Wangfujing and Hainan Rubber set to cooperate in planned Hainan offshore duty free sector targeting local residents

CHINA. Wangfujing Group Co, the powerful Beijing-based department store retailer, is poised to enter Hainan’s offshore duty free market after striking a joint investment and cooperation agreement with local entity China Hainan Natural Rubber Industry Group Co (Hainan Rubber), according to Hainan Provincial Bureau of International Economic Development (Hanain IEDB) citing announcements by the two companies. Hainan Rubber is China’s largest natural rubber resource owner and processor.

However, unlike existing offshore duty free operations, the partnership will cater specifically to Hainan residents under an extension of the current policy that is expected to be unveiled soon by the provincial government.

Unlike the existing offshore duty free shopping policy, residents will not have to leave the island to shop under the proposed legislation. Retail licences will be awarded by the Hainan provincial government.

Stores operating under the policy will be able to sell traditional tax- and duty free items as well as certain daily commodities. The allowance has not yet been revealed.

Hainan has a population of approximately 10 million.

City landmark: Wangfujing Group opened one of Beijing’s best-known department stores in 1955 and still operates it to this day

In an announcement, Wangfujing cautioned that because duty free retailing is a specialist business under strict government supervision, the specific tax-exemption policy for island residents has not yet been issued. The joint venture project still needs to be formally implemented, it added. Wangfujing said that as a “brand-new business model”, the tax free business for island residents will need to be cultivated over time.

Hainan Daily covers the breaking news on its WeChat platform

The agreement will see the creation of two cooperating entities, Hainan Wangfu Jinghaiken Duty Free Goods Operation Co Ltd (Wangfujing Haiken) and Hainan Haiken Wangfujing Daily Duty Free Goods Operation Co Ltd (Haiken Wangfujing).

For Wangfujing Haiken, Wangfujing will invest CNY60 million (US$9.3 million) and Hainan CNY40 million (US$6.2 million) while Hainan Wangfujing will invest CNY60 million and Wangfujing CNY40 million in Haiken Wangfujing.

Hainan Rubber said that the alliance will benefit from Wangfujing’s professional experience in brand channels and retailing networks, while Wangfujing noted the value of Hainan Rubber’s state-owned background and its local resources.

Hainan Rubber is China’s largest natural rubber resource owner and processor

Hainan Rubber is ultimately owned by the State-owned Assets Supervision and Administration Commission (SASAC) of Hainan Province while Hainan Rubber is 64.35% held by Hainan Nongken Investment Holding Group Co Ltd. is the controlling shareholder of Hainan Rubber, holding 64.35% of its shares.

As revealed by The Moodie Davitt Report last week, Wangfujing is to participate in the pioneering China International Consumer Products Expo to be held in Hainan province on 7-10 May. The event is being organised by Hainan International Economic Development Bureau (Hainan IEDB).

Hainan Island: Travel retail’s global hotspot

The Moodie Davitt Report will publish a Hainan Island Special Report with the China edition of The Magazine in February 2021. Written by Martin Moodie and Dermot Davitt, it will explore how the offshore duty free business in China has become critical to the world’s leading brands across many categories.

海南:旅游零售业的全球焦点

穆迪戴维特报告(Moodie Davitt Report)将于2021年2月随The Magazine的中文版发表《海南特别报道》。该篇由马丁·穆迪(Martin Moodie)和德莫特·戴维特(Dermot Davitt)撰写,将探讨中国的离岸免税业务是如何变得对跨类别的各大全球领先品牌至关重要。

报告将覆盖以下内容:

  • 评论与分析自2020年7月1日起,海南新离岸免税政策所引起的重大影响
  • 从美妆个护到时尚、钟表,从葡萄酒、烈酒到消费类电子产品的跨类别离岸免税额的潜力
  • 中免集团,中服免税店,DFS集团,Dufry, Hainan Development Holdings, 海南旅游投资发展公司,海南省国际经济发展局(Hainan IEDB),Wangfujing,拉加代尔旅游零售等集团的重要访谈和简介,尤其着眼于颇具潜力的海南免税店贸易港项目
  • 除海南外,我们还将考察中国国内市场的反弹情况,评估中国机场的前景,并希望终有一天能够恢复国际旅游通行,拥有来自内地,澳门和香港市场的领先旅游零售商的输入
  • 电商驱动力:评估旅游零售业的长期市场领导者Dufry与数字巨头阿里巴巴;以及CDFG和其他主要参与者,是否具备达成合作伙伴关系的潜力
  • 顶级旅行分析师ForwardKeys的专业意见
  • 在内容合作伙伴Globuy,iClick,Jing Daily,Jessica’s Secret和DutyFreeExpert的帮助下,分析有关中国消费者和免税市场的趋势

The report will feature:

  • Comment & analysis on the seismic impact of the new offshore duty free policy in Hainan since 1 July
  • The potential of new offshore duty free allowances across categories from beauty to fashion and watches and from wines & spirits to consumer electronics
  • Major interviews with and profiles of China Duty Free Group, CNSC, DFS Group, Dufry, Hainan Development Holdings, Hainan Tourism Investment Development Co, Hainan Provincial Bureau of International Economic Development (Hainan IEDB), Lagardère Travel Retail, Wangfujing and others, with a special focus on the ambitious Hainan Free Trade Port project
  • Beyond Hainan, we examine the rebound in the China domestic market, assess prospects for Chinese airports and hopes for an eventual return to international travel. With input from leading travel retailers in the Mainland, Macau and Hong Kong markets
  • The ecommerce drive: Assessing the potential of the partnership between travel retail’s long-time market leader Dufry and the digital powerhouse Alibaba; plus digital strategies at CDFG and other major players
  • Expert input from top travel analyst ForwardKeys
  • With contributions from our content partners Globuy, iClick, Jing Daily, Jessica’s Secret and DutyFreeExpert on trends among Chinese consumers and the duty free market

Contact Irene@MoodieDavittReport.com to partner with The Moodie Davitt Report for this special edition.

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