Date
21 July 2017
In February, the annual limit for duty-free purchases in Hainan was doubled to 16,000 yuan. Photo: Xinhua
In February, the annual limit for duty-free purchases in Hainan was doubled to 16,000 yuan. Photo: Xinhua

China bets on duty-free paradise to keep luxury spenders at home

China’s efforts to raise local consumption, spur domestic tourism and keep within its borders citizens who splurge in Milan or Seoul have spawned a duty-free paradise in Hainan that it hopes will satisfy a lust for luxury, Reuters reports.

Firms such as the owner of the world’s biggest duty-free shopping center, China International Travel Service Corp. Ltd., are capitalizing on a relaxation in February of duty-free spending restrictions in the island province.

HNA Group Co. Ltd. reported a 160 percent surge in sales.

Government initiatives, including 19 more duty-free shops nationwide, come as sales of the types of luxury goods that line duty-free shelves fell 2 percent last year.

Market watchers pin the blame on a campaign against demonstrations of wealth among public officials, as well as a slowdown in economic growth.

As things stand, mainland Chinese buy close to 80 percent of their luxury goods abroad in cities such as Paris, London and Tokyo, Bain Consultancy estimated.

“Whether it is Burberry or Richemont recently, many brands in the space have noted that the future of luxury demand will be about the Chinese and incrementally at home,” HSBC analyst Erwan Rambourg said in Hong Kong.

In Hainan, which is closer to Hanoi than Beijing, duty-free shops offering products priced as much as 30 percent less than on the mainland have been operating since 2011, under a trial program aimed at developing the island as a tourist destination.

Customers could initially buy only up to 8,000 yuan (US$1,220) worth of duty-free goods, twice a year.

From Feb. 1, they have been able to make purchases at any time provided the annual total does not exceed 16,000 yuan.

At the same time, stores have also been able to sell goods online for collection at airports.

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