Galway-headquartered Fintrax Group was founded in Tully, Co. Galway in 1985 and has since become one of the largest tourist VAT refunding business in the world through its brand Premier Tax Free, operating in 34 countries across the globe.
The company, which employs 800 people across the globe, works with 50% of the top 150 retailers in the world, working with high-end retailers such as Chanel, Gucci and Brown Thomas to provide refund services to overseas tourists. International shoppers spend up to five times more than domestic shoppers and can save up to 19% with tax free shopping.
While in the main Fintrax serve overseas tourists from countries including China, Russia and South Korea visiting Europe, they are now see seeing the Asian market itself expanding, according to CEO Patrick Waldron. “You have Europeans going the other way and Chinese going to other Asian countries as well.”
The market expansion is linked to the rise of the ‘middle class’, with the OECD predicting that the world’s middle class population will increase from 1.8 billion in 2009 to 3.2 billion by 2020 and 4.9 billion by 2030. The bulk of this growth will come from Asia. By 2030, Asia will represent 66% of the global middle-class population and 59% of middle-class consumption in the world. With growing spending power, the Asian market is expanding rapidly for companies like Fintrax.
“It’s often hard to contemplate it but the best way to think of it is that last year, 2016, 8 million Chinese went to South Korea as tourists. That’s more than all the Chinese that came to all 28 EU Member states. That shows you the scale of it. Over 120 million visits are made by Chinese abroad and even in Europe we haven’t seen really the start of it yet; you will see a significant continued explosion,” explains London-based Mr Waldron.
The company last week announced its expansion into the South Korean market through a joint venture agreement with the LOTTE Group, South Korea’s fifth largest conglomerate. The deal will see both groups tap into the growing tax refund market in Korea which has grown tenfold since 2010.
The company also established an office in Shanghai, China last year. “We’re positioning ourselves to make sure we can take advantage of the markets expanding and opening up,” says Mr Waldron, adding that he sees expansion into Thailand, Indonesia and Taiwan as likely in the coming years.
From an Irish perspective, Chinese visitors last year overtook Americans as the number one tourist purchasers of luxury goods in the country. While Americans remain the second biggest overseas consumers in Ireland, Mr Waldron adds, “The only caution is they spend less than the Chinese…Most Asian countries spend a lot more than Americans would.”
But because of the strong dollar, Mr Waldron believes Ireland will continue to benefit from an increase in US visitors this summer.”Certainly across Europe we’re seeing very, very strong arrival growth patterns from America.”
The company also provides Dynamic Currency Conversion, which allows brands to offer travellers the choice to pay in their own currency or local money, in countries including Colombia, Chile, Costa Rica and Peru. The Middle East market is also opening up, with Fintrax planning to offer refund services for tourists in the UAE next year, and other countries likely to follow. Russia is another key growth market in which Fintrax is seeking to expand.
Given the company’s global reach, it is inevitable that world events, regional conflicts or terrorism attacks sometimes become an issue. For instance, service use was impacted in France and Germany last year in the wake of the terror attacks suffered there. “But the more you expand around the world, the less you are exposed to an individual country being impacted. For example, if we were in Egypt, and we’re not, that business went down 90% the year before last. So if you’re just in one country, it’s challenging.”
Brexit also looms large on the horizon, but Mr Waldron considers that, when Brexit is finally rolled out, it’s possible that all EU customers could buy VAT-free goods in the UK, and all UK customers could buy in Ireland and elsewhere VAT-free, which would pose a substantial opportunity for Fintrax. However he doesn’t believe this is likely.
But Brexit has already been a boost to the company. “Because sterling has fallen, we have seen very significant increase in our UK business as a result. Very few businesses gained but certainly it was an advantage for us.”
In the past four years, the company has doubled its group workforce and its workforce in Ireland, and now employs almost 800 people worldwide, with 150 of these based in three locations across Ireland, including its headquarters in the IDA Business Park, Dangan, and base at Tully Business Park, Baile na hAbhann in Co. Galway. “There is a very strong IT hub in Galway…The IDA Estate there provides a very strong source of talented people.”
For more details, see www.premiertaxfree.com/business
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