Policies help fuel duty-free hub hopes

Shopping boom continues in Hainan with major spikes in customers, sales

The duty-free shopping boom has picked up momentum in Hainan province as fine-tuned national policies turn the resort island into a duty-free shopping hub, officials and experts said.

Offshore duty-free sales reaped 46.8 billion yuan ($7.2 billion) in the 12 months to June 30 in Hainan, surging 226 percent year-on-year, customs officials in Haikou, the provincial capital, said on Saturday.

The nine duty-free shops in Hainan received a total of more than 6.28 million customers, a year-on-year increase of 102 percent, and sold more than 60 million duty-free items, up 211 percent. Customers spent most of their money on cosmetics, watches and jewelry, according to customs officials.

On July 1 last year, Hainan raised its annual tax-free shopping quota from 30,000 yuan to 100,000 yuan per person, lifting the previous tax-free limit of 8,000 yuan for a single product and raising the duty-free purchase limit for cosmetics from 12 to 30 items. The categories of duty-free goods have been expanded from 38 to 45, with new products such as wine, mobile phones and laptops added.

Hainan introduced mail delivery services for tourists to the island in early February, in addition to the original option of airport pickup when leaving the island. Since its official launch, the Hainan branch of China Post has mailed more than 2.08 million duty-free items for 231,000 customers. The measures have boosted duty-free sales, local post office officials said.

As part of the master plan for the construction of the Hainan Free Trade Port released by the central government last year, the newly adjusted duty-free shopping policies have sparked remarkable enthusiasm among consumers, said Xie Xiangxiang, an associate professor of tourism at Hainan University.

"Duty-free shopping is becoming the new blockbuster growth point for Hainan's tourism industry and for the development of Hainan as an international tourism center," he said.

According to the master plan, China will build Hainan into a globally influential and high-level free trade port by the middle of the century.

Feng Fei, governor of Hainan, said duty-free sales networks around the island will be expanded to better meet domestic demand for imported goods during the 14th Five-Year Plan period (2021-25), with sales of duty-free goods expected to reach 300 billion yuan over the next five years.

The offshore duty-free policy was introduced on April 20, 2011, to boost development of the island as an international tourist destination. It has been continuously adjusted and expanded in terms of individual duty-free shopping quotas and the range and number of items on sale to cater to the needs of tourists, provincial government officials said.

Hainan has sold about 98 billion yuan of duty-free goods in the past 10 years. During that time, more than 25 million people shopped, and about 120 million items were sold, according to official statistics.

With the new shopping policy giving tremendous impetus to overseas brands, the Hainan FTP will likely become the world's biggest duty-free market in the near future if the growth momentum continues, according to a report jointly released by KPMG China and the Moodie Davitt Report at the first China International Consumer Products Expo, which was held in Haikou in May.