Tropical vacation destination plays key role in driving consumption upgrade in nation

Major Chinese duty-free retailers said offshore duty-free shopping in Hainan province, a top vacation destination, has become key to boosting consumption upgrade in China, with the duty-free sector playing a significant role in supporting the backflow of international spending into Hainan.

Speaking during the ongoing 3rd China International Consumer Products Expo in Haikou, capital of the tropical island province, companies' top executives said since China resumed quarantine-free cross-border travel in January, Hainan remains a preferred destination for Chinese tourists.

The popularity of traveling to Hainan has been fueled by limited international flight capacities still on the path to recovery, improvement of tourism infrastructure in Hainan and the two added methods for picking up offshore duty-free products since April 1, which makes it more convenient for buyers, they said.

In the first quarter, China Duty Free Group, the world's largest travel retailer in terms of sales revenue, saw its sales exceed the pre-COVID levels of the same period of 2019.

The group said its duty-free shopping complex located in Haitang Bay of Sanya has become the duty-free store with the highest sales revenue globally. It is building an additional shopping area to the complex, which is expected to open in the latter half of this year.

"As a State-owned company headquartered in Hainan, we will take the opportunity of the expo as a new start, and further promote the building of Hainan into an international tourism consumption center and free trade port," said Chen Yin, president of China Tourism Group, the parent company of CDFG.

April 13 marks the fifth anniversary of China announcing the building of Hainan island into a free trade port. In the past five years, offshore duty-free business in the province has grown continuously and become a bright spot for the FTP.

In the five years, as of April 11, total sales revenue of duty-free products in the province reached nearly 150 billion yuan ($21.8 billion), with more than 23 million shoppers who made purchases, the local government said on Thursday.

During the same period, Hainan's trade in goods and services saw an average annual growth rate of 23.4 percent and 17.7 percent, respectively. The province's actual use of foreign capital exceeded the total amount in the previous 30 years.

"Hainan FTP boasts unique development advantages and investment conditions. It is becoming an important base for Chinese enterprises to enter the international market and for overseas enterprises to enter the China market. Fashionable and healthy consumption is of great significance in helping boost consumer confidence," said Lu Zhan, secretary general of Reignwood Culture Foundation.

State-owned Shenzhen Duty Free Group said currently, the passenger flow clearance volume at the ports connecting Shenzhen and Hong Kong reached about half the level seen in 2019. The company expects the number will continue to increase in the second half, which would bring significant business opportunities for the company, it said during the expo.

Meanwhile, domestic retailer Wangfujing Group just opened its Wangfujing International Duty-free Port in Wanning, Hainan in early April.

"In the post-pandemic era, consumer confidence has gradually been restored and they have shown increasing willingness to buy both duty-free and taxable products. We are bullish on the growth potential of the shopping complex," said Zeng Qun, vice-president of Wangfujing Group.

Fosun Tourism Group, also known as Foliday, the travel and cultural arm of Shanghai-based conglomerate Fosun International, said for its hotels and resorts, booking volumes for the May Day holiday this year have comprehensively surpassed the figure in 2019.

"With the limited recovery of the capacity of outbound flights, many Chinese consumers still choose to travel domestically or in the Asia-Pacific region. For our Atlantis hotel in Sanya, its sales revenues exceeded 500 million yuan in the first quarter," said Cao Minglong, president of Foliday.