Introduction: On 31 January, Hainan Development Holdings (HDH) Co Ltd, a fully state-owned company of the Hainan Provincial Government, supported by leading international travel retailer Dufry, opened phase one of the Global Premium Duty Free (GDF) Plaza in Mova Mall, Haikou.
The business has developed steadily since, and with the second and third phases opening later this year and a new joint loyalty programme being launched during the recent China International Consumer Products Expo, the future looks bright for HDH and for the alliance between the company and Dufry.
In a world exclusive, The Moodie Davitt Report Founder & Chairman Martin Moodie was granted the first interview about GDF Plaza with Gu Gang, Secretary of Party Committee and Chairman of the Board at HDH (海南省发展控股有限公司党委书记、董事长 顾刚). We present the interview in English and Chinese. It will also appear on The Moodie Davitt Report’s WeChat Official Account in coming days.
The Moodie Davitt Report: Congratulations Chairman Gu on the opening of Hainan Development Holdings (HDH) Global Duty Free (GDF) Plaza. HDH opened the store in Haikou in January with the support of Dufry. Are you satisfied with the performance of the store so far?
首先祝贺海控全球精品（海口）免税城顺利开业!在杜福瑞的支持下，海发控于1月份在海口日月广场开了旗下首家免税店。你对目前店铺的表现满意吗?
感谢穆迪先生和《穆迪戴维特报告》对海南控股及海控全球精品（海口）免税城的关注和支持。我们很高兴获得离岛免税经营资质，成为海南旅游零售家族的一员，作为一个新的参与者，我们希望为海南的离岛免税事业的发展做出贡献，并希望与其他海南免税运营商一起发展整个离岛免税产业。
I would like to express my gratitude to you, Martin Moodie and The Moodie Davitt Report, for your kind attention and support to Hainan Development Holdings (HDH) and Global Premium (Haikou) Duty Free Plaza.
We are very pleased to obtain the licence for offshore duty free operation and become a member of the Hainan travel retail family. As a new participant, we hope to provide more contributions to the development of the offshore duty free business in Hainan and hope to develop this industry together with other Hainan offshore duty free operators.
我们之所以选择与Dufry合作进行这个项目，是因为他们在旅游零售市场拥有丰富的经验和知识，并且与品牌建立了合作伙伴关系。在Dufry和各方的大力支持下，我们按照海南省委省政府提出的品牌、品种、价格三同步的要求，在国际国内双循环的大背景下，积极地引进国际品牌，提升服务质量。作为一家离岛免税的新晋企业，我们制定了匹配门店定位的三期开业方案我们目前正在将海口日月广场的摩羯座和水瓶座发展成为离岛免税购物中心，目前一期小规模3000平米已于2021年1月31日顺利开业，开业首日实现营业收入2352万元，销售免税商品1.5万件，坪效高达1.469万元/平，实现了开门红。从一月底开业到现在，可以说是平稳有序、稳步提升，在广大消费者心目中初具一定的影响力。
We chose to cooperate with Dufry for this project because they have extensive experience and knowledge in the travel retail market and they possess many established partnerships with a wide variety of brands.
We have actively introduced international brands to our business and improved our service quality with the strong support of Dufry and all involved parties. As a new company operating the duty free business in Hainan Free Trade Port, we designated a three-phase opening and operating plan for the store.
This has been achieved in line with the principle of dual international and domestic circulation in accordance with the requirements of brands, range and price synchronisation proposed by the Hainan Provincial Party Committee and Government.
As a new company operating the duty free business in Hainan Free Trade Port, we designated a three-phase opening and operating plan for the store. We are currently developing the Capricorn and Aquarius Buildings of Haikou Mova Mall into offshore duty free shopping centres in Hainan.
The first phase of 3,000 square metres successfully opened on 31 January. This kicked off to a good start with the operating revenue reaching RMB23.52 million (US$3.7 million) on the first day of operation and 15,000 pieces of duty free products were sold. That averages to sales of RMB14,690 (US$2,298) per square metre.
Since the opening in January, the project has been operating steadily and smoothly, and has begun to have a positive influence on consumers.
How are sales growing and which categories and brands are contributing most to success?
你能分享销售增长的细节吗?另外，哪些品类和品牌取得了巨大的成功?
