Purchase tax refunds made easier

Alipay devises system for returning tax to Chinese tourists

Chinese tourists heading home from certain countries with purchases will now find it easier to receive tax refunds.

Alipay of China and the tax-refund giant Global Blue of Switzerland, began a service on July 14, allowing Chinese tourists to have refunds of duty sent directly to their Alipay accounts.

About 5,000 retailers across Britain, France, Germany, Italy and South Korea will be the first to provide the service, and retailers in the Netherlands, Spain and Switzerland are expected introduce the service in the coming months.

Customers are promised a refund in two weeks or less, instead of waiting for up to several months by waiting for a credit card refund.

Chinese were the top spending tourists globally last year, Global Blue says.

"About 85 percent of them want cash refunds, because they either don't trust credit card refunds or they don't have credit cards," says David Baxby, chief executive officer and president of Global Blue.

"Alipay is widely used in China and has a good reputation among Chinese customers. Through cooperation with Alipay we want to enhance the shopping experience for the Chinese global shopper."

While Alipay's parent company, Alibaba, prepares to be listed in the United States, Alipay is extending its business abroad. Last year it processed $519 billion (384 billion euros) in payments, more than half of that outside Alibaba. PayPal's total payment volume last year was $180 billion.

The first day of Alipay's tax refund in Europe was France's national day, and the Louis Vuitton store on the Champs-Elysees in Paris did not open until the afternoon. There was a long line outside the shop, many of those in it being Chinese, as are many of the shop's sales assistants.

A young Chinese couple, Lu Zhe and Li Mengyao, had just gone into the store after lining up for 15 minutes. Li says it was her first time shopping in Paris but they knew tax refunds had become available through Alipay.

"I saw the news online before we came to Europe, but I have no idea of how we get our refunds or how much they are," Lu says. "I have an Alipay account, and we will try to use this method if it is easier than using a credit card."

Unfortunately for Lu, employees he asked about the refunds knew nothing about them, let alone what Alipay is.

A Louis Vuitton employee says staff know of only two options for Chinese customers: either a 12 percent tax refund when using a credit card, or lining up at airports for a 10.8 percent cash refund.

Most Chinese opt for the lower cash payment because the waiting time for the credit card refund is six to eight weeks, staff says.

Another barrier to Alipay's growth in Europe is that a form must be filled in, as with traditional tax refunds, and those lodging it need to have an Alipay account.

"It is too much of a hassle, so I did not ask for a tax refund," says Wang Yuan, a Chinese customer at Louis Vuitton who wore many brands, including Chanel glasses, Salvatore Ferragamo shoes and a Miumiu bag. Wang says she is a regular customer of European luxury shops, but never bothers lining up for a tax refund and will not use Alipay.

"I even don't have an Alipay account in China."

Global Blue says Chinese tourists received 3 billion euros in overseas shopping refunds in 2012, accounting for only 70 percent of the eligible amount.

Alipay has expanded its services globally as more and more Chinese have become international tourists.

"A global tax refund is just one part of our international services," says Peng Yijie, chief executive officer of Alipay's international business department.

"We expect to launch more services to offer Chinese travelers easier payment options whether they shop overseas or study overseas."

Alipay and Global Blue are considering designing a system allowing Chinese tourists to receive their tax refunds immediately, she says.

Chinese were the top spending tourists globally last year for the second year running, buying $129 billion worth of goods and services overseas, the United Nations World Tourism Organization says.

Alipay says the number of Chinese outbound tourists is expected to double to 200 million by 2020 from about 97 million last year, with 3.5 million of them visiting Europe.

Contact the writers trhough tuoyannan@chinadaily.com.cn

(China Daily European Weekly 07/18/2014 page23)