"Can't Go Abroad, Shop Domestically"… China Hainan to Become World's Largest 'Duty-Free Island'

[Image source=Reuters Yonhap News]

[Asia Economy Beijing=Special Correspondent Kim Hyunjung] China is developing Hainan Island, known as a representative resort destination, into the world's largest "duty-free island." Following a significant increase in the per capita duty-free limit to 100,000 yuan (approximately 19.75 million KRW) in 2020, the number of stores on Hainan Island is being further expanded in a quantitative offensive. This move is interpreted as an effort to stimulate consumption by encouraging domestic shopping amid overseas travel restrictions due to COVID-19 prevention measures, while also contributing to the regional economy.

According to Tencent News on the 18th, Hainan authorities recently held a press conference where they approved additional duty-free store operations for China Duty Free Group (CDFG) and Wangfujing Group respectively. With these two additional approvals, the number of duty-free stores on Hainan Island will increase from 10 to 12, and the operating area will more than double from the existing 220,000㎡ to 520,000㎡.

To enter the duty-free market in the central region, one must first obtain a duty-free license and then receive regional approval. CDFG obtained its license in 2020, while Wangfujing Group received its license on the 10th of this month. CDFG is the top company in China's duty-free market and is the only one authorized to operate duty-free businesses nationwide. The newly approved store is scheduled to open on the 28th and will cover an area of 191,500㎡, making it the largest single duty-free store in the world. The store that Wangfujing Group is opening this time will cover 102,500㎡ and is set to open in January next year.

After the deployment of the Terminal High Altitude Area Defense (THAAD) system, group tours to South Korea were restricted, and with the subsequent COVID-19 pandemic, the South Korean duty-free market sharply contracted. Meanwhile, Hainan, designated as a duty-free special zone in 2018, quickly established its position as a "duty-free island." Last year, sales peaked, with annual duty-free sales expected to exceed 60 billion yuan.

The significant increase in the duty-free limit from the previous 30,000 yuan to 100,000 yuan in June 2020 had a major impact. The purchase frequency limit was also removed, and visitors to the island can make additional duty-free purchases online for up to 180 days after their visit.

Yao Lei, an inspector at the Hainan Provincial Department of Commerce, told Tencent News, "Half of the tourists who arrived last year visited duty-free stores, and one-sixth made purchases," adding, "More and more tourists will head to Hainan for duty-free shopping, which can also drive the development of other industries such as accommodation and transportation."

This content was produced with the assistance of AI translation services.