CHINA. In an extraordinary development, incumbent retailer Sunrise Duty Free (Shanghai) Co Ltd did not bid on the open tender for the departures and arrivals duty-free shop concessions at Shanghai’s twin gateways, Pudong International Airport and Hongqiao International Airport.

Bids closed this morning (9 December).

Sunrise Duty Free’s majority (51%) shareholder, China Duty Free Group (CDFG) did bid. Under the concession terms (see below), two retailers will divide the spoils. Informed observers believe Wangfujing Duty Free and CNSC are the most likely fellow bidders.

The surprise development has been brewing amid acute sensitivity over recent days after reports of CDFG not supporting its subsidiary’s bid surfaced. The Moodie Davitt Report has been speaking to both parties throughout that time as the likelihood of Sunrise not bidding grew.

That has now become a shock reality.

CDFG has a 4-3 majority on the Sunrise Duty Free (Shanghai) Co Ltd board.

As reported, China Duty Free Group completed the 51% acquisition of Sunrise Duty Free (Shanghai) Co Ltd and Sunrise Duty Free (China) Co Ltd during 2017 and 2018. The latter also operates the Terminal 3 duty-free concession at Beijing Capital International Airport, which is also out to bid along with T2 (run by CDFG).

It is not yet known whether Sunrise will be allowed to bid on the Beijing business. That tender closes at 9am Beijing time on 19 December.

Sunrise’s minority shareholders told The Moodie Davitt Report this morning: “Sunrise was not allowed to bid.” We understand those shareholders plan to issue a complaint to the Shanghai Airport Authority bid review board.

The Moodie Davitt Report is in communication with CDFG and will bring you an update soon.

As reported, the tender involves Pudong Airport’s terminals 1 and 2 and satellite halls and Hongqiao’s Terminal 1. The contracts periods are eight years (on a phased basis*), from 1 January 2026 to 31 December 2033.

Sunrise Duty Free (Shanghai) Co Ltd won a joint seven-year duty-free contract in July 2018 for the concession period 1 January 2019 until 31 December 2025.

FROM OUR EARLIER STORY

Tender overview

The new tender is divided into three parts. Bidders are free to choose which ones to bid on but must adhere to specific rules.

• Concession 1: Departures and arrivals duty-free shops in the international areas of Terminal 1 (T1) and Satellite Hall 1 (S1) at Shanghai Pudong International Airport.
• Concession 2: Departure and arrival duty-free shops in the international areas of Terminal 2 (T2) and Satellite Hall 1 (S2) at Shanghai Pudong International Airport.
• Concession 3: Departure and arrival duty-free shops in the international area of Terminal 1 (T1) at Shanghai Hongqiao International Airport.

According to the tender guidelines, a single bidder cannot be awarded both Concession 1 and 2. However, a bidder winning either Concession 1 or Concession 2 remains eligible to also win Concession 3.

*Phased structure puts focus on quality

According to Shanghai Airport Authority, the concession length for this tender adopts a flexible ‘whole + phased’ model, coupled with an assessment mechanism designed to select and incentivise retailers to deliver consistently high-quality services.

Upon completion of the first phase, if the retailer passes the assessment by Shanghai Airport Authority, the contract automatically renews for Phase 2. Should the incumbent fail the assessment at the end of Phase 1, the contract terminates.

Concession 1 (Pudong T1 & S1): The total contract term is structured as ‘3 + 5’ years.

• Phase 1: From 1 January 2026 to 31 December 2028
• Phase 2: From 1 January 2029 to 31 December 2033

Concession 2 (Pudong T2 & S2) and Concession 3 (Hongqiao T1): The total contract term is structured as ‘5 + 3’ years.

• Phase 1: From 1 January 2026 to 31 December 2030
• Phase 2: From 1 January 2031 to 31 December 2033

Backed by world-class operations

The duty-free shops involved in this tender are located at Shanghai’s two vital gateways, backed by the robust infrastructure and operational capacity of the Shanghai Airport Authority, the company said.

Pudong Airport’s terminal area features a ‘main terminal + satellite hall + transportation centre’ configuration, comprising T1 and T2 along with S1 and S2 (two satellite halls) located to the south.

The satellite halls, officially opened on 16 September 2019, boast a total floor area of 622,000sq m, making them the world’s largest single satellite terminal complex.

Functioning as extensions of the main terminal piers, these satellite halls are designed to serve an annual passenger capacity of 38 million. {Main story continues following the communication below}

The integrated T1-S1 operational system is expected to accommodate 36.8 million passengers annually, while the T2-S2 system can serve 43.2 million passengers per year. Collectively, the two main terminals and satellite halls form a robust operational network capable of processing 80 million passengers annually.

Hongqiao International Airport, which comprises T1 and T2, welcomed 47.92 million passengers in 2024, demonstrating its consistently strong passenger demand and commercial potential, Shanghai Airport Authority said.

In its tender announcement, Shanghai Airport Authority set out clear qualification requirements for bidders:

• Bidders must be domestic enterprises with duty-free business qualifications or reputable foreign-invested enterprises with a proven track record.
• They must have an independent legal representation status and bear civil liabilities independently.
• They must have no record of serious breach of trust in the past three years.
• Affiliated entities are prohibited from bidding for the same tender section, and consortium bids will not be accepted.

The deadline for obtaining tender documents concluded on 22 November. The bid submission deadline is 9:30am Beijing time on 9 December.

“The bundled tender for duty-free concessions at Shanghai’s two major airports represents a key step in managing their high-value commercial space,” Shanghai Airport Authority commented.

“It is also a key initiative to enhance the service capacity of Shanghai’s international aviation hubs and improve passenger experience. With the commencement of the new operational cycle, Shanghai’s airport duty-free services are poised to enter a great new era.”