CHINA. On 9 April, DFS Group and Shenya Group signed an agreement in Sanya, Hainan, marking the official commencement of the extraordinarily ambitious DFS Yalong Bay project. The 128,000sq m collaborative project, hailed as the first world-class, seven-star luxury retail and entertainment destination on the island, is slated for a 2026 opening.
According to DFS Group and Shenya Group, the project – to be jointly built and operated by the partners – is expected to reach CNY12.3 billion (US$1.7 billion) in annual sales and attract 16-18 million visitors per year by 2030. It will bring fresh energy into the high-quality development of Hainan’s tourism industry, the partners pledged.
On the day of the signing ceremony, The Moodie Davitt Report Chief China Representative Zhang Yimei interviewed DFS China President Nancy Liu and Shenya Group Chairman Li Zhong, who shared their insights about the project’s positioning and trajectory of development.
The Moodie Davitt Report: Ms Liu, could you give us a brief summary of what the Yalong Bay project means to DFS and Hainan?
Nancy Liu: First of all, I want to thank the Sanya government for their support of the DFS Yalong Bay project and of course The Moodie Davitt Report for your continued interest in this endeavour of ours.
The Yalong Bay project stands as the largest investment of DFS in the group’s 60-plus-year history. And what’s so special about it is that the world-class premium retail it promises to provide is something that Hainan has never seen before. We look forward to bringing consumers a brand new shopping experience upon its 2026 opening.
Enhancing and expanding the landscape of commercial projects in Haitang Bay has been a focus for Sanya in recent years. Why did DFS choose Yalong Bay for this project? And how will it be differentiated from other similar bays, such as Haitang Bay, in terms of your operational strategies?
Nancy Liu: There’s a lot of consideration behind this choice. Firstly, both we and Shenya believe that Yalong Bay is one of the best bays in Sanya. It boasts a high-calibre consumer demographic and they tend to stay for longer periods here. So that’s a huge advantage for our travel retail sales model.
Secondly, the key to differentiating our Yalong Bay project from other bays and areas in Sanya lies in our focus on creating high-end retail experience for the future. We will be bringing more premium brands on top of the existing line-up to ensure that our customers enjoy a one-of-a-kind shopping experience.
Li Zhong: Yalong Bay is a tourism hotspot – the Hawaii of China, if you will. It’s here that I built my first investment project, a resort-style apartment building development that put us on the map of Hainan travel property.
After researching data from Hawaii, we realised that Hainan had huge untapped potential in terms of tourist consumption. And we chose Yalong Bay for this project because it’s a national tourist resort and one of the fastest-growing bays in Sanya.
Sure, there’s a tremendous amount of development in Haitang Bay, too. I think that’s a positive sign because it shows that all of us are committed to building Hainan and bringing more prosperity to this beautiful island.
The DFS Yalong Bay project is positioned to be a world-class, seven-star luxury retail and entertainment destination. Could you share more detail about its non-retail aspects, such as accommodation, dining and leisure activities?
Nancy Liu: In addition to retail, the DFS Yalong Bay project also pays great attention to other types of offerings and experiences because ultimately we want to create a multi-faceted resort destination.
We’re going to curate a diverse array of dining options to satisfy every palate, as well as a variety of entertainments for visitors to enjoy when they’re not shopping. In addition, the experiences we present at the project will have a strong sense of cultural element.
We also strive to elevate consumer experience with unique, personalised services.
All of these will help us turn the Yalong Bay project into a luxury resort hotspot with a comprehensive range of world-class experiences to offer.
As you mentioned, the project is expected to open in 2026. Could you share with us the latest developments and a more detailed timeline?
Nancy Liu: The DFS Yalong Bay project has two main components – the beauty and F&B zone, and the boutiques (luxury retail) zone. We’re planning to open the former in June 2026, while the boutiques will open in phases throughout Q4 2026.
We expect the project to be fully completed and in operation by the end of 2026.
DFS Chairman and CEO, Benjamin Vuchot has previously shared that the project would attract over 1,000 luxury brands, including ‘iconic’ maisons from LVMH Group, once fully operational. Can you share more detail on the brand mix?
Nancy Liu: We have met with many top luxury brands on potential collaboration for the Yalong Bay project and the response has been overwhelmingly positive. One thing is sure, and that is shoppers can expect a diverse range of luxury brands at Yalong Bay upon its opening.
Apart from LVMH, we’re also in talks with Kering, Richemont and other world-renowned brand owners. We believe that this series of collaborations will greatly elevate the brand portfolio at the Yalong Bay project.
The DFS Yalong Bay project has an ultra-premium positioning, both in terms of luxury brands and high-end, personalised VIP services. Could you elaborate on the latter?
