Double Eleven Hainan Island-Free Shopping Tax Rebate Sales Exceed3.4Yi, doubling the average daily sales compared to National Day Golden Week. Companies such as China COSCO Group, Wangfujing Department Store, and HNA Group have intensified efforts in the field of tax-free shopping on remote islands in Hainan.
Currently, several companies that have obtained tax exemption licenses are deploying their operations in Hainan's tax-free business sector. From a consumer perspective, what important opportunities can the operating entities seize? The world's largest single-site duty-free complex, Haikou International Duty-Free City, has opened. It is significant for Hainan's tourism industry, What are the impacts and significance of island tax exemption? During National Day, sales at Hainan's island tax-free areas rebounded. What is your view on the future trend of the island tax-free market in this region? Frost & SullivanFrost & SullivanExecutive Director, Greater China Region (hereinafter referred to as 'Frost & Sullivan') Chen Chen Accept an interview with Cailian News and discuss the above topics together.
Cainiao Communications
Q
Currently, several companies that have obtained tax exemption licenses are deploying their operations in Hainan's tax-free business sector.CDFHaikou International Duty-Free City is located at10month28The store will open daily, and the Wangfujing International Duty-Free Port will be at2023year1The store is scheduled to open in October, with the Sanya Helin project under Zhuhai Duty-Free set to launch next2023Why are the opening dates chosen to be concentrated at the end of this year and early next year? From a consumption perspective, what important opportunities do you think business entities can seize?
2019After the Spring Festival, the state increased its support for tax-exempt industries and gradually relaxed strict supervision over tax exemption licenses. The Hainan offshore duty-free market has seen new players such as Haida Control, Hailvtou, Zhongchushou, and Shenan Duty Free enter the market, vying to layout offshore duty-free businesses and build new duty-free stores. After the opening of the newly established offshore island duty-free stores, the commercial facilities and environment for duty-free shopping on Hainan's offshore islands will be significantly improved, which will help attract more international high-end brands. At the same time, due to the enhanced passenger carrying capacity, it will also contribute to the development of Hainan's tourism market, playing a mutually reinforcing role.
In addition, affected by the pandemic, China has adopted a relatively strict border opening policy, which is also conducive to the return of overseas consumption during the same period. This has laid a good foundation for the further development of Hainan's tourism and duty-free industries. Business entities within the industry can seize this opportunity to layout duty-free business on offshore islands and fully attract consumers through product brands, categories, prices, etc., reshaping consumer shopping habits for duty-free goods. This can enhance consumer loyalty and retain them to the greatest extent possible even in the event of future opening up.
Q
The world's largest single-site duty-free complex, Haikou International Duty-Free City, has opened. It is significant for Hainan's tourism industry, What are the impacts and significance of tax exemptions for offshore islands?
For the tourism industry in Hainan, Haikou International Duty-Free City is the world's largest single duty-free store after Sanya International Duty-Free City and one of the landmark projects for the construction of Hainan Free Trade Port. Haikou International Duty-Free City takes duty-free commerce as its traffic entry point, consisting of 'duty-free+Culture and tourism, driven by 'dual wheels', provide tourists with one-stop shopping, consumption, and entertainment tourism retail services. The official opening of Haikou Duty-Free City is expected to attract more domestic and international tourists to Hainan, further driving tourism consumption in the province. At the same time, it also provides opportunities for the development of tourism and business enterprises.
Since the implementation of the offshore island duty-free policy, the proportion of offshore island duty-free sales in total tourism revenue and consumer goods has been continuously increasing. The duty-free industry has a significant impact on Hainan's tourism industry, consumer goods, and overall economy.
For offshore duty-free shopping, as a major participant in the Hainan offshore duty-free market, the Haikou International Duty-Free City has officially opened, which will further enhance the brand awareness of COSCO Duty Free and consolidate and elevate its leading position in the tourism retail markets of Hainan, across China, and globally. At the same time, the increase in the number of duty-free shops on Hainan's islands and the expansion of their operating areas have made the Hainan duty-free market more complete. This has further enhanced the passenger carrying capacity, providing consumers with better shopping options and experiences.
