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Alibaba joins forces with Switzerland’s Dufry to shake up China’s huge, fast-growing duty-free airport shopping market

  • The e-commerce giant and the Swiss duty-free retail juggernaut will set up a joint venture in China as Covid-19 boosts domestic travel spending
  • The move could give rise to a serious contender to challenge China Duty Free Group’s monopoly over the market, analysts say

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A duty free shop at Beijing Capital International Airport. Photo: Shutterstock
Yujing Liu
A new partnership between the Chinese e-commerce giant Alibaba Group and Dufry, the world’s largest operator of airport duty-free shops, points to a massive, fast-growing market in China accelerated by the Covid-19 pandemic, analysts say.
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The two companies have agreed to form a joint venture in China, while Alibaba will buy a stake of up to 10 per cent in the cash-strapped, Switzerland-listed Dufry for 250 million Swiss francs (US$273 million), according to a statement by Dufry on Monday. Alibaba owns the South China Morning Post.

The move underscores the burgeoning opportunities in duty-free shopping in China, as consumers shift at least some of the US$258 billion in annual overseas travelling expenses back home, amid global travel restrictions as a result of the coronavirus outbreak, according to analysts.

It could also introduce a strong contender into a market that has been dominated by a single firm – the state-owned China Duty Free Group.

The collaboration “will have a big impact on the duty-free market in China, given Alibaba’s strong digital capabilities and Dufry’s expertise in running duty-free business,” said Veronica Wang, partner at retail industry consultancy OC&C Strategy Consultants.

“From the supply side, the Chinese government is also encouraging the market’s development by issuing more licences” to operators and increasing competition, she said.

China’s duty-free retail market – which encompasses shops located in city centres and airports, as well as offshore islands such as the Hainan province – expanded by 31 per cent to 51.6 billion yuan (US$7.6 billion) last year from 2018, according to estimates by Li Dan, analyst at Zheshang Securities.
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