Duty-free retail segment expands on disrupted overseas consumption

BEIJING－China's duty-free market has been gathering steam as normal overseas consumption, which has been disrupted by the COVID-19 pandemic, drifted into the home market.

China's southern province of Hainan recorded 1.5 billion yuan ($230.8 million) in offshore duty-free spending during the Spring Festival holiday in February this year, double the figure from the same period in 2019, official data showed.

Offshore duty-free sales in Hainan are expected to double this year for the second year in a row, as fine-tuned favorable policies continue to draw more consumers, Shen Xiaoming, Party secretary of Hainan, told a news conference on April 19.

The island's offshore duty-free sales are likely to exceed 60 billion yuan this year, up from 30 billion yuan last year, which had doubled from 15 billion yuan in 2019, Shen said.

The province previously increased the annual tax-free shopping quota per person from 30,000 yuan to 100,000 yuan starting from July 1 last year.

The categories of duty-free goods have also been expanded from 38 to 45, with electronic products such as mobile phones and laptops added to the duty-free list.

By 2025, China's offshore duty-free market is expected to top 150 billion yuan, according to a research note from CSC Financial Co Ltd.

A large number of listed Chinese companies, attracted by the huge growth potential, applied for qualifications covering duty-free businesses in the cities of Beijing, Shanghai, Guangzhou in Guangdong province and Wuhan in Hubei province last year.

Apart from duty-free businesses at airports, ports and offshore islands, the new model of city-side duty-free shops is attracting considerable attention.

"City-side duty-free stores, usually located in urban areas, benefit from greater transportation convenience and longer effective purchase periods," said Wang Yun, a researcher with the Academy of Macroeconomic Research.

Citing prospects of such stores amid the country's further opening-up of the services trade sector, Wang said developing the duty-free economy will drive the coordinated growth of the local catering and tourism industries.

Xinhua