CHINA. Hainan Hinews Media Co, the island province’s leading digital media company, yesterday hosted the Global High-end Consumer Goods Development Forum, a key supporting activity to the second China International Consumer Products Expo (Hainan Expo), which is taking place this week from 26 to 30 July.
Hainan Hinews Media Co is The Moodie Davitt Report’s strategic partner in Hainan. Its coverage of the island’s offshore duty free industry (including through a dedicated duty free TV channel) reaches a vast audience in Hainan and across Mainland China.
The Moodie Davitt Report Founder & Chairman Martin Moodie delivered a keynote address at the Forum. Here is an edited version.
大家好！Da jia hao!
Greetings everyone and I hope you all have a fantastic week at the China International Consumer Products Expo in Haikou.
I am so sorry I cannot be with you this year but family commitments back in the UK have meant that my next visit to beautiful Hainan will have to wait. Not too long I hope!
Nevertheless, I am with you in spirit and The Moodie Davitt Report is delighted to support this important Forum, which forms a key part of the Expo.
It’s my pleasure to take part in this great initiative from the Hainan Hinews Media Co, whose amazingly professional team I work with very closely. They provide us with unrivalled local coverage including on-location reporting which I in turn can share through my media platform with the world’s most famous brands. It is a unique and very important collaboration between a local media and an international one.
Their unrivalled coverage of the Hainan offshore duty free sector is crucial in building awareness of and credibility for the business in the eyes of consumers and the world’s leading brands. Hainan Hinews even hosts the world’s only TV channel solely dedicated to the duty free industry – and their coverage of store openings, promotional campaigns and brand launches is second to none, I can promise you.
I have been covering this industry globally for 35 years and I have never seen such an exciting dynamic as the Hainan offshore duty free sector. It was the principle reason that I moved to Hong Kong, China in 2020, so I could be close to the world’s hottest duty free market, and one which I called the ‘lighthouse’ of travel retail while the rest of the industry was plunged into darkness by the pandemic.
“President Xi has described international tourism as an important ‘business card’ for Hainan Free Trade Port. What a powerful business card it has become, one that has been shown to millions of Chinese visitors and many international tourists and businessmen since that small CDFG store opened in Sanya in 2011” – Martin Moodie
This week in association with KPMG China we published a White Paper that examines the Hainan duty free business in the context of the global duty free industry.
The White Paper underlines the significance and success of Hainan’s offshore duty free policy which I consider the most enlightened, consumer-friendly, and business-supporting policy in the history of the travel retail sector.
That policy, introduced in 2011 and enhanced in 2020, provides a wonderful role model of government/private sector collaboration and helps explain why Hainan has become the hot spot of the global duty free industry, an incredible achievement in just 11 years.
The travel retail industry worldwide has gone through the most sustained and severe crisis in its history over the past two years. With passenger traffic collapsing at most of the world’s airports, travel retail was robbed of its bloodline through most of 2020 and to a lesser but still challenging extent in 2021. A global market that went into freefall with one remarkable regional exception, Hainan.
Thanks to some key health, strategic, policy and commercial decisions, China’s domestic travel retail industry has been the exception to the rule of industry malaise during the crisis.
Firstly the sustained success of the ‘dynamic zero Covid’ policy has been overwhelmingly successfully in curbing infections and limiting deaths. That has meant that domestic travel in China, albeit with sporadic restrictions, has blossomed through much of the pandemic era.
That has been a major reason behind China Duty Free Group’s extraordinary rise to become the world’s number one travel retailer by sales since 2020 according to The Moodie Davit Report annual rankings. Consider that CDFG ranked just 19th in 2011 and you get an idea of the phenomenal impact of the offshore duty free policy introduced in that same year.
The impact of the enhanced duty free shopping policy introduced on July 1, 2020 was electric. Hainan’s duty free industry has become the superstar of travel retail, posting year-on-year sales increases of +127% and +84% respectively through 2020 and 2021 – in both cases from an all-time record high base and in both cases amid a global pandemic.
Hainan’s enhanced offshore duty free shopping generated a whopping CNY90.6 billion (US$13.55 billion) in sales over the two-year period after the policy was introduced. As I say, a triumph of policy.
Government support to boost the business didn’t stop there. Another key source of momentum came with the issuing of licences to several newcomers in 2020 in both the capital Haikou and the shopping heartland of Sanya to the south.
Again this year the Hainan government was proactive in its reaction as the island’s retailers were hit by the COVID-related slowdown in visitor numbers. Two key stimulus packages have been introduced over recent months to boost consumer consumption and assist the island’s duty free retailers.
The schemes are a rare example globally of government working hand in hand with duty free retailers to support a business that brings visitors, creates jobs and stimulates the wider Hainan economy – a far cry from the hostile approach to the duty free and travel retail industry of the UK government and the European Union authorities.
That support is further reflected in the hosting of the second annual China International Consumer Products Expo on July 26-30. The Expo will allow international exhibitors and visitors to gain a deeper understanding of Hainan’s Free Trade Port policy and create crucial business opportunities for Chinese and international companies.
Hainan offshore duty free is central to the Free Trade Port programme. It plays a dual role for brands – it is a big volume and value channel in its own right but it also offers an almost priceless showcase to consumers across the vast Chinese nation.
President Xi has described international tourism as an important ‘business card’ for Hainan Free Trade Port. What a powerful business card it has become, one that has been shown to millions of Chinese visitors and many international tourists and businessmen since that small CDFG store opened in Sanya in 2011. Who could have imagined back then that Hainan would become such a remarkable success story?
This conference will magnify that success story and I congratulate Hainan Hinews for having the vision to organise it. It has been my pleasure to take part.
谢谢你 Thank you.
