China's resort island opens 2 more duty-free shops

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Customers visit a duty-free shop in Haikou, south China's Hainan Province, Jan. 31, 2021. [Photo/Xinhua]

Two new offshore duty-free shops opened on Sunday in Haikou, capital of south China's island province of Hainan, raising the number of duty-free shops in the province to nine.

The nine shops, run by five entities, bring a pattern of differentiated competition to the duty-free market, which will be a great boost to the building of Hainan into an international tourism and consumption destination.

The Global Premium Duty Free Plaza, run by a local company, is located in a large shopping center in downtown Haikou. The products on sale include electronic products, perfumes, cosmetics, sunglasses and imported wine, among others.

The plaza launched its first phase on Sunday, with its second and third phases due by the end of June and September this year, respectively.

The other duty-free shop, run by a company based in the southern city of Shenzhen, offers nearly 500 international brands in a shopping area of 20,000 square meters.

Yang Jun, vice general manager of Hainan Development Holdings Co., Ltd., which runs the Global Premium Duty Free Plaza, said Hainan's offshore duty-free shopping has entered a new era of development with a growing number of shops.

"We will join hands with other shop operators to expand Hainan's offshore duty-free market, attract more Chinese to spend in Hainan rather than in the overseas markets, and promote the consumption upgrading of the Hainan free trade port," Yang said.

Among the nine duty-free shops, three opened in the tropical resort city of Sanya on Dec. 30, 2020, one in Sanya Phoenix International Airport and the other two in downtown Sanya, adding to the previous one at Haitang Bay.

For Zhu Mengxia, the two newly-opened shops in downtown Sanya are better located and more convenient. "We now have more choices and better opportunities to hunt for bargains," she said.

Wang Jiansheng, chairman of the Hainan Tourism Development Research Association, said, "competition impels duty-free companies to enrich products and improve services. Their competitive advantages will help build Hainan into a globally influential tourism and consumption destination, and further attract back home more overseas spending by Chinese consumers."

The China Duty Free Group (CDF), which used to dominate Hainan's duty-free shopping market, has taken steps to face the competition.

Gao Xujiang, executive director of Sanya Downtown Duty Free Store Co., Ltd., affiliated to the CDF, said the company is expanding and upgrading its duty-free shop to create a more spacious business area and offer better services.

Gao said it has also taken a slew of measures to better serve consumers, including increasing staff to handle complaints and after-sales services, and enhancing the efficiency of delivery.

Liu Feng, director of the Research Center for Free Trade Port with Chinese Characteristics of Hainan Normal University, said that the CDF has obvious advantages in the supply chain, marketing and operations due to having engaged in the duty-free market in Hainan for many years.

"Even if a competition pattern has been formed, the CDF's dominant position in Hainan's tax-free market will not change in the short term," said Liu.

Starting July 1, 2020,Hainan has increased its annual tax-free shopping quota from 30,000 yuan to 100,000 yuan per person. The categories of duty-free goods have been expanded from 38 to 45, with electronic products such as mobile phones and laptops added to the duty-free list.

The previous tax-free limit of 8,000 yuan for a single product has been lifted, and the number of categories with a single-purchase quantity limit has been significantly reduced. The duty-free purchase limit for cosmetics has also been raised from 12 items to 30.

Official data shows sales of offshore duty-free shops in the province exceeded 32 billion yuan (about 4.98 billion U.S. dollars) in 2020.

Following the policy upgrade, the average daily duty-free sales had hit 120 million yuan by the end of 2020, an increase of more than twofold year on year.

The potential of Hainan's duty-free shopping is far from being fully tapped. The duty-free shopping industry on the island is likely to become a 100-billion-yuan industry in the next few years after duty-free sales doubled in 2020, insiders said.

"Hainan's duty-free market has huge potential," said Xie Zhiyong, general manager of Hainan Tourism Investment Duty-free Co., Ltd.

Xie said that competition will definitely benefit consumers, and duty-free shopping will become an important attraction for tourists, which will lead to the development of Hainan's tourism industry and exponential growth for duty-free shopping sales.

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