“Hew a stone of hope out of a mountain of despair
and you can make your life a splendid one”
– Yu Minhong, Founder and CEO of New Oriental Education and Technology Group (New Oriental)
CHINA. China Duty Free Group (CDFG) President Charles Chen this week hosted Yu Minhong, the Founder and CEO of the influential New Oriental Education and Technology Group (New Oriental), on a tour of the Sanya International Duty Free Shopping Complex in Haitang Bay. The event, held on 23 December, was livestreamed with “sensational impact”, CDFG said.
New Oriental is China’s largest provider of private educational services. It operates a network of 122 schools, 1,669 learning centres, 11 bookstores and many other educational services across 108 cities.
The offshore duty free policy, designed to boost the development of Hainan, has grown to become the ‘Gold business card’ of Hainan tourism , one that has been attracting many domestic and [pre-pandemic] international travellers, CDFG said in a WeChat post about the tour,
As Chinese travel retailers look ahead, a top priority in this environment is how to create better shopping experiences for consumers through duty free shops, the key platform for the island’s shopping policy, CDFG noted. In that context Sanya International Duty Free Shopping Complex has become an important first-stop destination for many visitors to Hainan. The livestream highlighted the ‘secret recipe’ for attracting so many tourists throughout the year, CDFG commented.
The livestreamed tour – themed ‘Meet at the Yunjie Bridge’ – saw Chen and Yu walk around the shopping complex where they visited a range of elegant product exhibitions and shared their views on the potential of China’s travel retail market. The spectacular Yunjie Bridge connects Phase 1 and Phase II (opened in early 2020) of the Sanya International Duty Free Shopping Complex. Whereas Phase 1 is focused on duty free shopping, Phase II blends art, culture, commerce and dining. It features more than 30 branded restaurants, a wide array of trendy brand shops and the famed Fangsuo Bookstore.
“It’s absolutely spectacular! Now I see that Sanya International Duty Free Shopping Complex is as much a world-renowned shopping paradise as an incredible tourist attraction and landmark,” noted Yu.
Although he has visited several duty free malls abroad, Yu said that he was stunned by what he saw standing at the magnificent water fountain show by the vast shopping complex. Chen explained that the Haitang Bay project, which opened in 2014, features the world’s largest duty free shopping centre, renowned for its architectural structure that resembles a blossoming begonia flourishing by the island coastline.
The mall has attracted nearly 700 global brands embracing 45 categories such as cosmetics, perfumes, clothing, watches, jewelleries, and wines and spirits. As Hainan’s duty free business and the domestic travel sector have flourished, CDFG has emerged as the leading travel retailer in the world based on 2020 sales, the company pointed out [Source: The Moodie Davitt Report Top 25 Travel Retailers].
Changing consumer needs
Chen pledged that CDFG will continue to lead the market thanks to a comprehensive range of products, keen pricing, and excellent services. The company plans to meet evolving consumption needs by creating a new and immersive shopping experience, he added.
The CDF Mall, boasting a huge shopping space filled with an extensive product range, has become a highly popular duty free shopping destination for travellers to Hainan, Chen explained to Yu.
However, consumers’ needs and desires are becoming diversified and they are looking for an experience that is beyond the products themselves, he said. For example, the ‘Watches & Wonders’ exhibition [a three-month exhibition of luxury watches jointly hosted by CDFG and Fondation de la Haute Horlogerie -Ed] currently features 14 luxury timepieces from some of the world’s most illustrious watchmaking houses. As he toured the exhibition, Yu said that the craftsmanship on display reminded him of Switzerland’s heritage.
Later, as they visited the elegant imported wines & spirits sector, Yu shared several anecdotes with viewers about some famous wine producers. Chen noted that the products on display represent not simply an aesthetic pursuit of class and taste, or a quest for precise technique and craftsmanship, but more importantly the imagination of a beautiful life.
CDF Mall has this year hosted an array of major events including the CDFG Offshore Duty Free Shopping Festival and the second Watches & Wonders exhibition. Through an array of artistic installations, brand masterclasses, and exclusive products, visitors have been able to discover the various brands’ stories and heritage.
