All eyes on Hainan duty free as China steps up efforts to stop COVID-19 imported cases

CHINA. All eyes are on Hainan. That’s the simple message for the travel retail sector as China steps up its efforts to stop any ‘second wave’ of COVID-19 cases being imported from overseas.

With the Hubei province outbreak now under apparent control, the Chinese authorities are working overtime to restrict the number of cases imported from overseas, with strict multiple health checks in place at the country’s borders. Source: National Health Commission of the People’s Republic of China (Click to enlarge)

Those efforts are well-documented in a Sky News online report today. China is building a ‘fortress’ to ensure that new cases are not imported, writes Sky News Asia correspondent Tom Cheshire from Dalian in an excellent online article (click here to read) that underlines the strict – but vital and highly effective – measures being taken by China to eradicate a feared second wave of cases brought in from abroad.

For the travel retail sector that means only one thing. Focus on Hainan and the resort island’s lucrative offshore duty free industry.

Sky News Asia correspondent Tom Cheshire reports on the strict but vital measures being taken within China to stop COVID-19 being imported from overseas. Click here to read.

How long such measures will remain in place is uncertain but one thing is for sure – any early recovery in Chinese travel will be dominated by intra-Chinese travel.

Speaking on Friday during an OAG webinar, Institute for Aviation Research Professor Zheng Lei said: “Recently, airline [domestic] traffic has picked up. China Southern now has a 60% load factor on average so that is an improvement. The latest data from Hainan Airlines shows an average load factor of 62% on 254 flights on 21 March.

“With the coronavirus coming under control, airlines are gradually resuming their traffic. That is what we are seeing in China. Consumer confidence hasn’t fully come back yet and will take a while to get back to normal. But airlines have done a great job to reassure travellers with regular cleaning of aircraft, for example.”

For the travel retail sector that means only one thing. Focus on Hainan and the resort island’s lucrative offshore duty free industry. As reported, Hainan’s provincial government this month announced a CNY150 million (US$21.2 million) rejuvenation plan for the island’s beleaguered tourism industry with duty free shopping at the heart of its plans.

China Duty Free Group President Charles Chen with Martin Moodie at the spectacular new Daxing International Airport in Beijing late last year.

In a Podcast interview with The Moodie Davitt Report on 21 March, China Duty Free Group President Charles Chen reinforced that message. “We’ve been talking with the Governor of Hainan province and they have given us a lot of support. They asked us to reopen all the spaces and all the stores and to do a lot of promotions,” he said. “So, we are thinking that from the beginning of May and maybe even from the end of April, that we will start planning for the promotions.

“Each month they want to do a promotion in Hainan. In Hainan we already have four stores – in Sanya, Haikou Airport, and downtown Haikou Riyue and Qionghai Bo’ao. Also, we have a new upcoming store in Haikou, under construction. It’s going to be ready very soon,” commented Chen.

“You’ll see in the coming days that the sales in Sanya and Haikou are still very good. This will be especially true in the coming months, especially from June, July, and August when students go on holidays and we have the mid-autumn festivals; and in October when we have our national days.”

“The Hainan market is there and each year there are so many visitors. We have a quota of RMB30,000 (US$4,230) per person per year but so far the average transaction is around RMB5,000 (US$705). So I said to the brands, we have RMB25,000 (US$3,520) to play with that is travel retail business.”


[Click on the icon to hear China Duty Free Group President Charles Chen’s interview with Martin Moodie]

All aboard the Hainan express

A special, wholly dedicated edition of The Moodie Davitt Report Magazine in May will profile Hainan’s burgeoning offshore duty free industry and examine its increasingly pivotal role in leading the Asian travel retail sector’s recovery.

This special edition, written by Martin Moodie and themed ‘All aboard the Hainan express’ will profile China Duty Free Group’s acclaimed CDF Mall and other Hainan travel retail locations and explore why the province is so critical to many of the world’s leading brands.

A separate May edition of The Moodie Davitt Magazine will carry a special ‘Road to Recovery’ report, edited by Dermot Davitt, which assesses how travel retail will look – and might best prosper – once it emerges from the biggest crisis in its 73-year history.

Click here for details of the 30-second ‘Clap for our Carers – Travel Retail ’ global initiative on Tuesday 31 March (#ClapforourCarersTravelRetail)
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