CHINA. The official opening of the new Hong Kong-Zhuhai-Macau Bridge on 23 October marks the beginning of a new phase of business for state-owned travel retailer Zhuhai Duty Free. The company has opened 1,000sq m of retail in the first phase of openings in the departure/waiting hall at the transfer terminal between Zhuhai and Hong Kong.

A further 2,500sq m of space is planned in arrivals in phase two next year, with another 700sq m store between Zhuhai and Macau to open by late 2018.

The retailer has committed to raising the standard of its retail offer and environments with these new openings, with a strong focus on beauty and fashion complementing its traditional strengths in liquor & tobacco. It hailed the development of the new bridge stores as its “big strategic change”.

The Hong Kong-Zhuhai-Macau Bridge transfer terminal hosts the duty free operation, with Zhuhai Duty Free the exclusive travel retail tenant.

The 55km long Hong Kong-Zhuhai-Macau Bridge represents the world’s longest sea crossing bridge. It connects Hong Kong to Macau and the Mainland Chinese city of Zhuhai. Chinese President Xi Jinping opened the prestigious project at a ceremony in Zhuhai in Guangdong Province on Tuesday.

Speaking at the opening ceremony, Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor said that the Bridge creates “a new vitality” for Hong Kong’s development. She said its commissioning will expand the city’s role from a “connector” to a more active participant in the country’s overall development.

Hong Kong has also made long-term plans to develop Lantau Island, where Hong Kong International Airport is located, into a gateway linking the vibrant Greater Bay Area with the rest of the world. People in the region will find the “one-hour living circle” within easy reach, she added, while businesses will receive a boost with greater ease in the flow of goods, information, capital and talent.

The construction will shorten the travelling time between Zhuhai and Hong Kong International Airport from four hours to 45 minutes, and the time between Zhuhai and Hong Kong’s Container Terminals from 3.5 hours to 75 minutes. It will also create new, smoother points of access between Hong Kong, Macau and Zhuhai.

The first departures store opened this week, with arrivals to follow next year as the operation goes into overdrive to match anticipated traveller growth.

The daily passenger flow by 2025 between Zhuhai and Hong Kong is expected to average 150,000, with 100,000 between Zhuhai and Macau. By 2035, these numbers are expected to hit 300,000 and 150,000 respectively.

Established in the 1980s, Zhuhai Duty Free Group is one of China’s top five state-owned duty free retailers. Its flagship store (before the Bridge project) is at Gongbei, the entry point between Zhuhai and Macau, with a turnover of around US$300 million a year from a passenger base of over 130 million a year. This 4,000sq m store will also undergo extensive renovation from early 2019.

Of the new Bridge project, Zhuhai Duty Free General Manager Lifu Zhu said: “The opening of the Zhuhai Duty Free departure duty free shop in HZMB (Hong Kong-Zhuhai-Macau Bridge) serves as a new step in Zhuhai Duty Free’s business development. The Hong Kong-Macau and China domestic market is a retail hotspot in Asia Pacific. Zhuhai is the major entry point for China tourists and plays a key role for the region.

“Zhuhai is an integral part of the Greater Bay Area, and Zhuhai Duty Free is trying to become one of the top duty free & travel retail operators. We are committed to providing an excellent service, with price advantages and fashionable travel retail for visitors.”

Zhuhai Duty Free has pledged to deliver a premium environment and experience at HZMB, not only in liquor & tobacco but in beauty and fashion too.

Underlining its ambitions to become a luxury travel retailer with an increased emphasis on beauty, Zhuhai Duty Free Assistant General Manager Tony Yu told The Moodie Davitt Report: “With the development of China’s travel retail market and the opportunity from HZMB, Zhuhai Duty Free will deepen its strategic cooperation with L’Oréal Group, Estée Lauder, Amorepacific, LG Group and other major P&C brands and groups in the duty free & travel retail market. Zhuhai Duty Free wants to provide an excellent duty free and travel retail service in the Greater Bay Area.”

The company said that brands such as Hennessy and Rémy Martin and groups such as Diageo would complement major tobacco brands in phase one.

The store’s first customers receive special gifts today as Zhuhai Duty Free opens a new chapter in its history.

As noted, Zhuhai Duty Free was previously focused mainly on liquor & tobacco, with beauty representing just 6% of the business. Alongside P&C, sunglasses and other accessories will benefit from increased space, pledged the retailer. In the arrivals stores to come, a large share of space will be devoted to beauty, accessories and electronics.

Meeting of minds: Zhuhai Duty Free Assistant General Manager Tony Yu led the company’s delegation at Cannes recently; he is pictured centre meeting The Moodie Davitt Report President Dermot Davitt, accompanied by Head of Projects Daniel Chow (right), Business Department Executive Sarah Liu (second left) and Emily Cong Wen (left), President of supply partner Keystone International.

The company said that the new stores were its answer to “a changing consumer” and a move to “upgrade its image”. It noted that some brands were traditionally reluctant to invest in the border duty free business, but that the Hong Kong-Zhuhai-Macau Bridge, a prestigious project, represented a new, upscale departure for the channel. It said a strong programme of promotions and the emphasis on new categories would also encourage more younger shoppers, and women in particular, to purchase.

Gateway to the region: The HZMB departure hall entrance.

The departures store investment was valued by Zhuhai Duty Free at around RMB20 million (US$2.8 million). It noted that travellers see the store immediately upon entry to the transfer terminal, which is open 24 hours a day. The terminal departures area to Hong Kong houses a ticketing area, waiting hall, VIP lounge and shuttle bus ports, as well as the duty free shop.

The company added: “Zhuhai Duty Free is part of a serious project, an important one for the Chinese government. This bridge represent a new vision for travel in the region, and a new vision for travel retail. This is still a border shop, but with a difference. Zhuhai Duty Free is the only operator here. This could be a template project for the border business.”

*We will bring you further news of Zhuhai Duty Free’s development at the Hong Kong-Zhuhai-Macau Bridge as it happens.