CHINA. Wangfujing Group Co, the powerful Beijing-based department store retailer, is poised to enter Hainan’s offshore duty free market after striking a joint investment and cooperation agreement with local entity China Hainan Natural Rubber Industry Group Co (Hainan Rubber), according to Hainan Provincial Bureau of International Economic Development (Hanain IEDB) citing announcements by the two companies. Hainan Rubber is China’s largest natural rubber resource owner and processor.
However, unlike existing offshore duty free operations, the partnership will cater specifically to Hainan residents under an extension of the current policy that is expected to be unveiled soon by the provincial government.
Unlike the existing offshore duty free shopping policy, residents will not have to leave the island to shop under the proposed legislation. Retail licences will be awarded by the Hainan provincial government.
Stores operating under the policy will be able to sell traditional tax- and duty free items as well as certain daily commodities. The allowance has not yet been revealed.
Hainan has a population of approximately 10 million.
In an announcement, Wangfujing cautioned that because duty free retailing is a specialist business under strict government supervision, the specific tax-exemption policy for island residents has not yet been issued. The joint venture project still needs to be formally implemented, it added. Wangfujing said that as a “brand-new business model”, the tax free business for island residents will need to be cultivated over time.
The agreement will see the creation of two cooperating entities, Hainan Wangfu Jinghaiken Duty Free Goods Operation Co Ltd (Wangfujing Haiken) and Hainan Haiken Wangfujing Daily Duty Free Goods Operation Co Ltd (Haiken Wangfujing).
For Wangfujing Haiken, Wangfujing will invest CNY60 million (US$9.3 million) and Hainan CNY40 million (US$6.2 million) while Hainan Wangfujing will invest CNY60 million and Wangfujing CNY40 million in Haiken Wangfujing.
Hainan Rubber said that the alliance will benefit from Wangfujing’s professional experience in brand channels and retailing networks, while Wangfujing noted the value of Hainan Rubber’s state-owned background and its local resources.
Hainan Rubber is ultimately owned by the State-owned Assets Supervision and Administration Commission (SASAC) of Hainan Province while Hainan Rubber is 64.35% held by Hainan Nongken Investment Holding Group Co Ltd. is the controlling shareholder of Hainan Rubber, holding 64.35% of its shares.
As revealed by The Moodie Davitt Report last week, Wangfujing is to participate in the pioneering China International Consumer Products Expo to be held in Hainan province on 7-10 May. The event is being organised by Hainan International Economic Development Bureau (Hainan IEDB).
Hainan Island: Travel retail’s global hotspot The Moodie Davitt Report will publish a Hainan Island Special Report with the China edition of The Magazine in February 2021. Written by Martin Moodie and Dermot Davitt, it will explore how the offshore duty free business in China has become critical to the world’s leading brands across many categories. 海南：旅游零售业的全球焦点 穆迪戴维特报告（Moodie Davitt Report）将于2021年2月随The Magazine的中文版发表《海南特别报道》。该篇由马丁·穆迪（Martin Moodie）和德莫特·戴维特（Dermot Davitt）撰写，将探讨中国的离岸免税业务是如何变得对跨类别的各大全球领先品牌至关重要。 报告将覆盖以下内容：
The report will feature:
Contact Irene@MoodieDavittReport.com to partner with The Moodie Davitt Report for this special edition. |
