Duty-free shopping heats up in tropical province

The offshore duty-free shopping market in Hainan province has continued to embrace a rosy sales performance following the approaching winter tourist season and the optimization of COVID-19 prevention and control measures.

During the three-day New Year's holiday from Dec 31 to Jan 2, the daily average sales of duty-free products in Hainan reached 140 million yuan ($20.6 million). Since mid-December, average daily sales have exceeded 100 million yuan, according to Haikou Customs.

Over the holiday, some 43,000 people went duty-free shopping on the tropical island and purchased a total of 476,000 units of duty-free products. Their average transaction amount reached 9,816 yuan per person, which rebounded to a similar level compared to the same period last year, Haikou Customs said.

"After China's optimization of the COVID-19 measures, business operators expect that the tourism sector will grow vigorously," said Pan Helin, co-director of the Digital Economy and Financial Innovation Research Center at Zhejiang University's International Business School.

"Duty-free shopping has been one of the most popular segments in recent years, and many enterprises would like to grab the opportunities to satisfy growing consumer shopping demand as reduced disruptions from COVID-19 are expected to release pent-up demand," Pan said.

Major duty-free operators have increased their investments in Hainan. Domestic retailer Wangfujing Group plans to launch a new duty-free mall in Wanning, Hainan, in January, and the mall has entered the final preparation stages.

After the opening of the new mall, the total number of offshore duty-free malls in the province is expected to reach 12, giving full play to the role of consumption in driving economic growth in the region. Next, Wangfujing Group plans to further expand its layout in three aspects, which are offshore duty-free shopping, and operating duty-free stores in cities and at ports.

In late October, China Duty Free Group opened its new shopping complex in Haikou, the provincial capital of Hainan. The mall is expected to further strengthen the position of CDFG in the offshore duty-free market in Hainan and contribute to its revenue growth, said Southwest Securities.

Meanwhile, Chinese companies such as BBK Electronics Corp, Guangzhou Lingnan Group Holdings Co Ltd and Zhongbai Group have intentions to operate duty-free businesses. However, they haven't been approved for duty-free licenses yet.

"With the upgrading of the industrial structure of the Hainan Free Trade Port, the spillover effect of various factors such as manpower and technology has been obvious," said Zhang Tianbing, leader of consumer products and retail at Deloitte Asia-Pacific.

"As an important tourism destination and duty-free market, Hainan is expected to further drive China's overall consumption growth by helping to raise the high-quality consumption scale and supporting the backflow of international spending," Zhang said.