China’s duty-free market poised to grow fourfold to US$40 billion by 2025, but travel restrictions could stand in the way

China’s domestic duty-free market is tipped for big growth, provided travel restrictions are eased by late this year, The Economist Intelligence Unit says

The domestic market will ‘face intense competition’ once borders reopen and Hainan must enhance product ranges and price competitiveness

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China’s duty-free market was estimated to be worth 66 billion yuan last year, according to a report by The Economist Intelligence Unit. Photo: Xinhua

Published: 10:15pm, 24 Jan 2022Updated: 11:17pm, 24 Jan 2022

China’s duty-free market is forecast to grow fourfold to 258 billion yuan (US$40 billion) in 2025, a new report says, as the government looks to boost domestic consumption to shore up the economy.

The duty-free market in China was estimated to be worth 66 billion yuan last year, according to a report by The Economist Intelligence Unit (EIU) published on Saturday. But it is poised to quadruple in value in three years’ time, provided Beijing clears strict quarantine mandates for international travel by late this year.

The report added the island province of Hainan, which has been declared a free-trade port and a duty-free hub, will account for half of the domestic duty-free market by 2025.

Chinese consumers spent more than 180 billion yuan overseas on duty-free products in 2019, accounting for 40 per cent of total global duty-free sales.

Customers select cosmetics in a duty-free shop in Haikou, the capital of south China’s Hainan province. Photo: Xinhua

But China’s duty-free market only accounted for 8 per cent of total global duty-free sales, showing the limitations of its offerings compared to the massive spending power of its consumers.

Beijing is seeking to address this and turn the focus of economic growth in the future to domestic consumption through its so-called dual circulation strategy.

“If some of Chinese consumers’ overseas spending on duty-free items could be repatriated successfully to the domestic market and maintained, even once borders reopen to international travel, it would significantly boost the size of the duty-free market in China,” the report said.