CHINA. In a key sector development, Hainan Tourism Investment Duty Free Co (HTDF) and South Korea’s Hotel Shilla Co – parent company of The Shilla Duty Free – yesterday signed a far-reaching strategic cooperation agreement.
During the online event yesterday, HTDF Chairman and General Manager Xie Zhiyong and Hotel Shilla President Han Ing-yu signed the Memorandum of Understanding (MOU) on behalf of the two travel retail companies.
In response to a question from The Moodie Davitt Report, HTDF said that this agreement does not affect the cooperation relationship between it and existing business partners.
According to the new agreement, HTDF and Shilla will use their respective advantages to carry out a “comprehensive and multi-level strategic cooperation” across several areas including product development and sourcing, brand incubation, human resources & staff training. The companies will deeply integrate their activities, develop synergies, and jointly develop Hainan and overseas duty free markets, they said.
A spokesman for The Shilla Duty Free said, “The signing of this MOU is meaningful in that it will allow us to enter the Chinese market, especially Hainan, which is rapidly growing even amid the COVID-19 crisis. We will overcome the difficulties in the duty free retail industry by penetrating overseas markets using a variety of different strategies.”
Shilla added: “The two companies have agreed to cooperate with each other with product sourcing and market development through the establishment of a joint venture.”
HTDF is an affiliate of Hainan Tourism Investment Development Co Ltd, which holds a retail licence for Hainan’s burgeoning offshore duty free shopping sector.
As reported, the retailer opened its first store, Hainan Tourism Duty Free Shopping Complex., on 30 December 2020. The 95,000sq m store offers 45 categories of duty free products, including perfume, cosmetics, luggage, watches, jewellery, sunglasses, wines & spirits and others. The store has introduced over 700 internationally renowned brands within an expansive integrated travel retail environment that offers a mix of shopping, dining and entertainment.
Publically listed Hotel Shilla is a subsidiary of South Korea’s powerful Samsung Group. Since its opening in 1986, The Shilla Duty Free has developed an extensive network of duty free stores in numerous locations, including South Korea, Singapore, Hong Kong, Macau and Thailand.
The company provides over 1,300 world-renowned brands across multiple categories and last year ranked as the world’s third-biggest travel retailer by sales according to industry benchmark, The Moodie Davitt Report Top 25 Travel Retailers league.
Since the COVID-19 pandemic developed from early 2020, Hainan has attracted growing numbers of Chinese travellers, helping to drive a strong increase in demand for duty free products on the island.
The sector received a huge boost with the introduction of an enhanced duty free shopping policy on 1 July, 2020, since when sales have increased by over +200% year-on-year. Market prospects are very strong, HTDF said.
Against a background of promoting China’s dual international and domestic circulation policy, the combination of HTDF and The Shilla Duty Free will boost the Hainan offshore and Asia duty free sectors, HTDF said.
