Luxury brands set sights on Chinese tourists in Hainan as extended duty-free quotas and pandemic-free shopping attract travellers

With a tripling of its annual duty-free shopping quota and planeloads of tourists arriving all summer, China’s Hainan island is the new darling of travel retail

But its growth could have severe consequences for other cities in Asia that rely on Chinese tourism, including Hong Kong and Macau

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People shop at the Sanya International Duty Free Shopping Complex in Sanya, Hainan, on August 6. The Chinese island has long been a tourist destination but new duty-free shopping quotas and closed international borders have added to its popularity among Chinese tourists. Photo: Xinhua

Published: 7:15am, 8 Oct 2020Updated: 11:45am, 20 Oct 2020

Sanya is a place best described in superlatives. It has the whitest sand and the warmest sea in China, the glossiest new five-star hotels in the region – and now the fastest growing luxury fashion market in the world.

The Chinese holiday island of Hainan, and Sanya in particular, has long been a tourist destination. But since 2011, Beijing has also been pushing its offshore duty-free shopping policy there. The results have been explosive – in 2019, retail sales at Hainan’s offshore duty-free shops hit almost US$2 billion.

In July, in a bid to encourage even more tourists to visit the semi-tropical island, Hainan more than tripled the annual duty-free shopping quota to 100,000 yuan (US$14,700) per person, removed the limit for a single tax-free purchase, which was previously set at 8,000 yuan, and expanded the number of duty-free product categories from 38 to 45. The reaction from beauty and fashion designer brands was instant, laying down claims for store space in the island’s rapidly growing malls in anticipation of an influx of tourists.

“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.”

Customers line up to enter a Gucci store at the Sanya International Duty Free Shopping Complex on August 27. Photo: Reuters

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.

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