the airport customs officials for the same thing: a stamp that will save them a great deal of money. Travelers from non-EU countries can receive a refund for the value-added tax they've paid on items they buy, generally 19 percent of the purchase price. There are days when the customs officers are barely able to cope with the flood of heavily laden tourists. Long lines often form at the customs counters shortly before flights leave for Moscow, Beijing or Dubai. The same is true for incoming flights, when arriving passengers must declare cash amounts over €10,000. "Cash declarations have risen dramatically," says Christine Strass at the Frankfort Airport customs office.

'Prestige Conscious'

Luxury goods retailers in Germany are, of course, pleased with the development. On Neue Wall, a Hamburg shopping street that includes Hermès and Louis Vuitton stores, Russian, Chinese and Arabic have long since become part of daily life. Many of the shops train their staff specifically for serving customers from these countries, and have hired employees who speak Mandarin and other languages. "Many of our customers are from Asia," says Karl Heinz Peters, an expert on watches at the jewelry shop Juwelier Wempe in downtown Hamburg. These customers from the Far East, he adds, are "prestige conscious and they love luxury items. The more expensive the better."

At a nearby branch of watchmaker Omega, other customers sometimes have to wait their turn with the shop full of a dozen or so shoppers from China. These wealthy travelers see Germany as a shopping paradise. "Asians in particular can save a great deal of money, because of the high taxes on luxury goods back home," says Peters, adding that Germany provides the additional benefit that these sought-after goods are available at all times and are guaranteed to be authentic.

Standing outside the same store are Yelena and Viktor from St. Petersburg. "We use a business trip as a chance to go shopping," Viktor explains, saying that the selection of products in Hamburg is much larger than that in St. Petersburg, and clothing items in particular often cost less than half what they would in Russia. "We save money even though we have to pay duties when we reenter Russia," Yelena adds.

Jewelry stores all over Germany have begun doing what they can to cater to the international clientele. On Düsseldorf's high-end shopping street Königsallee, jeweler Christel Heilmann displays necklaces, earrings and watches in a two-story shop. Customers must ring a bell at the front door to enter, but once they're inside, Russian and Chinese customers can count on finding employees able to advise them on their purchases in their own languages. "Hardly a day goes by without customers here from China," Heilmann says, and is considering printing a product catalogue in Chinese. She says she's already learned the most important jewelry terms in Chinese, as well as a few phrases such as "thank you" and "goodbye." She is currently looking to hire an Arabic-speaking employee.

Holiday Purchases

Dresden, meanwhile, is making a special effort when it comes to customers from Russia. Perched picturesquely on the banks of the Elbe River, Dresden received more than 15,000 Russian visitors between January and September of 2012, fully three times more than during all of 2007. And they spent €5 million in those nine months, twice as much as during 2011.

Indeed, since October, two airlines fly several times a week between Moscow and Dresden with the airport now equipped with a dedicated counter just for passengers arriving from Russia. Here, in the days leading up to Russian Orthodox Christmas, Russian guests are greeted by hostesses in sequined dresses and fur hats, and can even request to be picked up from the terminal by a car and taken directly to shops, where they are met by Russian-speaking staff. "Russians expect that," says Bettina Bunge, head of Dresden Marketing.

Retailers aren't the only ones benefiting from this boom in shopping tourism. A golden age has also begun for businesses that specialize in refunding value-added tax. When travelers leave Germany, they essentially sell those receipts that have been stamped by customs officers to a tax refund firm, such as market leader Global Blue. The companies pay tourists the bulk of the refund, but the company retains a percentage as a "service charge."

Global Blue registered 51 percent more transactions involving Chinese travelers between January and September this year than during the same time period in 2011, with the company collecting receipts worth about €340 million. Russian shoppers came in second with an increase of 44 percent (€251 million) followed by Arab shoppers with a 37 percent uptick, worth receipts of €85 million. And each group's preferences are predictable. Chinese tourists tend to be interested mainly in watches and jewelry, while Russians and Arabs generally return from their shopping trips with clothing.

In December, of course, special holiday purchases also play a role. A few days ago, two Russian travelers showed the customs officers at Hamburg Airport their new Christmas tree ornaments. They were made of real silver and worth €13,000.

Translated from the German by Ella Ornstein

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