The Great Mall: how China is turning foreign tourists into shoppers

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By Ralph Jennings

Published October 17, 2025

Foreign tourists in China are increasingly drawn to shopping, said Steven Zhao, CEO of China Highlights, a travel agency that organises tours of the country.

“They’ll buy drones and take them back home,” he said, noting the trend has become “more obvious” over the past two years – especially among Middle Eastern travellers – as China produces an outsized share of the global total, with some devices small enough to fit in the hand.

“Drone prices are cheap and the choices are numerous,” he said, referring to products available on the Chinese market.

Relaxed visa policies could make China an even stronger draw for overseas shoppers. Inbound tourism revenue is likely to rise to 18 per cent of the overall travel market in five years, up from the current 11 per cent, according to a Morgan Stanley research note on Thursday.

“Shopping will become an increasingly significant reason for inbound travellers to visit China, especially considering the higher trade barriers globally”, one of the analysts told the Post, referring to tariffs and other restrictions that have raised prices in many parts of the world.

Morgan Stanley Research highlighted China’s value-added tax (VAT) refunds for tourists as a driver of expected growth. The initiative was liberalised this year to stimulate the domestic economy, allowing visitors to receive cash that they can spend elsewhere in the country.

Retail sales taking advantage of the scheme grew 98 per cent year on year in the first eight months of 2025, according to the research note.

“China has made tax refunds more convenient for inbound visitors, which should further encourage shopping tourism”, the Morgan Stanley analyst said.

Inbound visitors spent about US$94.2 billion last year, according to travel marketing and technology company China Trading Desk, which also cited the scheme as a growth driver, along with the growing list of countries whose citizens qualify for visa-free entry.

“Instant refunds” have been offered since April, with the minimum daily spending limit to qualify cut to 200 yuan (US$28) per tourist, per store, said Subramania Bhatt, China Trading Desk CEO.

“The appeal for spending has certainly grown,” he added.

Purchases by foreign travellers “vary widely”, Bhatt said, with hi-tech devices, apparel, silk and “cultural goods” among the most popular buys.

By the end of August, more than 10,000 stores were offering tax refunds, according to the State Taxation Administration. Previously, tourists had to process them at special airport or immigration hall counters, usually just before leaving China.

But some travellers remain unaware of the scheme. Christelle Denis, 52, a Hong Kong resident from France, said she would have considered buying face creams and international clothing brands when in Shenzhen earlier this month – had she known about the initiative.

“I looked all around me, but this kind of information was never seen,” she said.

According to the Morgan Stanley Research note, shopping malls and healthcare stand to benefit from growing tourist demand. By 2030, the New York-based investment bank forecast that about 20 per cent of revenue generated by the hotel industry will also come from inbound travellers.

“Exposure” to inbound travel for online travel agencies, civil aviation and duty-free shopping is likely to grow five to 10 per cent over the next five years, according to the research note. Profits are also expected to increase due to “potentially higher pricing” by airlines and travel agencies, it added.

Authorities have introduced other measures to encourage spending by overseas travellers. Three government departments have approved the Hainan Free Trade Port in southern China to allow offshore travellers to buy 47 different kinds of duty-free goods. The list includes micro drones, pet supplies, portable musical instruments and small household appliances, the Ministry of Finance said on Friday.

The changes “further satisfy consumers’ increasingly diversified shopping needs”, the ministry said.