Over ten billion RMB OF TAX REFUND UNCLAIMED IN eUROPe TAX FREE EASY Focusing on tax refund to solve Difficulties of the industry
Chinese citizens’ fever of travelling abroad never fades away. As indicated by the National Tourism Administration, in 2016 there were 122,000,000 Chinese travelling overseas, with a consumption abroad of up to 108.9 billion USD and 900 USD per capita. It is predicted that in another 5 years, the number of people travelling abroad will have increased to 700,000,000, which is 6 times the number of 2016. As a result, the potential of overseas consumption will be great.
The “shopping fever” of Chinese tourists overseas cannot be ignored, and the tax exemption for tourists even promotes this fever. However, at the moment tax refund procedures arising from this exemption are an awkward problem for shoppers overseas. Even when entrusting third-party tax refund institutions with handling the tax refund, difficulties, such as queueing at the tax refund counters, long waiting time until actually receiving the tax refund, high deductions from the VAT and even the failure of receiving a tax refund, do exist. It was reported that in the European market over ten billion RMB of tax refund from overseas shopping by Chinese tourists were left unclaimed due to the large consumption of time and effort that the procedure takes.
In order to handle this huge consumer market and to deal with the current difficulties of this industry, TRAVEL EASY partnered up with UTour Group and CAISSA to convene a press and economic conference in Frankfurt on the consumption in the European tourism market, aiming at solving the difficulties encountered by Chinese tourists when touring through and consuming in Europe.
It should be noted that TRAVEL EASY has launched TAX FREE EASY in 2016, a product that facilitates a tax refund of. During an interview by “Securities Daily”, Yang Yang, the CEO of TRAVEL EASY, stated that the intention of TAX FREE EASY is to solve difficulties of Chinese tourists concerning the tax refund after consumption in Europe. “EU member states exempt Chinese tourists from VAT, which encourages Chinese tourists to shop in Europe. TAX FREE EASY, in cooperation with Alipay, allows a tax refund, real time monitoring of the tax refund process and extremely shortens the time it takes for the tax refund to reach the tourist’s bank account.”
TRAVEL EASY is known to have a cooperation with Apollo (a large duty-free shop in Germany) and other merchants and already received strong market response. According to Yang Yang’s plan, the business of TAX FREE EASY will cover the entire European market by the end of this year and the number of clients will also been increased further.
Continuous increase in overseas consumption
Chinese tourists have already travelled the world. As indicated by the National Tourism Administration, in 2016 122,000,000 Chinese tourists travelled overseas, an increase of 4.3% compared to 117,000,000 tourists in 2015. When it comes to the number of tourists who are travelling abroad, China still ranks No. 1 in the world.
Along with the fever of travelling overseas, the consumption by Chinese tourists keeps increasing. Based on the report Big Data of Chinese Tourists Abroad in 2016 released by the China Tourism Academy and Ctrip, the expenses of Chinese tourists abroad in 2016 were as high as 109.8 billion USD (760 billion when converted into RMB), with 900 USD per capita. Hence the Chinese tourists contributed with over 13% to the global revenue of the tourism industry and ranked first in the world for both the consumption spending and the percentage of the overseas’ consumption.
Therefore, FengBin, the president of UTour Group, said, “the market development of Chinas tourism is sound and sustainable, especially European markets like Germany have great potential for the future. In this sense, UTour Group is in its early stages and still has a long way to go.”
The “shopping fever” of Chinese tourists is obvious to everyone – with Germany being at the center of the European market, the potential there is great.
In the Press and Economic Conference “Europe as a shopping destination for Chinese travelers”, Zhu Weige, the commercial counselor of China’s consulate general in Frankfurt expressed that this fever can be attributed to the sound Chinese-German relations. 2017 is the 45th anniversary of the establishment of Chinese-German diplomatic relations. According to Zhu Weige, personnel exchange can be seen as an important part of the bilateral relations. On one hand due to the rapid development of China’s economy, more and more Chinese come to Germany and Europe. On the other hand, German products are well received in China. Chinese tourists visit Germany not only for landscape reasons, but also to shop for products “Made In Germany”.
