CHINA. Nanning Department Store is the latest Chinese domestic market retailer to apply for a duty free licence as interest in China’s burgeoning travel retail channel surges.
Nanning takes its name from its home base, the capital city of Guangxi Zhuang Autonomous Region
In a disclosure to the stock market, the company said that it had submitted a licence application to relevant authorities within the Xi Zhuang Autonomous Region and Nanning Municipal Government. However, as with other recent hopefuls, Nanning warned that the preparatory work is still in a preliminary phase and that there is no guarantee of success.
“The application for the company’s duty free business qualification is at the initial stage and there are major uncertainties in qualification. At present, the company’s main business is still the retail business of taxable goods, and there will be no major changes in the short term,” Nanning said.
Informed observers in China say that the flurry of applications from local market retailers should be treated with caution. Such licence applications are good for driving the share price up but fall far short of guaranteeing market entry, one source told The Moodie Davitt Report.
The latest application follows a flurry of competitor activity over recent weeks. As reported first by The Moodie Davitt Report’s Chinese information partner DutyFreeExpert, Beijing-based department store operator Wangfujing Group was granted a duty free licence in June. This month, the retailer (which is attending the Moodie Davitt Virtual Travel Retail Expo in October) announced the creation of a wholly owned subsidiary duty free company
More recently, Guangzhou-based publicly listed tourism services provider Lingnan Holdings confirmed that its parent, Lingnan Group, had also applied for a duty free licence. The disclosure came in a stock exchange announcement after the company’s share price rose above +20% on both 14 and 15 July. The company cautioned, however, that the application was work in progress and its chances of success uncertain.
Lingnan Group is part of the Guangzhou State-owned Assets Supervision and Administration Commission.
Wuhan-based department store company Wuhan Wushang Group Co (listed as E Wushang A) issued a similar disclosure on 15 July in response to abnormal fluctuations in stock trading between 13 and 15 July. “The company has submitted an application for the qualification of duty free goods management to the relevant government departments, but the work is still in progress,” Sina.com reported. And last week, Dalian-based Dashang Co, another domestic market retailer, followed suit.
