Hainan sizzles with duty-free shopping

Customers purchase bags at a duty-free shop in Haikou, Hainan province, on Oct 1, 2021. [Photo/IC]

In the past few years, I visited the duty-free shopping mall at the Haitang Bay, Sanya, in South China's tropical island Hainan province three times. Every time I had been there, I was greeted by more and more newly launched brands. I also found the mall attracted more and more consumers.

For me, a visit to Sanya can't be complete without a ritual－that of stopping by, and shopping at, the duty-free mall. Not going through the ritual could fill me with a sense of loss or a sense of having missed out on great deals, discounts and promotions as prices of the same products tend to be substantially higher in other cities on the Chinese mainland.

I'd bet my last RMB that many other (female) consumers familiar with the lures of Sanya might nurse similar sentiments. Small wonder, duty-free market sales have been rising nonstop in Hainan.

For instance, in the first three quarters of this year, the offshore duty-free sales on the island reached 35.54 billion yuan ($5.6 billion), up nearly 121 percent year-on-year, according to local Haikou Customs.

If the growth rate sustains, Hainan will likely emerge as the world's largest duty-free shopping market soon, according to the Moodie Davitt Report, which is published by Moodie International Ltd, a multimedia business-to-business publisher.

Since July 2020, Hainan, which aims to become a global free trade port, increased its annual offshore tax-free shopping quota from 30,000 yuan to 100,000 yuan per person. The range of duty-free goods also expanded from 38 categories to 45, while the previous tax-free limit of 8,000 yuan for a single product has been lifted.

Fueled by the favorable duty-free shopping policies, Sanya now ranks No 5 among Chinese cities for luxury shopping, behind Shanghai, Beijing, Guangzhou and Shenzhen of Guangdong province, according to a report by global public relations firm Ruder Finn and Consumer Research Group.

Louis Vuitton is said to be considering opening its first duty-free store in China on the emerging luxury island hub of Hainan, Reuters reported.

By 2025, Chinese consumers are expected to spend 1.2 trillion yuan on luxury goods, according to research firm Statista. Hainan is set to play an increasingly significant role in attracting luxury spending by Chinese consumers.

"In the short term, international travel will still be stagnant due to border control measures relating to COVID-19. Thus, it would help guide the backflow of overseas consumption to China and drive the business growth of the duty-free sector in Hainan," said Fu Yifu, a senior researcher at the Suning Institute of Finance.

Hainan has made remarkable achievements in duty-free sales. Given restrictions on international travel, the duty-free economy in Hainan will continue to receive consumer attention as Chinese consumers cannot go abroad to buy products that usually carry cheaper price tags than the same products available in other cities on the Chinese mainland, Fu said.