Q
In the third quarter, Hainan's off-island duty-free sales were hit. However, with the stabilization of the epidemic and the joint efforts to stimulate consumption from various parties, Hainan's off-island duty-free sales warmed up during National Day holidays. What are your views on the future trend of the off-island duty-free market in this region?
The number of duty-free stores in Hainan is constantly increasing, with continuously expanding operating areas and coverage cities. Numerous duty-free city construction projects are also advancing steadily. Many duty-free players, including the Wangfujing Group and Haizhijie Group, are intensifying efforts in the field of Hainan's offshore duty-free business, accelerating the formation of industrial cluster effects for offshore duty-free at the Hainan Free Trade Port, and driving the development of upstream and downstream industrial chains including brands, logistics warehousing, supply chain management, e-commerce retail, etc. The offshore duty-free market enjoys favorable policy environment, and the development on the supply side is continuously improving, creating good conditions for the sustained growth of offshore duty-free sales.
From the perspective of market demand, against the backdrop of normalized prevention and control measures for the COVID-19 pandemic, most outbound tourism consumption capacity in China has remained domestically, providing an opportunity for domestic tourism and duty-free shopping on offshore islands.
In the long run, with the continuous improvement of Hainan's offshore tax-free shopping and supporting facilities, a comprehensive tourism consumption ecosystem that includes shopping, accommodation, catering, leisure vacations, and other industries formed around the tax-free industry will attract more global consumers to Hainan, promoting the further development of local offshore tax-free shopping, tourism retail, and tourism industries in Hainan.
Q
In your opinion, is there a possibility of further adjustment to the individual tax exemption limit within the island? How does this relate to the overall off-island tax exemption market?
The adjustment of the individual tax exemption quota for offshore islands highly depends on government policy guidance and requires comprehensive consideration of various aspects such as the development of the tax exemption market in Hainan Province, its carrying capacity, and supporting facilities.
In the past decade, the individual tax exemption quota for islands has been continuously increased, demonstrating the government's support for the development of Hainan's island-based duty-free economy. The sales volume of Hainan's island-based duty-free products has grown rapidly. In an environment where the industry is developing well, increasing the individual tax exemption quota for islands will help unleash consumer potential in both domestic and international markets, stimulate consumers' enthusiasm for purchasing duty-free products, further expand the development space of the duty-free industry, and create more business opportunities for duty-free enterprises.
Q
Hainan Island Free Trade Zone Shopping Mall has its original location10Increase in home12Home, tax-exempt business area from22Ten thousand square meters increased52Ten thousand square meters. How do you view the competitive landscape of duty-free shopping on offshore islands? What impact does it have on the future development of the industry?
Previously, the players in the offshore duty-free market were mainly China COSCO Group International Limited (COCOF), with a high industry concentration. To stimulate overseas consumption return and economic development during the pandemic, stimulated by a series of favorable policies from the Hainan government, the offshore market in Hainan has grown rapidly in recent years.2019In the past year, the sales scale of duty-free shopping on Hainan's offshore islands has achieved a significant increase.
2020After the state liberalized the issuance of tax-free licenses for Hainan's offshore islands in 2018, companies such as Haida Holdings, Hailvtou, China Merchants Service Group, and Shenzhen Duty-Free Shopping Co., Ltd. have entered the Hainan offshore market one after another. They have continuously expanded their business operations and store layout in the Hainan market, resulting in an increase in the tax-free operating area and number of stores in the offshore market.
In the future, as new entrants to the industry gradually increase, market concentration will decrease compared to before. However, in the long run, due to the mature supply chain and sales system already formed by the industry leader, China COSCO Group Co., Ltd., with its significant scale advantage, the industry will exhibit a competitive landscape of one dominant company over multiple strong competitors.
In addition, against the backdrop of a gradual increase in players in the offshore duty-free market, the competition in China's offshore duty-free market will not only feature price competition but also exhibit differentiated competitive patterns across multiple dimensions such as product brands, categories, regional layout, and target customer groups.
*This interview is published in Cailian News Agency.APPReporter: Lu Tingting, original title Selling More Than One Million on a Single Day3.4Yuan! Hainan's offshore tax-free shopping areas welcome peak consumption season Sales are expected to rebound in the fourth quarter|Industry Dynamics (Clicking "Read the Original Article" at the end of the text will provide access to the full report).