就目前而言，一期香化、数码、酒水是我们的销售主力，Apple、 Estée Lauder、Hennessy、Lancôme 、La Mer等品牌都取得了不俗的销售。但正如我刚刚介绍的，我们的免税城项目一期仅有3000㎡建筑营业面积，目前进驻的品牌和品类有限，产品还不够丰富，因为一期面积限制，我们目前正在积极的和Dufry一起努力打造更完美的二期和三期规划呈现给大家，请您期待。
So far, cosmetics and perfume, digital products and alcohol are our best sellers for the first phase. Brands such as Apple, Estée Lauder, Hennessy, Lancôme, La Mer, Shiseido etc. have achieved good sales.
As I mentioned earlier, the first phase of our duty free plaza currently offers 3,000 square metres of gross retail space. At present, the brands and categories are limited, and the products are not abundant enough. We are, however, making positive efforts to work with Dufry to create the perfect second and third phases plans for customers. This is definitely something the customers can look forward to for the near future.
Are the new categories such as alcohol and mobile phones meeting your expectations?
像酒和手机这样的新类别是否达到了你的期望?
正如以上所述，目前酒和手机的表现都达到我们预期的要求，但因目前面积约束，品牌品种受限，无法大力发展这两个品类。我们相信这两个品类还是有更好的增长空间，因此在二期和三期的规划中会有更详细的扩建计划。
The current performance of alcohol and mobile phones has reached our expected initial projections. However, due to the current space constraints and limited brand varieties at this moment, we are unable to develop these two categories as vigorously as we would like.
We believe these two categories offer better room for sales growth in the future, so you can expect more detailed expansion plans in the second and third phases.
What have been your major learnings to date?
到目前为止，主要的收获是什么?
对我们来说，目前最大的收获是通过一期小规模开业，从业务开展、供应链衔接、服务提升和队伍建设等方面初步搭建起门店全链条运营、营销管理体系。我们从获得免税经营资质后，仅以4个月的时间就完成了店面的选址和设店的报批及员工的招聘、培训，有序地推进项目建设，项目一期如期在2021年1月31日开业，这充分彰显了我们海南控股的战斗力和全球精品免税城的执行力。
For us, the biggest advantage is having the full-chain operation and marketing management system established through our first phase’s small-scale opening. That includes business development, supply chain connection, service improvement and team building.
After obtaining the duty free business licence, we had just four months to decide the location of the store, complete the recruitment and training of employees, and proceed with the construction of the project in an orderly manner. The first phase of the project opened on 31 January, 2021 as scheduled, which fully demonstrates the fighting capability and executive ability of Hainan Development Holdings and Global Premium Duty Free Plaza.
同时，我们充分利用项目一期的运营，为我们项目二期、三期的开业做好压力测试和服务升级，比如我们加强了对员工的专业化培训、梳理了风险隐患、优化了购物流程数字化、实现了24小时服务热线和在线客服、启动邮寄送达服务和岛民返岛提货服务、推行线上智能化服务，这些都是我们在项目一期中的收获，为我们后续的发展打下了坚实的基础。
At the same time, we made full use of our operational experience during the first phase of the project to do better in terms of stress testing and service enhancement for the opening of the second and third phases.
For example, we strengthened professional training for employees, sorted out hidden risks, optimised the digital shopping processes, offered a 24-hour service hotline and online customer services, and launched mail-delivery services and service for islanders returning to the island to pick up goods. These are our gains in the first phase of the project and they have laid a solid foundation for our future development.
And what have been the biggest challenges?
在这段期间我们面临的最大挑战是什么？
作为一家免税行业的新晋企业，我们还处于起步发展阶段，我们面临的最大挑战有三点：一是供给侧结构还不够理想，我们目前门店一期的品牌还不够丰富，与广大消费者的期望还有一定差距，需要不懈努力，引进更多的品牌，让我们的供给侧更加符合广大消费者的期望。二是门店规模还不够大，我们需要加快项目二期的装修，三期的筹开，尽快扩大我们免税城的营业面积，壮大我们的体量，同步加大对广大消费者期望的品牌和品类的引入，为广大消费者提供更加舒适便利体验多元；三是服务水平上有待提升，由于队伍是新组建的，如何快速构建门店规范、快速、高质的运营服务长效机制，打造海控全球精品（海口）免税城独具特色的服务品牌是我们当前急需强化的一项工作。
As a new company in the duty free industry, we are still in the initial stage of development. The biggest challenges we currently facce are: firstly, the supply structure is not ideal, currently our brands line-up is not rich enough to meet the expectations of consumers.
We need to put in great effort to introduce more brands so that our supply structure is in line with consumer expectations.
The second is that the scale of the store is not large enough. We need to speed up the renovation of the second and the third phases to expand the business area of our duty free plaza as soon as possible. We also want to increase the introduction of brands and categories expected by consumers and provide our guests with a more comfortable, convenient and diversified shopping experience.