As indicated in the data released by the German National Tourist Board, from January to November 2016, 1,292,300 Chinese tourists visited Germany, with a year-on-year growth of 3.2%. As such, Xiang Shi, the director of the China National Tourism Administration Office in Frankfurt, said frankly, “although this data is not based on the whole year yet, the growth is quite considerable. Besides, shopping is the major characteristic of Chinese tourists; it can be proven that, when it comes to consumption capacity, the Chinese citizens rank No. 1 within the international tourists in Germany, featuring great potential. ”
UTour Group and CAISSA were the first two companies to enter and exploit the European tourist market. Feng Bin, the president of UTour Group stated that every year 100 million tourists leave China to travel abroad, among which, up to 10 million are travelling to Thailand and up to 1 million to Japan. In relative terms, the number of tourists to Germany and Europe is limited, which, in other respects, implies great potential. He said, “Along with the increasing income and consumption of Chinese tourists, UTour Group will conform to the tourist’s consumption demand and seize this opportunity.”
Ren Jun, the vice president of CAISSA, explained the development trend of Chinese outbound travel, which evolves around the key word “change”. “Change” can be seen in the following three aspects: first, new outbound port cities are constantly springing up (such as Tianjin, Nanjing and Hangzhou); second, due to market changes, Chinese tourists’ demand for tourism is increasing; third, due to the changes in the form of cooperation, the industry of tourism becomes more diverse.
No matter how the outbound tourism market changes, it is beyond doubt that China will still be the market with the largest tourist source globally. It is predicted that the number of Chinese tourists abroad will reach 700,000,000 in 2020, which is 6 times higher than the current number of tourists. At the same time, the consumption overseas will also continue to increase.
Resolving difficulties linked to tax refund
As stated by Xiang Shi, the director of the China National Tourism Administration Office in Frankfurt, shopping is one of the major characteristics of Chinese tourists and as EU member states exempt Chinese tourists from VAT, the “shopping fever” of Chinese tourists in Europe is encouraged.
However, currently, there are always many people waiting in line in front of the tax refund counters. When entrusting a tax refund company as a third-party with handling the issue, tourists get frustrated with the fees charged, the long waiting time until the actual tax refund is received and the difficulty of monitoring the progress.
In addition, it is reported that, in the European market over 3 billion RMB of tax refund from overseas shopping by Chinese tourists have been unclaimed annually due to the large consumption of time and effort it takes. Apart from time and effort, the corresponding fees charged are also not low. Taking the German market as an example, except for health care medicine, food and books, the VAT for almost all other commodities is 19%. If a third-party company is entrusted to deal with tax refund matters, the VAT will only be around 10% after the deduction of corresponding taxes and other incidental expenses. Furthermore flights are often missed due to the long duration of tax refund processing at the airport counters. Weige Zhu, the commercial counselor of China’s consulate general in Frankfurt, told the reporter that it is a common occurrence to see a lot of Chinese tourists waiting for tax refund at the airport. For that same reason 3 tourists missed their flights at Frankfurt Airport not long ago.
To solve these difficulties, TRAVEL EASY launched TAX FREE EASY in 2016, a product allowing tax refund. While being interviewed by “Securities Daily”, Yang Yang, the CEO of TRAVEL EASY, expressed that, as the market of overseas consumption evolves characteristics of youth, digitalization, and feminization in recent years, it is necessary to change relevant services accordingly.
Yang Yang said, “In terms of tax refund, the tax exemption is originally the driving force of shopping abroad, but now it becomes a difficulty in itself. The Chinese tourist’s entitlement to VAT-free shopping granted by EU countries involves complication and the tourist’s satisfaction decreases due to a difficult tax refund.” The company TRAVEL EASY seeks to settle these problems by launching the tax refund product TAX FREE EASY.
Compared to conventional tax refund institutions, TAX FREE EASY has the following advantages: first, the tax refund received by the tourist is higher:tax refund is guaranteed (the service fee for tax refund at airports can go up to 25 euro); second, the waiting period for the actual tax refund is shorter: Tourists receive the tax refund form at the shops and after it gets sealed by customs, they can board their flight; after arriving back home, they can then use a courier service to send the form to our Chinese data center and will receive the tax refund within one week through Alipay; third, with TAX FREE EASY, tourists can check the status of their tax refund form on the internet at any time – this is impossible at conventional tax refund companies.
Concerning cooperative business relations, Yang Yang introduced that TAX FREE EASY currently has a cooperation with Apollo (a large duty-free shop in Germany) and that cooperation will be extended to more merchants in the future. With the help of Alipay, TAX FREE EASY will make it possible for tourists to receive the tax refund immediately after paying at a duty-free shop and to enjoy a credit limit of up to RMB 30,000 granted by Huabei (Alipay).