Nancy Liu: DFS will be offering a series of extraordinary, highly customised services at Yalong Bay, which are designed to create a more comfortable and convenient shopping experience for our VIPs, ensuring they feel special and taken care of in every single interaction they have with us.
Take for example our butler service. It will provide customised assistance and advice based on the guest’s specific preferences and needs. Whether it is shopping, dining or entertainment, our team is dedicated to providing guests with the best of the best.
The specifics of these personalised services will be revealed once the project is operational, and we look forward to presenting our guests with amazing surprises and pleasant experiences.
DFS has repeatedly been emphasising its commitment to China. Apart from your strong presence in Macau and Hong Kong, as well as the recently opened Chongqing Jiangbei Airport store and the newly commenced Yalong Bay project, are there other projects in the pipeline?
Nancy Liu: The Yalong Bay project is currently a top priority for DFS, and we are doing all we can to ensure its successful development and operation. We’re confident that through these efforts we’ll be able to offer a brand new level of shopping experience and services to our consumers.
Since 2020, with the proliferation of duty-free licenses and the rapid growth of the duty-paid luxury retail sector, Hainan has been a remarkably competitive market, both in terms of pricing and the number of players. What does DFS think of this competitive landscape and what’s the key to success in your opinion?
Nancy Liu: Personally, I think competition is a good sign. With the rise of China’s middle class, it is expected that by 2035, middle-class household income in China will exceed that of the United States, and I see it as a good trend.
China has more than 300 cities, around 240 of which do not have luxury stores. When this huge consumer group comes to Hainan, they will savour the opportunity to satisfy their shopping needs here.
DFS is known for its ability to reimagine and transform historic and commercial properties into world-class luxury retail destinations beloved by affluent shoppers from around the world. As DFS’s largest investment project in history, the Yalong Bay project is a core pillar of our long-term investment strategy in China.
What kind of impact will the project have on Hainan in terms of economic, employment and investment opportunities?
Nancy Liu: As I mentioned, this is one of the largest projects that DFS has taken on in its history. Although I can’t disclose the amount of investment involved for now, I can say with certainty that the Yalong Bay project will bring huge economic benefits and employment opportunities to Hainan.
The project will create a large number of jobs, covering everything from retail sales staff to restaurant workers and butlers. In addition, the development of the Yalong Bay project will also greatly enhance the livability of its surrounding environment, including the improvement of infrastructure and various facilities, which in turn will provide local residents with better quality of life and opportunities.
Li Zhong: The Yalong Bay project will drive investment activities in Hainan; its impact is not to be underestimated. The involvement of LVMH – a Fortune 500 company and a world leader in the luxury goods industry – in this project will serve as a great calling card for Hainan to attract investment.
Meanwhile, the project will also deliver new and high-quality products, services and cultural activities, giving consumers an unprecedented retail experience. This will not only boost local economic development and employment, but also help cultivate and attract a highly-skilled professional labour force.
The Yalong Bay project will open after Hainan becomes fully tax and duty free in 2025. How will this affect your pricing and overall strategy?
Nancy Liu: Once Hainan is entirely duty free in 2025, a more streamlined tariff system will be implemented across the island.
We will work with brands to conduct multi-faceted, multi-regional research and analyses, to assess how we can make reasonable pricing arrangements to meet consumer needs and maintain our competitiveness.
Mr Li, you’ve been a long-time witness of and participant in Sanya’s development. What is your assessment of the overall importance of this project, particularly its potential contribution to Hainan?
Li Zhong: I’m certain that this collaborative project will have a huge impact on Hainan’s economic development. We will leverage the brand power of both companies to improve product supply and quality, thus increasing the per capita consumption.
Hainan welcomed over 90 million tourists last year. If we could drive up their per capita spending to CNY10,000 (US$1,381), it will give a huge boost to the entire Hainan economy.
In the future, we hope to introduce more luxury brands, high value-added goods and high-quality services, to continuously boost tourism consumption. This will have an immeasurable impact on the entire province and particularly its tourism industry.
Any final words for our readers?
Nancy Liu: To all The Moodie Davitt Report readers, I want to say: “Welcome to Hainan. Welcome to Sanya.” I have no doubt that the establishment of Hainan as a Free Trade Port in 2025 will usher in a brand new era. The government has been working hard to improve all aspects of Hainan’s development, and I believe Hainan’s future is going to get brighter.
I hope to see all of you at the Yalong Bay project and experience the services and culture of DFS in person. Hainan is teeming with tourism and investment opportunities and wonderful experiences. So I look forward to seeing you in Hainan! ✈
