Chinese And Saudi Shoppers Are Ditching Beverly Hills Ritzy Boutique Stores

The Hollywood Reporter is blaming a collapse in Chinese and Saudi tourist at Beverly Hills hospitality and shopping destinations on President Trump's trade war and immigration policies.

Fewer foreigners are showing up this year at world-renowned fashion houses and one-of-a-kind local boutiques at Rodeo Drive, a two-mile-long street packed with Prada, Gucci, Valentino, Armani, Dior, and Cartier stores.

According to the International Trade Administration, Chinese travelers to the US has plunged for the first time in 15 years, down -5.7% in 2018, likely to be a lot worse in 2019.

The Hollywood Reporter blames the slowdown of tourist on "trade war-induced propaganda, with China issuing US travel alerts warning of shootings and robberies; and Trump administration visa restrictions."

Chinese and Saudi tourist account for a sizeable share of store sales in Beverly Hills. The LA's Tourism & Convention Board reports Chinese travelers to LA spent the most money in the city, about $3.3 billion in 2018.

Rhys Edwards, an executive director of marketing at for the luxury Beverly Hills auto dealership O'Gara Coach Co., told the paper that he's noticed "a little dip in our Chinese and Arabic clients this year," adding, "I presume it has something to do with the travel visa issues."

Lauren Santillana of the Beverly Hills Conference & Visitors Bureau said, "Our China business is down," and tourist from the Persian Gulf sank in July, based on several conversations with luxury hotel managers.

"Literally half of our Gulf region clients skipped coming to America this year to go to the Mediterranean," said luxury personal shopper Nicole Pollard Bayme. "And it's not because they can't get into the United States; they can't get visas for their staff because of what Trump's doing. Hotels are dead. Just walking down the street, the demographic is different. There've been years when you might have thought you were in the Gulf, walking down Rodeo, and those days are gone."

A front end sales associate at the Coach store on Rodeo Drive said purchases by Chinese clients are down "maybe 40%" YoY this summer.

An associate at Salvatore Ferragamo said Chinese and Saudi business is down "maybe 30%" YoY.

At Ermenegildo Zegna, an employee said a "significant" drop in Chinese and Middle Eastern customers had been observed during the peak shopping season.

In a separate report by the Los Angeles Times, Chong Hing Jewelers, located in San Gabriel Square, has seen the amount of Chinese tourist plunge in the last two years.

"I had days with literally hundreds [of Chinese tourists] coming through my stores," said David Lee, chairman and chief executive of Hing Wa Lee Group. "That changed maybe one to two years ago, and now everyone is experiencing fewer."

Another reason for the decline of Chinese tourism to LA is due to President Xi Jinping removal of tariffs on luxury goods last summer, allows the Chinese to purchase their favorite high-end foreign products domestically rather than traveling to the West.

According to a report from Exane BNP Paribas, as recently as early 2017, luxury goods purchased in China cost 21% more than their global average. As of 2019, not anymore.

Julie Wagner, CEO of the Beverly Hills Conference and Visitors Bureau, said, "You cannot sustain double-digit growth forever. When the retailers are looking at year-over-year numbers, it's hard for them to get their head around that because it looks like it's falling, but really it's just a return to normal after those crazy times."

So maybe President Trump's trade war and immigration policies, combined with China's dismissal of luxury good tariffs, has created a bust cycle in Beverly Hills shopping industry that will continue to gain momentum into 2020.