Duty-free biz seen as key to building Hainan FTP

Continued efforts to promote the building of the Hainan Free Trade Port as an international tourism consumption center, with a focus on improving the international competitiveness of its offshore duty-free sales, will help the tropical island attract more tourists, experts said.

After China optimized its COVID-19 response measures and resumed cross-border travel in January after nearly three years of suspension, Chinese consumers have shown a growing demand for traveling abroad.

"With China optimizing its entry measures, Chinese passengers' travel confidence is reshaping rapidly and many overseas destinations have introduced favorable measures to attract Chinese tourists," said Chen Yin, president of China Tourism Group and a member of the 14th National Committee of the Chinese People's Political Consultative Conference.

"In this context, the building of Hainan as an international tourism consumption center may face some challenges in the future. We suggest that Hainan continue to strengthen its attractiveness of offshore duty-free shopping by expanding the scale, launching more brands, expanding online sales channels and upgrading services," Chen said.

Since the opening of the first duty-free shopping store in Sanya, Hainan in 2011, the total sales revenue of duty-free products in the province exceeded 100 billion yuan ($14.3 billion), and the average annual growth rate reached 44.6 percent, according to the local government.

After the implementation of offshore duty-free shopping policies in Hainan, a top vacation resort and shopping paradise, detailed rules have been adjusted eight times, making duty-free shopping a golden ticket for Hainan.

Meanwhile, Chen proposed that to support further development of offshore duty-free shopping, more domestic brands should be encouraged to establish a presence at offshore duty-free stores and further consolidate the leading position of China's duty-free enterprises globally, which will help further strengthen Hainan's attractiveness to its consumer market.

Chen also suggested that to further drive inbound travel and leisure consumption to Hainan, the government may accelerate the implementation of the trial opening of the Seventh Freedom of the Air for passenger and freight transportation in the province. By then, Hainan will have the highest level of such traffic rights in the country.

The Freedoms of the Air are a set of commercial aviation rights that grant a country's airline privileges to enter and land in another country's airspace.

Major duty-free operators have continued to increase their investments in Hainan. Late last year, China Duty Free Group, a sub-affiliate of China Tourism Group, opened a new shopping complex in Haikou, the provincial capital of Hainan.

Chen suggested the launch of more high-end hotels in the island province and further improving the construction of urban rail transit systems. He proposed to give full play to the gathering effect of the Haikou International Duty Free Shopping Complex and create a new growth model that combines tourism, art performances, sporting events, duty-free shopping and leisure consumption.

At the same time, the Hainan FTP is set to continue to play a crucial role on the map of China's luxury goods market, with sizable sales in offshore duty-free luxury products.

"We are optimistic that China's luxury market will continue to grow, driven by an increasing consumer base and a further digitalized environment. Hainan will serve as a key enabler to drive consumption," said Xing Weiwei, partner of consultancy Bain & Co.