“For many major international players, the CDF Mall in Haitang Bay is their number-one or number-two store in the whole duty-free world,” says Martin Moodie, a leading authority on the global tax- and duty-free industry and the founder of The Moodie Davitt Report. “That status has been reinforced by the pandemic, which has had a drastic impact on Chinese travel and shopping abroad.”

The combination of Sanya’s white-sand beaches and cheap shopping has proved more irresistible than ever in a year of closed borders. While the island was hit by lockdown in March and April, it hasn’t reported a single case of coronavirus since April 23.

Flight operators have been running nearly full planes from Shanghai, Beijing and a number of second-tier Chinese cities all summer. This has made Sanya one of very few destinations in the world to have had more incoming flights this August than last.

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“Hong Kong and Seoul’s loss has been very much Hainan’s gain,” says Moodie, explaining that South Korea saw a 78 per cent drop in Chinese visitors and a 40 per cent drop in Chinese duty-free spending in the first half of this year. “Hainan is now the epicentre of the global duty-free and travel-retail industry – and that sector’s only hotspot worldwide.”

For many years, the island attracted fast-fashion customers looking for a cheap holiday and cheaper clothes, but with a spate of five-star hotels opening as well as the glossy CDF mall, Sanya has piqued the interest of some of the world’s most expensive brands.

“Everything on the Haitang Bay strip is really high-end,” explains Robert Esser, the president of shoe brand Havaianas in Asia-Pacific. “High-end travellers will often spend 6,000 yuan a night on their hotels and then shop in the day, and as a result [the strip] has some of the most productive per-square-metre retail in China. For many brands, [their stores on the strip] is actually their top store in terms of per-metre productivity in the world.”

Havaianas’ first boutique opened in Haitang Bay in June and it is already the brand’s best performing store in China, clocking up double the sales this summer than expected. It is planning to open two more stores on the island before the close of 2020.

Watch label Panerai also opened its first boutique in Sanya in June; by August it was outperforming the brand’s flagship Hong Kong store. These may be extraordinary times, but that is still a remarkable achievement in just three months.

“Attracting luxury brands is a key part of Hainan’s ambitious strategy,” Moodie says. “All the luxury brands I talk to have Hainan in their sights – it is a question of when, not if, for those who are not there.”

Sanya has even bagged a host spot for this year’s Watches and Wonders international trade show. A partnership between Richemont and the Fondation de La Haute Horlogerie and in association with the China Duty Free Group, Watches & Wonders Sanya will take place from September 29 to October 31 at the CDF Mall, where 11 luxury watch brands including Cartier and Hermès will present their latest creations in a dedicated space.

A week ago, Chinese department store operator Youa announced that it had signed an agreement with the Haikou Jiangdong New Area Administration Bureau to invest 1 billion yuan in developing an international luxury supply chain, hoping to attract shoppers from southern China who can cross the straits by car, train or ferry onto the island.

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 Luxury conglomerates such as Kering and LVMH are likely to be looking to partner with Youa to ensure they have prime real estate in any newly opened malls.

“The enhancement of the offshore duty-free shopping policy in July was the mother of all retail developments, not just in Hainan and China but within the whole travel retail industry worldwide,” Moodie says. “It has seen many of the world’s leading brands pivot most of their marketing efforts to Hainan given the dire status of business worldwide.

“Tourism and shopping form two of the key planks of the masterplan and, critically, the whole island will be duty-free and tax-free by 2025, making it a shopping magnet.”

The expansion of Hainan’s duty-free shopping limits is a masterstroke in a year like this. A virus-free island filled with warm beaches, tropical forests and some of the cheapest luxury shopping on earth will cause visitors to flock to its shores. But the island’s growth could have severe consequences for other cities in Asia that rely on Chinese tourism.

“I think Hong Kong should be all right, as to some extent the two islands are offering different things,” Esser says. “If you’re talking about Sanya specifically, then travellers are going there for a beach vacation and to shop. People are coming to Hong Kong for an urban holiday.

“Macau, however, has many of the same components as Sanya – giant luxury hotels with swimming pools and big shopping malls, so there could be some cannibalisation of the market there.”

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Hainan may, however, be missing an opportunity to attract a more sophisticated customer who is looking for a different shopping experience away from luxury hotels and designer malls.

“I think there is still one gap in the market in Hainan and that’s the sort of charming boutique high street you get in places like Cancun in Mexico or in Bali,” Esser says. “At the moment Hainan is just resorts and malls, but street culture is why Chinese tourists flock to Europe and Australia, and I think with time Hainan should expand their plans to offer something similar.”

If they do, then Hong Kong and Macau really will have a notable rival on their hands.