Thirdly, the service level needs to be improved. As the team is newly formed, our urgent mission is to find ways to quickly build a standardised, fast, and high quality long-term mechanism for store operation and service, in order to create an uniqueness for HDH Global Premium (Haikou) Duty Free Plaza, focusing on distinctive service features.
The downtown duty free shop will eventually span more than 38,920sq m across two buildings – Aquarius and Capricorn in the Mova Mall. Can you tell us about the timeline for GDF Plaza’s next development stage?
您能告诉我们GDF下一阶段的开业计划吗?这家位于市中心的免税店最终将横跨日月广场购物中心的两座建筑——水瓶座和摩羯座，面积超过38920平方米。能给我们分享一些你可以分享的细节吗？
目前我们正在全力推进位于海口日月广场购物中心水瓶座1-3层的项目二期建设，项目二期的面积将达到27780㎡，现已进入装修阶段，将在今年三季度开业，届时将进驻近400个国际品牌，品类涵盖香化、精品、数码以及部分重奢品牌；项目三期位于摩羯座1-2层，面积6000㎡，将于今年年内开业，摩羯座着重是重奢品牌进驻，打造重奢品牌形象店。
At present, we are making every effort to advance the construction of the second phase project that is located on the first to third floors of Aquarius in Mova Mall. The second phase project will embrace 27,780 square metres of space and is expected to complete and open for trading in the third quarter of this year.
Upon phase 2 completion, we will offer nearly 400 brands covering cosmetics and fragrances, fashions and accessories, digital products and some top luxury brands.
The third phase of the project located on Capricorn (covering first and second floors), will cover an area of 6,000 square metres. It is targeted to open before the end of this year. Our objective is to build a high-class luxury brand image store in Capricorn and as such we are focusing on establishing top-notch luxury brands line-up for this phase.
Are there any other exciting developments that you can share with us?
关于GDF未来的发展，还有其他令人振奋人心的信息可以分享吗?
为助力海南自贸港国际旅游消费中心的建设，海南控股还计划打造海南自贸港高端精品免税购物标杆项目，与毗邻海口日月广场购物中心的海南控股D01、D09地块中的15万平方米商业综合体联动开发，构建海南高端购物商圈，将海控全球精品（海口）免税城打造成为海南自贸港国际旅游消费中心具有国际影响力的全球免税购物新地标。
Hainan Development Holdings plans to set up a major high-end boutique duty free shopping benchmark project with the goal to create an international tourism consumption centre in Hainan Free Trade Port.
This will be jointly developed with the 150,000 square metre commercial complex in plots D01 and D09 of our company on Guoxing Avenue adjacent to the Mova Mall in Haikou in an effort to build a high-end shopping circle in Hainan.
Our ultimate goal is that Global Premium (Haikou) Duty-Free Plaza will be built into a new world-level duty-free shopping landmark with international influence within the international tourism consumption centre of Hainan Free Trade Port.
How have international brands responded to GDF? And how can they help you more?
国际品牌对GDF的反应如何?他们如何能更多地帮助你?
海南正在加快推进自由贸易港的建设，海南自贸港将成为中国对外开放的窗口、自由贸易程度最高的区域之一，国际众多机构纷纷落户海南，都希望抓住这个发展机遇，共享发展成果，国际品牌也不例外。
Hainan is accelerating the construction of its Free Trade Port, which will become a window for China to enhance opening-up to the outside world and one of the areas enjoying the highest level of free trade in China. Many international organisations have settled in Hainan, so we all hope to seize the development opportunities and share the development benefits, including with international brands.
海控全球消费精品（海南）贸易有限公司，作为海南控股公司离岛免税经营全资子公司，背靠海南控股这一省属重点头部国企综合性投资运营平台，发展势头向好，众多国际品牌也希望通过与之合作，进驻海南自贸港的广阔市场。
Through operating offshore duty free business, Global Consumer Boutique (Hainan) Trading Co., Ltd – as a wholly-owned subsidiary of Hainan Development Holdings – represents a key and comprehensive provincial investment and operation platform, and one that enjoys strong development momentum. Many international brands hope to enter the vast market of Hainan Free Trade Port through cooperation with us.
