At this point, it’s no secret that China represents a huge growing market for luxury goods. Due to China’s 30 percent luxury tax, these consumers tend to shop at foreign retailers which accept China’s UnionPay (CUP) bank cards. In particular, Chinese consumers have turned to Europe, comprising half of Europe’s luxury good sales last year.
But luxury retailers Saks Fifth Avenue and Neiman Marcus know that wealthy Chinese travelers have their sights on the United States luxury market, too – and they’re preparing to capture these customers by testing and rolling out infrastructure that will allow at least their flagship stores to accept payments from CUP debit cards. Although the CUP credit card is already widely accepted by urban U.S. retailers, its $50,000 annual spending limit means that ultra-wealthy Chinese consumers prefer to use the debit card, which is limited only by the amount of funds in their accounts, for large luxury purchases.
According to data from Nihao, a Hawaii-based media firm, the average Chinese tourist visiting North America spends $12,120 while shopping over a 12-day stay. So, store window stickers that signal the acceptance of not only CUP credit cards, but CUP debit cards, seem sure to attract business to U.S. luxury retailers like Saks Fifth Avenue and Neiman Marcus. We’ll be interested to see who gets on this bandwagon after these two venerable department stores.