FINGERPRINTS REQUIRED

Europe’s biometric visas are suddenly hurting its luxury goods industry

Obsession
Borders
Obsession
Borders

New visa requirements have made it harder for Chinese travelers to visit Europe, and Europe’s own luxury brands are paying the price.

Chinese tourists are some of the world’s biggest buyers of pricey clothes and handbags. But in order to access Europe’s biggest and most glamorous shops for luxury goods, they first need to cross into Europe’s borderless 26-country Schengen zone. To do that, according to an EU rule that went into effect for Chinese tourists in October 2015, requires obtaining a biometric visa from an EU consulate or application center in their home country. Compared to the former process, where they could apply by mail, it’s enough of a hassle to deter many from visiting Europe altogether.

In the past few months, spending by Chinese tourists in Europe has slowed considerably compared to last year, according to Global Blue, which processes travelers’ tax-free payments. It’s already hurt some company’s earnings, such as LVMH, which owns Louis Vuitton, Céline, Givenchy, and other major fashion houses. In April alone, Global Blue calculates that tax-free shopping sales were down 27% this year, and the number of transactions decreased 11%.

Several factors are behind the slowdown, says Tomas Mostany, Global Blue’s senior vice president of product tax-free shopping: Recent terror attacks in Europe have kept tourists away, and since sales were particularly high last year, they now look even lower by comparison. But he also blames the new Schengen biometric visa, which requires 10 fingerprints and a facial image. “In our view, the new biometric policy is limiting the current growth of shopping by the Chinese in Europe,” he says.

Chinese tourists now must travel personally to an EU consulate or visa center in one of China’s main cities, such as Beijing, Shenzhen, Fuzhou, Guangzhou, or Shanghai, to submit finger prints and an image, according to Mostany. “Compared to the previous process, in which the traveller would either post the application materials or rely on a tour operator to submit the application on their behalf, the new process is considerably more demanding and can therefore act as a deterrent,” he adds.

The biometric visas last five years. Over time, Global Blue expects the effect to ease, as Schengen countries open more application centers across China. The new visa is also quicker to approve than the old one.

When other countries, such as Thailand and Taiwan, started requiring biometric visas, the resulting dip in tourist spending only lasted about six to nine months, notes Mostany. Even so, the bottom lines of European luxury labels for the year will probably suffer. In its luxury outlook for 2016, Bain & Company reported: “[s]low tourism throughout Europe as a result of terrorism and new biometric visa requirements will likely dampen the region’s luxury market growth.”

In the meantime, brands should probably do whatever they can to curry favor with the Chinese shoppers that do show up.

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