Shanghai making steady progress as consumer hub

Shanghai has seen explosive growth in both inbound passengers and their spending over the past year on account of China's visa-free policies, and the city is making steady progress in building itself into an international consumption center due to the joint efforts of the city government, brands and commercial operators, experts said.

From January to November last year, the number of overseas travelers applying for departure tax refunds in Shanghai surged 156.3 percent year-on-year, while sales of tax-refund eligible goods and total refund amounts both rose by about 80 percent, according to data from the Shanghai municipal tax service of the State Taxation Administration.

The latest surge in consumer spending has driven merchant participation. By the end of November, Shanghai had added more than 1,000 new departure tax refund stores, bringing the total number of registered tax refund retailers to over 1,700, which is double the figure recorded at the end of the previous year.

Among numerous beneficiaries, "the Louis", the boat-shaped three-storey complex space unveiled last June by Louis Vuitton, has emerged as a big winner. Publicly available information shows that the flagship store has attracted visitors from 87 countries and regions to date.

Located on West Nanjing Road, one of Shanghai's most prestigious shopping avenues, the new landmark space looks to present a creative shopping experience beyond offering conventional luxury products.

"The transaction amount of those tax refund upon purchases soared about 700 percent in the second half compared to the first half at HKRI Taikoo Hui, with the spending growing nearly 400 percent year-on-year," said Connie Ting, joint general manager of HKRI Taikoo Hui, where the Louis is situated. "Among all, 30 percent of the tax refund transaction amount was made at the Louis."

According to Ting, the shopping mall operates nearly 50 tax refund stores, and about 90 percent of these are international brands, covering jewelry, watches, fashion, footwear, leather goods, cosmetics, skin care, fragrances and lifestyle products, making them popular with overseas consumers.

Shaun Brodie from global real estate services firm Cushman & Wakefield said Shanghai's duty-free sales surge resulted from more overseas visitors taking advantage of the expanded visa-free entry.

According to Brodie, since the Chinese mainland expanded visa-free entry, Shanghai's retail sector has seen a clear increase in overseas visitors.

Regarding strategies to tap into this surging demand, Brodie suggested Shanghai could further enhance visitor experiences through seamless digital payments, immersive cultural and shopping experiences, and targeted marketing to emerging source markets, cementing its position as a global retail hub.

As China's visa-free policies continue to be optimized, Shanghai has seen a notable rise in inbound visitors, who are staying longer and seeking more in-depth and diversified experiences.

"The opening of the Louis last June drew strong interest from both domestic and international consumers, significantly lifting foot traffic and sales at HKRI Taikoo Hui," said Calvin See, joint general manager of HKRI Taikoo Hui.

According to See, riding this momentum, HKRI Taikoo Hui has accelerated upgrades to its brand portfolio and business modes to enhance the overall customer experience.

London-based luxury outlet shopping village operator Bicester Collection reported that sales revenue of tax refund products would double at both its Shanghai Village and Suzhou Village in Jiangsu province in 2025.

Currently, more than 80 percent of Shanghai Village's over 200 brands offer tax refund upon departure service, and Shanghai Village has introduced convenient services for tax refunds upon purchase at its customer's center.

"Given China's attraction as a global travel destination, the high-quality and cost-efficient Chinese products, I see unlimited opportunities for inbound spending," said Qi Xiaozhai, vice-chairman of the Commerce Economy Association.

According to Qi, thanks to the Chinese government's expansion of visa-free policies to an increasing number of countries, visiting China has become ever more convenient for travelers worldwide. Shanghai, as one of the top entry points into the country, has directly benefited, with inbound arrivals rebounding to more than 9 million passenger trips.

In 2025, Shanghai's inbound tourism market achieved a leapfrog growth by receiving 9.36 million passenger trips of inbound tourists, up 39.58 percent year-on-year. In December alone, the figure soared 45.56 percent from a year earlier to 1.08 million passenger trips, underscoring Shanghai's distinctive allure as a global tourism hub, according to local news portal Shanghai Observer.

According to the city's three-year action plan for optimizing the tax refund consumption environment, issued last year, Shanghai aims to become a benchmark city for tax refunds, offering well-organized services, a wide variety of goods, attentive customer care and a superior experience for inbound consumers.

The plan aims to operate more than 3,000 tax refund stores and over 10,000 service points, with more than 80 percent of stores offering tax refunds upon purchase services by 2027. At the same time, Shanghai seeks to quadruple tax refund consumption compared with 2024, further reinforcing its role as an international consumption center.

"Shanghai's targets are ambitious but achievable, reflecting the city's push to become the leading retail hub for international and domestic shoppers alike on the Chinese mainland," Brodie said.