CHINA. Hainan Island’s offshore duty free industry is recovering fast after a drastic slump during the height of the COVID-19 crisis in China.
As reported, four duty free stores on the resort island recommenced trading on 19 February after being closed on 26 January. According to a statement today by Haikou Customs, sales have picked up encouragingly in the period from 19 February to 30 March.
“With sales of 1.857 million pieces, CNY1.283 billion (US$182 million), and 183,500 shoppers – the main business indicators have returned to about 80% of the same period last year,” the regulatory body said of sales in that timeframe.
Sanya Haitang Bay International Duty Free City, home to the CDF Mall run by China Duty Free Group, is crowded with customers, Haikou Customs said.
“The number of tourists is increasing and the demand is strong. To ensure sufficient supplies, we must quickly increase the speed of the flow of goods. In the face of the increasing business volume, we have no retreat, only reforms for efficiency!” said Luo Zilian, the Head of Sanya Customs, an arm of Haikou Customs.
On 22 March, Hainan’s provincial government 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.
In 2019, Haikou Customs oversaw the sale of 18.199 million units of duty free goods and sales of CNY13.49 billion (US$1.91 billion) yuan, a record high that represented year-on-year growth of over +30%.
According to one leading Chinese analyst, sales at CDF Mall in January actually increased by +16% year-on-year. Given the five days of trading suspension because of COVID-19, the like-for-like growth rate was over +30%, with cosmetics sales particularly strong.
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 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.
A separate 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. |
