Beijing and Shanghai will offer tax refunds on purchases made by overseas visitors starting on Wednesday, kicking off a program to bolster tourism and sales of some items popular with foreign visitors, such as souvenirs, silk, porcelain and traditional Chinese medicine products.
The rebate program could significantly stimulate the development of Beijing's tourism, which has seen slow growth in spending and a decrease in visitors, said Wang Yue, deputy director of the Beijing Municipal Commission of Tourism Development.
"The tax refund policy is a new step in building Beijing as an internationalized tourism destination," Wang said.
Tourists from overseas, as well as those from Hong Kong, Macao and Taiwan who have lived on the Chinese mainland for no more than 183 days, will be eligible for an 11 percent rebate on consumer goods bought at designated stores.
So far, 86 stores in Beijing and 27 in Shanghai have qualified for the program. The minimum purchase to obtain a tax refund is 500 yuan at any one store in a day.
Offering tax refunds has long been an important way for cities and countries to attract overseas tourists. More than 50 countries and regions have tax refund polices, including the United States, Japan, South Korea, Canada, Brazil and Thailand.
However, Zhang Guangrui, honorary director of the Tourism Research Center at the Chinese Academy of Social Sciences, questioned whether the tax refund program would produce the desired results. He said the biggest obstacle to increasing overseas visitors' spending is a lack of sought-after products.
"Overseas visitors don't come to China for shopping," Zhang said. "Besides, many overseas visitors are bargain-hunters. They want to buy Chinese-made clothing and accessories from flea market vendors where they can get good deals, which is unlikely at the designated stores."
Beijing and Shanghai were chosen as the first Chinese mainland cities to start the program after a tax refund trial in Hainan province.
Wu Xingbao, deputy director of the Shanghai Municipal Commission of Commerce, said the city studied the shopping habits of overseas tourists thoroughly before choosing the 27 participating shops.
"Modern department stores and traditional Chinese brands have both been included. The shops are located in the areas frequented by tourists potentially interested in tax refunds, and large number of businesspeople coming to China for conferences and exhibitions," Wu said.
Next, the two cities will explore the expansion of the tax refund program to more stores and offer processing of refunds outside of airports.
Additionally, Beijing, which added a 72-hour visa-free policy to boost tourism, plans to introduce shopping-tailored tourism routes for overseas visitors.