Chinese-led growth on the cards for DJs
More than 700,000 UnionPay card users visited Australia last year, spending billions on goods and services.
China UnionPay chairman Su Ning said he expected the value of card transactions in Australia to double this year, reaching 4.6 billion yuan $770 million).
"The total value of UnionPay card transactions increased 45 per cent in the first four months of this year and we expect it to double at the end of the year," Mr Su said.
He said only 12 per cent of Australian businesses accepted UnionPay cards but expected that figure to increase to 40 per cent, now that the Commonwealth Bank had come on board.
Tourism Australia says Chinese visitors spent about $4.2 billion here last year, up 12 per cent on 2011 figures.
It is believed 10 per cent of David Jones' sales staff speak Mandarin and a significant portion of its luxury goods revenue comes from Chinese tourists. The retailer plans to hire more Mandarin-speaking staff to cater to the increasing number of Chinese shoppers.
Commonwealth Bank has signed an agreement to allow UnionPay users to access the bank's ATMs and merchants.
Ian Saines, a Commonwealth Bank executive, said the acceptance of UnionPay cards presented opportunities for retailers.
"Experience in other markets has shown ... accepting UnionPay does drive a noticeable increase in sales - that is why David Jones is so excited," he said.
Luxury British retailer Harrods registered a 40 per cent rise in sales to Chinese tourists in the first quarter of 2011, boosted by the installation of UnionPay terminals.
NAB launched an advertising campaign recently spruiking its partnership with UnionPay in an effort to cash in on its soon-to-end monopoly relationship with the Chinese company.
Frequently Asked Questions about this Article…
David Jones is accepting China UnionPay cards to attract cash-rich Chinese shoppers and boost luxury goods sales. The article says many luxury retailers are turning to UnionPay because it’s the world’s largest card issuer and can drive noticeable increases in sales from Chinese tourists.
More than 700,000 UnionPay card users visited Australia last year. Tourism Australia reported Chinese visitors spent about $4.2 billion here last year, and China UnionPay expected card transaction value in Australia to double this year to 4.6 billion yuan (about $770 million).
At the time of the article only about 12% of Australian businesses accepted UnionPay cards. China UnionPay expected that figure to rise to around 40% now that the Commonwealth Bank had signed on to provide UnionPay access at its ATMs and merchant network.
Yes — the article quotes a Commonwealth Bank executive noting that experience in other markets shows accepting UnionPay drives a noticeable increase in sales. For example, Harrods recorded a 40% rise in sales to Chinese tourists in Q1 2011 after installing UnionPay terminals.
Commonwealth Bank signed an agreement to allow UnionPay users to access the bank’s ATMs and merchant network. The bank’s involvement is expected to help expand UnionPay acceptance among Australian retailers and service providers.
The retailer already has about 10% of its sales staff who speak Mandarin and plans to hire more Mandarin-speaking staff to better cater to the growing number of Chinese shoppers, a significant source of its luxury goods revenue.
NAB has launched an advertising campaign promoting its partnership with UnionPay as it looks to capitalise on that relationship. The article notes other banks are partnering with UnionPay to reach Chinese customers as acceptance grows.
Based on the article, wider UnionPay acceptance and rising Chinese tourist spending could boost sales for luxury retailers like David Jones and create opportunities for banks that provide UnionPay access. Investors may want to watch retailers with strong exposure to Chinese tourists and banks expanding UnionPay services, as these trends have driven sales growth in other markets.
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