CHINA. In a further major boost for China’s travel retail sector, two new offshore duty free stores will open on Hainan Island tomorrow, The Moodie Davitt Report can reveal.
The openings of Haikou Riyue Plaza Duty Free Shop and Qionghai Bo’ao Duty Free Shop come just before the peak Chinese New Year period.
The Haikou and Boao duty free shops will be operated by Hainan Provincial Duty Free Co, a subsidiary of China Travel Group Co. Critically, all goods are being directly purchased by China Duty Free Group (CDFG).
CDFG extends its role in Hainan Tomorrow’s opening follows a wide-ranging cooperation agreement struck on 30 July 2018 between Hainan Duty Free Haikou Meilan Airport Duty Free Store – a subsidiary of Hainan Provincial Duty Free Co (HNDF) – and CDFG. That deal superseded a long-standing supply agreement between Hong Kong-based DFS Group and HNDF which formally expires tomorrow, the date of the store openings. Hainan Duty Free Haikou Meilan Airport Duty Free Store has run a highly successful offshore duty free business for the past eight years. It combines traditional duty free categories with a wide array of fashion and luxury boutiques. Under the terms of the alliance, CDFG leads the buying and merchandising function for the Haikou Meilan Airport duty free operation. HNDF remains the sole duty free licence holder at the airport. |
The news comes hot on the heels of November’s announcement by the Ministry of Finance that it was increasing the offshore duty free allowance for visitors to Hainan Island from CNY16,000 (US$2,300) to CNY30,000 (US$4,314) from 1 December.
The move to expand the duty free store offer is firmly in line with Chinese President Xi Jinping’s stated commitment to turn the island into an international free trade zone. As reported, Xi made the pledge during a speech in Hainan in April 2018. The Chinese leader had promised a more “open and convenient” duty free shopping policy on the island.
Haikou Duty Free Shop is located on Floor L, Sagittarius of the Mova Mall in the central business district of Haikou City. It will eventually embrace 22,000sq m of retail space with some 13,000sq m being opened in the first phase.
The 4,200sq m Bo’ao Duty Free Shop is located in Bo’ao, a town close to the city of Qionghai, which has hosted the annual Boao Forum for Asia for the past 17 years.
The two stores offer 38 duty free categories, including perfumes, cosmetics, bags, watches, jewellery, confectionery and other foodstuffs.
The offer is highlighted by over 200 internationally renowned brands, including Chanel, Dior, Cartier and Gucci. The sale of all goods will be closely supervised by local Customs to ensure optimum quality and provenance of the offer, CDFG noted. The two new stores will enrich and optimise the duty free shopping experience of Hainan travellers, the travel retailer said.
Since Hainan Province was given central government approval to establish the China (Hainan) Pilot Free Trade Zone, the island’s offshore duty free shopping policy has ushered in a series of breakthroughs. The pioneering scheme, designed to boost local tourism and to maximise domestic consumption, has been expanded from the original ‘one city and one store’ concept to (from tomorrow) ‘three cities and four stores’.
Raising the quality bar in a ‘new chapter’
The offshore duty free shopping policy was formally implemented in September 2011 with the opening of the first CDFG store in Sanya (since replaced by the retailer’s extraordinary retail complex in Haitang Bay, Sanya, pictured below). Since then the policy has undergone five adjustments and improvements, each designed to promote and enhance the merits and attraction of the shopping programme. All Chinese visitors to Hainan, whether travelling by plane or cruiseship, qualify for the duty free shopping benefits.
The latest openings represent a further strengthening of the strategic cooperation between Hainan Province and CDFG, an alliance that is designed to bolster Hainan tourism. The partnership has strengthened the management of the island’s duty free businesses and helped unify their operation, the parties said. The cooperation has also enhanced the quality and range of duty free goods on offer and raised service standards, CDFG commented.
The opening of the Haikou and Bo’ao duty free stores marks “a new chapter” in the development of offshore duty free shopping on Hainan Island, the partners said.
In a clear reference to the central government’s desire to maximise domestic consumption, they said, “It also provides a new platform for Hainan travellers to experience duty free shopping without having to go abroad.
“The positive enhancement of the offshore duty free shopping policy through the unified operation of four shop in three cities, will inject a new vitality and further promote Hainan Island as an international tourism centre.”
*Footnote: Look out for our major China market report in the February/March issue of The Moodie Davitt Report Print Magazine and Online Magazine, e-mailed to our entire database on the eve of the TFWA China’s Century Conference in Hainan.
Written by Martin Moodie and Dermot Davitt, this edition will be the definitive publication to date on the fast-evolving Chinese travel retail market, written by the industry’s two leading commentators and featuring a host of exclusive material. For advertising details, please contact Irene Revilla at Irene@MoodieDavittReport.com
