Chinese shoppers spent $1.8 bln in Hainan duty-free stores in 4 months

Shoppers at the Sanya International Duty-Free Shopping Complex, Hainan, China, July 1, 2020. /CFP

Thanks to the new policy and domestic travel recovery from the COVID-19 disruption, sales of duty-free shops in south China's island province of Hainan surged by a year-on-year 214 percent for the past four months, hitting 12 billion yuan (about $1.8 billion), customs data showed Tuesday.

The pandemic has forcibly grounded Chinese outbound tourists. However, Chinese consumers' enthusiasm for "buying global" has proven to be unfettered. They have diverted their attention to other channels, like cross-border shopping platforms and duty-free shops.

Nearly 1.8 million shoppers visited Hainan duty-free stores from July 1 to October 31, an increase of 59 percent compared to the same period last year, according to Haikou Customs.

Duty-free shops in China allow all travelers, not just international ones to buy. China currently taxes imported consumer goods, such as garments and beauty products, an average of 6.9 percent and high-end cosmetics by 15 percent. But tariffs for many luxury products, such as perfumes and watches, exceed 30 percent.

Data revealed that cosmetics, watches and jewelry are the most popular goods among buyers in Hainan duty-free stores, together, they made up 72.8 percent of all sales in the period.

Favorable policies also added fuel to the rocketing in sales. Hainan has offered greater visa-free access and duty-free shopping for tourists since July 1.

Meanwhile, the annual quota for individuals making duty-free purchases on the island tripled to 100,000 yuan, and the duty-free product catalog increased from 38 to 45 items with some electronic products and wines newly added to the duty-free list.

China's duty-free industry began in 1979 and has grown rapidly. Total duty-free retail sales in the country exceeded 50 billion yuan in 2019, according to a China Securities report.

China's duty-free retail giant China Duty Free Group owns all four offshore duty-free shops in the island province. Its parent company China Tourism Group Duty Free generated 19.3 million yuan in revenue in the first half of 2020, making it the world's largest duty-free retailer.