It is clear to see that a more immersive, interesting, and consumer-centred shopping environment is taking shape, CDFG said, one in which consumers are brought closer to the brands to find out more about their legacy. This is increasingly important to the success of the Sanya International Duty Free Shopping Complex.
Boosting the Free Trade Port
The Haitang Bay complex has played a key role in boosting inbound consumption to develop Hainan as an international travel & consumption centre, CDFG noted. Even though it was already evening by the time of Chen and Yu’s tour, the mall was still busy.
The offshore duty free policy has significantly unleashed consumers’ enthusiasm for shopping, Chen said. He pointed out that the shopping policies have been adjusted several times to meet the growing demands for duty free shopping. In particular, on 1 July 2020 the Hainan authorities raised the duty free shopping allowance to CNY100,000 (US$15,700) per person each year and added seven categories to the assortment, including mobile phones and wines & spirits.
In February this year, a mail-delivery service was introduced while Hainan residents can now return to the island to pick up their goods rather than having to take them with them when they travel to the Mainland. These measures have enabled consumers to shop more flexibly, Chen pointed out.
“With the huge support from national and local government and as Hainan continues to develop its Free Trade Port (FTP) infrastructure, an increasing number of travellers are coming to Hainan,” he commented. “The offshore duty free business has hence become a very large part of Hainan’s travel retail sector, which not only fuels the growth of the local economy, but also generates taxes and jobs. The Sanya International Duty Free Shopping Complex alone has created more than 4,600 jobs.”
CDFG is also aligning its selection of brands, product categories, and prices to an international level, Chen explained. He said that as more product categories are added to the shelves and shopping methods become more diversified, the offshore duty free policy will play an increasingly valuable role in repatriating overseas consumption to Hainan.
“As Hainan keeps enhancing its FTP infrastructure and as the offshore duty free policy brings extended benefits to consumers, shopping has become more flexible and convenient than ever, allowing people to buy duty free goods without having to travel abroad,” Yu said.
In response to the huge demand for duty free shopping, CDFG said that under the leadership of its parent company China Tourism Group it has been working to improve its procurement, operational ability, digitalisation, and marketing ability, as well as optimising its brand portfolio and extending the product range. This is all lending impetus to Hainan’s development as an international travel & consumption centre, the company said, pointing to a +48% increase in sales year-on-year at the Sanya International Duty Free Shopping Complex during this year’s national holiday.
Extra measures to support a new travel retail ecosystem
Driven by the momentum of Hainan’s Free Trade Port development programme, China has become one of the world’s largest travel retail markets, CDFG said. As an active participant in building the Free Trade Port programme, CDFG under the leadership of its parent company is exploring ways of developing its wider travel retail business while maintaining a steady, healthy growth in its core duty free operations.
By overlooking the whole Sanya International Duty Free Shopping Complex from the Yunjie Bridge, the observer can see that Phase 1 and Phase II echo and complement each other nicely, Yu noted. “The complex boasts a wide range of goods and brands. In a sense, it is not simply a mall but more of a museum of the brands,” he commented.
Chen pointed out that Phase II is mostly dedicated to non-duty free products as well as restaurants. Among the restaurants, over 20 have entered Hainan for the first time, four have Michelin stars, and one is on the Black Pearl Restaurant Guide list with a rare double-diamond rating.
Many brands have customised the appearances of their shops to represent Hainan’s rich tropical island vibes and elements. The development offers a very strong complement to the core duty business of Phase 1, Chen noted. Based on precise consumer insights and by offering a diverse range of services, CDFG has successfully built a vast membership system with a large and loyal base, he added.
After Yu Minhong learned that CDFG plans to roll out mystery tours for members to visit various places of product origin, he expressed a strong desire to work with the company again and join members on their trips to explore together the beauty of the world.
Note: Every fortnight The Moodie Davitt Report publishes Hainan Curated, in association with Foreo, a selection of all recent stories from the offshore duty free sector in Hainan province.
Click here to view all back issues. Please email Sinead@MoodieDavittReport.com to subscribe.
