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Outlet malls eager to welcome big spenders from China

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By Richard Chang
The Sacramento Bee
Published:
  • Rainy Zhang of Beijing tries on sunglasses at the Solstice Sunglass Outlet at Vacaville Premium Outlets in Vacaville, Calif. Shoppers, many from the B...

    Lezlie Sterling/Sacramento Bee

    Rainy Zhang of Beijing tries on sunglasses at the Solstice Sunglass Outlet at Vacaville Premium Outlets in Vacaville, Calif. Shoppers, many from the Bay Area and Asia, make the long trek to Vacaville because of the discounts.

They came empty-handed, but they left clutching loaded shopping bags.
Throngs of Chinese tourists swarmed Vacaville, Calif., Premium Outlets on recent weekends, scooping up luxury handbags, designer sunglasses and American jeans. With prices that are often 50 percent cheaper than goods at home, the Chinese aren't shy about opening their wallets.
"Chinese visitors are the darlings of the industry," said Maura Eggan, vice president of marketing for Premium Outlets, which is owned by Simon Property Group of Indianapolis.
The Chinese have long shopped in New York and Los Angeles, but many of them are now turning to suburban outlet malls where they can get more bang for their buck.
"Of course, things are cheaper here than in China," Beijing resident Rainy Zhang said in Mandarin, while sitting on a bench outside the Burberry store in Vacaville.
As Zhang spoke in a thick Beijing accent, her friend Hill Ai stared at a long receipt from Calvin Klein, tallying up the number of discounts.
China's middle class, now 400 million strong, is growing at an explosive rate. Newly affluent Chinese are flocking overseas and spending big money.
On a recent Saturday, a group of 20 schoolteachers from remote Shaanxi province scrambled to purchase wallets, leather jackets and other high-end items. They left five hours later, juggling oversized shopping bags emblazoned with names that included Coach, Juicy Couture and Polo Ralph Lauren.
The shoppers declined to be interviewed because they were visiting the United States through a government-exchange program. Their guide, Henry Lee, noted that official trips are carefully scrutinized by the Communist Party.
The average Chinese visitor spends $3,000 on luxury goods, according to an analysis by TaxFree Shopping, a company that processes tax refunds for foreign travelers. That kind of spending has caught the attention of American retailers and mall operators.
"The Chinese want designer brands, and they want a bargain. That's why they come to Premium Outlets for our upscale stores," Eggan said.
With 120 boutiques, the Vacaville property offers 447,000 square feet of shopping an hour's drive from San Francisco. A parade of tour buses drops by every week, according to management; many make the stop on the way to Lake Tahoe or the Napa Valley.
Simon Property Group has aggressively courted Chinese consumers since 2005. Eggan often travels to China, meeting both officials and tour operators. She was one of 80 business leaders who accompanied California Gov. Jerry Brown on a weeklong trade mission to the Asian giant in April.
With the liberalization of their country's economy in the 1990s, the Chinese have grown accustomed to seeing Western styles and luxury brands. But high tariffs make foreign imports extremely expensive, even though many of them are made in China.
In some cases, Chinese tourists say, the discounts on merchandise in the United States cover the cost of their trip.
Stores with especially high tourist traffic are also hiring Mandarin-speaking salespeople and accept Chinese-issued credit cards. Simon Property makes an extra effort, decorating its offices red for Chinese New Year and hiring crews to put on traditional lion dances.
Shopping at outlet malls has become something of a ritual for Chinese visiting California, if not a national obsession. Entire blogs and forums are devoted to discussions about the deals to be had. Those unable to visit will recruit friends and family to bring back gifts.
Cora Ip, a recent University of California-Davis graduate, said her parents -- who live in Sacramento, Calif. -- spend hundreds of dollars buying gifts for relatives back home in Hong Kong.
"When you buy things here, there is quality control," said Ip, scanning the aisles at Columbia Sportswear.
Desert Hills Premium Outlets near Palm Springs, Calif., a perennial favorite of Chinese shoppers traveling in Southern California, is undergoing a large expansion that could bring its store count up to 190 in early 2014 to become the largest outlet mall in the state.
Chinese visitors have also proven a boon for tour operators like SH Tours in San Francisco. The company organizes 600 tours annually for Chinese citizens, up from 300 in 2009.
"We always bring them to the outlets," said Silvia Chuang, general manager at SH Tours.
For Zhang, the shopper from Beijing, the choice to buy here is an easy one.
"Coach is 50 percent off. Why wouldn't you buy?" she asked.

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