CHINA. Offshore duty free sales on Hainan Island have surged by +227.5% year-on-year for the three months to 30 September, driven by the enhanced duty free shopping policy introduced on 1 July.
According to Hainan Daily, which quoted Haikou Customs figures, sales for the quarter reached RMB8.61 billion (US$1.27 billion), driven by soaring purchases of top-selling category, cosmetics. To put those numbers into context, in the whole of 2019 offshore duty free shops on the island generated revenues of RMB13. 61 billion (US$1.98 billion).
Under the new policy, customers can purchase 30 cosmetics SKUs, up from the previous limit of 12. Other changes included the removal of the previous RMB8,000 (US$1,158) limit on individual items, and the more than tripling of the annual duty free allowance from RMB30,000 (US$4,215) to RMB100,000 (US$14,050). The number of categories was expanded to 45, including popular sectors such as electronics, mobile phones and wines & spirits.
Buying agents under intensified scrutiny
Liu Chun, Section Chief for Sanya Customs told Hainan Daily that the agency had stepped up its monitoring of personal limits, ready to crack down on any violations.
The agency is using big data analysis to establish a database of ‘high-risk’ customers deemed to be making excessive purchases for resale. A warning and ultimate punishment system is being stepped up to curb any such activity.
Customs has strengthened video surveillance and store inspections; set up plainclothes inspection posts; and even launched a facial recognition scheme to monitor purchase limits.
A new local government plan was introduced in September to deal with the issue of reselling. Seven kinds of illegal sales and profiting activity have been identified. This will deter illegal activities such as buying agents, said Huang Tingting, Director of the Haikou Customs Port Supervision Office.
As reported, for the period 1 July to 18 August, average daily sales on the island exceeded RMB100 million (US$14.5 million); while the number of shoppers reached 740,000, a year-on-year increase of +70%. The number of purchases reached 4.58 million, up 1.5 times. For that period, consumption of items in excess of the former RMB8,000 limit rocketed to nearly RMB1.2 billion (US$173.7 million) an increase of 4.2 times year-on-year. The share of such items rocketed seven percentage points to 24%.
The Hainan Provincial Bureau of International Economic Development (Hainan IEDB) is a Platinum Partner at the Moodie Davitt Virtual Travel Retail Expo in October. China Duty Free Group is a Platinum Partner and President Charles Chen will take part in a keynote interview with The Moodie Davitt Report Founder & Chairman Martin Moodie on the opening day, 12 October.
As reported, Hainan IEDB has just launched a new website to encourage global investment in the ambitious Hainan Free Trade Port development.
