CHINA. China Duty Free Group (CDFG), the country’s leading travel retailer, has announced a major downtown retail development on the resort island of Hainan.
Addressing key suppliers at a private dinner during the TFWA Asia Pacific show in Singapore last week, CDFG Director Marketing Department Antonio Hao said that the group will open two downtown duty free stores in the Sanya Bay and Yalong Bay areas for departing tourists – including both foreigners and Chinese.
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China Duty Free Group’s annual dinner at TFWA Asia Pacific is a highlight of the show |
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China Duty Free Group Vice President Ms Zhao Feng (left) welcomes guests to the annual dinner |
Hainan – the only tropical island in China and dubbed the “˜oriental Hawaii’ – attracts 18.5 million tourists every year from China and abroad. But its travel retail market is underdeveloped – shopping currently accounts for just 12% of all tourism income instead of the 21% domestic and 31% international average.
“Our target is to increase consumption of Hainan tourists to an international level,” said Hao.
He revealed that the State Council has approved the establishment of downtown duty free shops on the island. “The Hainan Government supports CDFG and the Customs General has approved CDFG to open duty free shops,” he said.
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Sanya Bay and the more exclusive Yalong Bay are major attractions for tourists to Hainan |
As a result the company is swinging into action, with the first 3,500sq m store due to open in Sanya Bay within five months. That will later be expanded to 7,500sq m and a second 2,500sq m store added in the nearby (and more exclusive) area of Yalong Bay in October 2010 as new government policies to facilitate downtown duty free shopping come into effect.
China Duty Free Group hopes to release details of its merchandising plans to key brand partners in June. The slated October opening of the first store will focus on perfumes and cosmetics, watches, jewellery, accessories, confectionery and local products. Fashion boutiques will follow in the second phase.
[NOTE: This is a major strategic push by China Duty Free Group, which is receiving the highest-level support, including from parent China International Travel Service. The Moodie Report will be bringing you phase-by-phase details of one of the biggest developments in the history of China’s travel retail industry.]
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CDFG outlines its step-by-step plans to develop downtown duty free retailing on Hainan Island |
TARGETING PROVINCIAL AIRPORTS AND BORDER STORES
Antonio Hao then moved on to discuss the rich opportunities for duty free and travel retailing in China’s provincial airports and on its land border crossings.
He said that inbound foreign tourist numbers had increased by an average of +7% annually between 1999 and 2008, while the outbound Chinese market had grown by an average of +18.7%.
Pertinently he pointed out that of the 175 million outbound travellers in 2008 (foreigners and Chinese), 90% depart the country from locations outside the big three airports – Beijing, Shanghai and Guangzhou. Some 86% exit via provincial airports and land borders while 4% use ferry and railway points.
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Source: China Duty Free Group |
Those statistics pointed to a huge duty free retailing opportunity for CDFG, Hao said, especially given the planned surge in Chinese civil airport construction between now and 2020.
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Source: China National Tourism Administration |
CDFG has conducted extensive research into its customers’ needs and has identified price, assortment and service as the keys to driving revenue, he said. The group plans to focus on broadening its assortment and to continue upgrading its stores, Hao added.
The company’s commitment to heavy investment was underlined in a video (click on The Moodie View icon below to watch) showing the dramatic retail transformation at Shenyang Airport, the Heihe border shop and the Ruili border store. The impact of such investment could be seen, for example, in a dramatic +96% rise in sales amid the financial crisis, following the expansion of the 60sq m store into a 2,000sq m shopping mall in 2008.
The Moodie View – Click on the arrow to view the tales of transformation in Shenyang, Heihe and Ruili |
Issuing a vote of thanks and a toast to the company’s partners, CDFG Vice President Ms Feng Zhao said : “2008 was an extraordinary year for CDFG. We have overcome the global financial crisis to achieve double-digit increases in sales and profits.
“The opening of the Hainan Island duty free shops will also open a new chapter for China Duty Free Group.”
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CDFG management mingle with guests, including ‘Mr Inniskillin’ Lars Johannson (second from right) at the annual dinner |
MORE STORIES ON CHINA DUTY FREE GROUP
China Duty Free Conference hears of “˜rapid development’ despite external crises – 19/02/09
China Duty Free Group turns the tables and interviews The Moodie Report – 26/09/08
China Duty Free Group in upbeat mood as retail transition gathers pace – 29/07/08
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