What if Boris Johnson introduced Offshore Duty Free to the UK?

“The two great Cowes that in loud thunder roar
This on the eastern, that the western shore” – Charles Godfrey Leland

If you can dream—and not make dreams your master;
If you can think—and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same – Rudyard Kipling
The Moodie Davitt Report launches a new column, for which we encourage submissions. Only one rule. To encourage new thinking, each article must begin with two words, ‘What if…’

UK. What if….?

What if the UK government, keen to kick-start a stricken domestic economy ravaged by the COVID-19 crisis, while simultaneously grappling with the complexities of Brexit, tried some out of the box measures?

What if it focused on efforts to simultaneously stimulate domestic consumption and domestic tourism?

What if it took a leaf out of China’s book and mirrored one of the world’s most successful attempts to boost a moribund local economy?

What if it created a UK equivalent of China’s booming ‘offshore duty free’ shopping policy, unveiled in April 2011 on the island of Hainan – ‘China’s Hawaii’? The far-sighted policy allowed Mainland Chinese (and islanders) to enjoy certain duty free shopping allowances without leaving the country.

The first Hainan store, opened in the city of Sanya that month, generated phenomenal levels of business; rampant demand leading to the opening in September 2014 of the extraordinary Sanya International Duty Free City. This became the world’s largest duty free complex – built in record time and featuring some 120,000sq m of shopping space – a landmark in every sense in the history of Chinese travel retail. That store is now the most valuable duty free location in the world for many of the world’s leading perfumes & cosmetics brands – and certainly the only one currently beating 2019 sales levels.

The Moodie Davitt Report story was front page news on local media On the Wight

Sanya International Duty Free City, which houses the acclaimed CDF Mall run by the country’s dominant travel retailer China Duty Free Group, is located in Haitang Bay, Sanya City, Hainan Province. This magnificent architectural complex was the dominant contributor to the island’s total offshore duty free sales of CNY13.49 billion (US$1.91 billion) in 2019, a record high and more than +30% above the previous year’s total (also a record).

Sanya International Duty Free City: A testament to a far-sighted government policy

In addition to duty free shopping, Sanya International Duty Free City brings together five major functional divisions of national specialty products – Hainan specialty products, outdoor sports, food, and customer service, as well as entertainment and recreation areas such as children’s playgrounds. ‘Eat, live, travel, travel, purchase’ is its tagline. Sanya International Duty Free City has become the locomotive driving the strong and sustained development of Hainan tourism of recent years.

With no cases on Hainan island for many weeks and the Mainland seeing only single-digit infection numbers on a sustained basis, domestic tourism is picking up against fast

To boost shopping – and tourism – the offshore duty free allowance for visitors to Hainan Island was increased from CNY16,000 (US$2,300) to CNY30,000 (US$4,314) from 1 December 2018. And this year, in an innovative attempt to stimulate consumption post COVID-19, the authorities introduced a measure to allow returning Mainlanders to spend any of their unused duty free allowance online for up to 180 days and have the goods home delivered.

Hainan, famous for its pristine environment, tropical climate, beach resorts and beautiful forested, mountainous interior, is hugely dependent on tourism income. Visitor numbers plummeted after the COVID-19 outbreak began to gather pace in early January but have picked up fast as the crisis has eased across China. Duty free shopping has been a key magnet.

CDF Mall hosted some of the most spectacular brand launches and campaigns in travel retail history last year, including these from (above and below) Estée Lauder, Dior, Kiehl’s and Shiseido

So what’s to stop the British government from bestowing the same status on, say, the Isle of Wight? Local retailer resistance perhaps? Compared with the likely influx of visitors to the island, hardly a major concern. Let’s instead focus on the pluses.

With the added drawcard of offshore duty free, visitors pour into Cowes in record numbers for the 2021 Cowes Week

According to the Visit Isle of Wight website, the island features “a stunning coastline, gorgeous countryside, vibrant events and award-winning attractions on one beautiful, picturesque island.” Sound familiar?

So, let us imagine that Boris Johnson, knowing that Brits are unlikely, unwilling or unable to travel abroad in the short term, decides to take a leaf out of China’s book. His government fast tracks new legislation designating the Isle of Wight a special duty free shopping zone. A hotly contested tender is held and by early summer 2021 the winner, Dufry, has opened a dazzling new store in the Isle of Wight seaport town of Cowes, a famous international sailing centre, in time for the world’s oldest sailing regatta, Cowes Week, in August.

August 2021 and Dufry’s startling new Isle of Wight Offshore Duty Free store is already considered one of the world’s finest travel retail operations

Cowes, which faces the smaller town of East Cowes on the other side of the River Medina (inspiring Leland’s verse above) experiences a tremendous upsurge of visitors. They come not only from the UK but from many nearby European Union countries whose citizens, locked down for so long, decide to visit this great annual sporting spectacle and buy duty free at the same time (intra-EU holidays do not offer the possibility to buy duty free since 1999).

Encouraged, the Isle of Wight authorities and private operators pour investment into local infrastructure, improving the ferry service and creating a boom for the leisure, restaurant and bar sectors. By 2022, with a COVID-19 vaccine in place, the Chinese are travelling freely again and, drawn by the Isle of Wight’s clean, green environment and friendly people, begin to visit the island in great numbers, spurring Dufry’s average spend and sales to new heights.

As the offshore duty free business booms, the Isle of Wight authorities lay on more ferries from Southampton, helping to not only facilitate the tourist trade but to boost the lives of islanders

Could it happen? Well why not? The Koreans have offshore duty free on Jeju Island; the Japanese on Okinawa; the Chinese on Hainan.

Will it happen? Unlikely. But what if?

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