我们十分欢迎也希望更多的国际品牌能与我们优势互补、共谋发展，将他们优质的产品、完善的供应链、成熟的运维模式融入到我们的项目中，我们始终怀着开放的态度，共赢的理念迎接他们。我们毕竟在旅游零售是一个新的企业，很多品牌对我们可能还不太了解，因此我们选择了和Dufry的合作，希望通过他们在旅游零售的资深能力和经验，成为GDF和品牌当中的桥梁，共同为海南离岛免税做出强大的贡献。
We welcome international brands and hope that more of them can complement our advantages with a view to seek common development, and integrate their high-quality products, complete supply chains, and mature operation and maintenance models into our projects. We will always welcome them with an open mindset and win-win attitude.
We are a new enterprise in the travel retail industry, and have therefore chosen to cooperate with Dufry to rely on their experience to serve as a bridge between GDF and the brands. Together, our contributions will be greatly impactful to the offshore duty free business in Hainan.
同时我们也希望借此机会在接下来GDF的发展中能和马丁·穆迪先生有更多的合作机会，借助《穆迪戴维特报告》在全球免税行业的影响力，加大对GDF Plaza接下来二期三期项目的宣传报道和曝光，提升海控全球精品免税在国际上的知名度和影响力，引进更多的国际一线品牌，一同为全球旅游零售，尤其是在对海南的发展中，出一份力。
At the same time, we also wish to take this opportunity to have further cooperation with yourself, Martin Moodie, in the future. With the influence of The Moodie Davitt Report in the global duty free industry, we seek to increase our reputation and boost the influence of GDF Plaza across the world.
The publicity exposure for the Grand Opening of GDF’s next two phases will enhance the international influence of HDH Global Premium Duty Free Plaza. In turn, this will help to introduce more international top brands, and jointly contribute to the global travel retail industry, especially in Hainan Free Trade Port.
How about Chinese products? Will you seek to champion them too?
中国产品怎么样?你们也会经常推广这些产品吗?
中国是个历史悠久的国家，有非常多的产品受到全球消费者的喜爱，我们的GDF不仅仅要把全球的消费精品引入国内，让老百姓不用走出国门就能购买到全球精品，更要把中国的品牌产品推荐给全球的消费者，真正实现全球消费精品的循环流通。目前，我们正在和中国的知名白酒品牌积极沟通，希望让国外的消费者也能在GDF购买到中国的品牌精品。
China is a country with a long history, and many of its products are favoured by consumers around the world.
GDF Plaza not only introduces global consumer products into our country, so that customers can purchase international renowned brands without going abroad. At the same time, we will also bring Chinese products and brands to consumers worldwide in order to realise the circulation of global consumer products.
At present, we are actively communicating with well-known Chinese liquor brands, hoping that foreign consumers can also buy Chinese brand products at GDF.
At the China International Consumer Products Expo in Haikou in early May, you launched an integrated membership programme with Dufry. Congratulations. Please tell us about this programme and why it is such an important step for GDF and HDH.
在海口举办的中国国际消费品博览会上，您将与杜福睿(Dufry)共同推出一个全面的会员计划。祝贺你。请告诉我们这个计划，以及为什么它对全球精品和海南控股是如此重要的一步。
我们预见，推动销售的重要因素之一是通过会员忠诚度计划。 从我们的研究中可以了解到，会员在总销售额中所占的比例很高，他们通常是高消费的人，会员还充当社交媒体交流的重要工具。 展望未来，我们还计划与品牌合作创建活动，例如新产品发布，独家产品发布，限量版产品发布等，仅会员独享。
We foresee that one of the important factors driving sales is through membership loyalty programmes. We can learn from our research that members contribute a high proportion to total sales. They are usually high-spending consumers, and they also play an important role in terms of social media communication.
Looking to the future, we also plan to cooperate with brands to create activities, such as new and exclusive product releases, limited-edition product launches and so on, which will be available to members exlusively.
此项全球会员计划是海南控股持续深入贯彻海南省委省政府“三同步”的要求，以本次消博会为契机，与Dufry实现双方资源共享、全球境内外不同免税主体间会员打通信息共享的探索之举。海控全球精品免税会员系统将与Dufry全球会员系统全面对接，海控全球精品免税城将基于现有积分模式开放端口全面对接会员系统，与Dufry实现会员信息共享，消费者一次注册，即可享受双方权益，意味着海控全球精品免税城的会员可以同时成为Dufry的全球会员，在全球各地均可尊享免税购物权益，提升海控全球精品免税城的会员含金量，为会员提供国际化、便利化、全球化的增值服务。
This global membership plan represents Hainan Development Holdings’ continuous and in-depth implementation of the ‘Three Synchronizations’ requirements of the Hainan Provincial Party Committee and Provincial Government.
