CHINA. Hainan Free Trade Port says that the increase in offshore duty free retail locations from four to nine in December 2020 and January this year has created a new business pattern characterised by healthy competition, which will help drive annual sales of CNY300 billion (US$46.5 billion) by 2025.
As reported, offshore sales (including duty paid) on the island province exceeded CNY32 billion (US$5 billion) in 2020. Noting that stellar result, Hainan Free Trade Port said in a statement on its WeChat Official Account that the enhanced duty policy introduced on 1 July 2020 had boosted revenues significantly.
Average daily sales from that date until 31 December reached CNY120 million (US$18.6 million), up more than twofold on the previous year. Revenues during the recent seven-day Spring Festival holiday hit a record high of CNY997 million (US$154.4 million) with 1.14 million items sold.
During the 14th Five-Year Plan period from 2021 to 2025, Hainan provincial authorities will further improve the strength of the island-wide sales network and leverage increased domestic consumption to drive annual revenues, Hainan Free Trade Port said.
“The new competitive landscape will force all duty free companies to continuously enrich products and improve service quality, each forming their own competitive advantages,” it commented. “This will promote the construction of an international tourism consumption centre in Hainan, driving the further repatriation of Chinese overseas consumption and accelerating the formation of the ‘dual cycle’ pattern.
Competition to drive widespread improvements
Increased competition will also help raise standards in areas such as international brand procurement, online to offline retailing, and supply chain management to better meet the duty free shopping needs of domestic and foreign tourists, Hainan Free Trade Port said.
“In order to adapt to the new competitive landscape, duty free companies will do everything possible to improve service quality, increase customer service staff, strengthen sales staff training, and strictly manage complaints, returns, and after-sales service,” it added.
“With the increase in duty free business entities, those companies have taken the initiative to introduce more brands and categories favoured by consumers. Duty free products have become more and more cost effective and the international price competitiveness advantage gradually more prominent.”
More shops, allied to an extended variety of categories and brands will create a ‘duty free +’ model by combining with other elements of the tourism industry, to promote the overall transformation and upgrading of tourism “while making the duty free cake bigger and bigger”.
Note: Look out for the special Hainan-themed edition of The Moodie Davitt Magazine out this week.