Taking the first China International Consumer Products Expo as an opportunity, Dufry and GDF Plaza have sought to share membership resources and information with each other from home and abroad.
The HDH Global Premium Duty Free Plaza Membership System will be fully integrated with that of Dufry based on the existing credits model.
Consumers can enjoy the rights of both parties once registration is complete. This means that members of HDH Global Premium Duty Free Plaza can become global members of Dufry at the same time, thus enjoying duty free shopping rights all over the world.
This move will enhance the value of HDH Global Premium Duty Free Plaza membership, and provide members with international, convenient and global value-added services.
How do you see the future for GDF Plaza and for Hainan’s offshore duty free once the pandemic is over and Chinese tourists start to travel abroad freely once more?
您如何看待疫情结束后，中国人再次自由出境后，全球精品免税城和海南离岸免税的前景?
过去一年是极不平凡的一年。突如其来的新冠肺炎疫情引发的世界经济深度衰退影响深远，世界的东方，风景这边独好，疫情防控取得重大战略成果，中国也成为了唯一实现经济正增长的全球主要经济体。虽然疫情结束后会有一部分的现有客流会流失，但我们相信随着海南自由贸易港的建设，旅游业的发展、便利化服务、线上业务的开展将有助于境外消费回流。其次，我们认为各大海南旅游零售企业应当携手合作，把海南打造成一个旅游消费胜地，是一个吃、喝、玩、乐、购的休闲必到之处，不仅仅吸引更多的国内旅客，也要吸引海外旅客到海南消费。
The past year has been an extraordinary one. The unprecedented COVID-19 caused deep recession in the world economy. However, here in the east of the world, the situation is unique.
Major strategic results have been achieved in terms of pandemic prevention and control, while China has also become the only major global economy with positive economic growth.
Although some of the existing consumers will be lost after the pandemic [by Chinese travelling abroad once more], we believe that with the construction of the Hainan Free Trade Port, the development of tourism, improved facilitation services, and the development of online business will all help overseas consumption return.
Secondly, we believe that all Hainan tourism retail companies should work together to build Hainan into a tourist destination – a must-go place for food, sightseeing, and shopping. It will not only attract more domestic tourists, but also overseas travellers to Hainan for consumption.
海控全球精品免税城也将借海南自贸港建设的发展机遇，充分依靠中国超大规模市场优势和内需潜力，探索创新GDF的差异化发展，与各大海南旅游零售企业一起共同推动海南离岛免税市场的繁荣。
HDH Global Premium Duty Free Plaza will also take advantage of Hainan Free Trade Port’s development opportunities. We fully rely on China’s large-scale market advantages and domestic shopping demand potential. We will explore and innovate the differentiated development of GDF Plaza, and we will jointly promote Hainan’s offshore duty free industry alongside various other Hainan tourism retail companies.
Do you have a final message Chairman Gu for the global travel retail industry?
您对全球的旅游零售业有什么想要分享的吗?
受新一轮新冠疫情的影响，全球经济面临更加复杂多变的局势，对全球的旅游零售业的冲击明显，全球旅游零售业正在进入新一轮的调整中。后疫情时代，中国在全球经济增长中将发挥引擎作用。
Affected by the latest round of the pandemic, the global economy is facing a more complex situation. That is having an obvious impact on the international travel retail industry, which is facing a new round of adjustment. In the post-pandemic era, China will serve as an engine in global economic growth.
海南自贸港作为中国对外开放的重要窗口，其发展拥有得天独厚的政策优势、区位优势和自然环境优势。尽管2020年海南游客人数下降了22.3%至6455万，但离岛免税销售额较2019年猛增了127%，超过320亿人民币，我们对新一轮的旅游零售业发展抱有信心，期待海南会成为旅游零售业中一道靓丽的风景线。
As an important window for China’s opening to the outside world, Hainan Free Trade Port enjoys unique advantages in terms of favourable policies, location and a sound natural environment.
Although the number of tourists to Hainan dropped by -22.3% to 64.55 million in 2020, offshore duty-free sales surged by +127% compared with 2019, exceeding RMB32 billion (around US$5 billion).
We have full confidence in the new round of travel retail development here and we are expecting Hainan to become a key highlight within the travel retail industry globally.
Footnote: Every fortnight The Moodie Davitt Report publishes Hainan Curated, in association with Foreo, a selection of all recent stories from the offshore duty free sector in Hainan province.
Click here to view all back issues. Please email Sinead@MoodieDavittReport.com to subscribe.
