DFS Group bets on duty-free Sanya with seven-star shopping complex

What Happened: Duty Free Shopping (DFS) Group, a Hong Kong-based luxury traveler retailer, has announced plans to open a seven-star luxury retail and entertainment destination in Sanya, Hainan province by 2026. The project, called DFS Yalong Bay, will house over 1,000 luxury brands including those under LVMH, which owns DFS Group. 

The 128,000-square-meter site will feature immersive concepts across multiple categories such as fashion, beauty, jewelry, wines and spirits, and is expected to attract over 16 million visitors per year by 2030, offering promising business opportunities for both DFS Group and Yalong Bay.

DFS Yalong Bay will span 128,000 square meters and offer immersive concepts across multiple categories including fashion and beauty. Photo: DFS Group

“DFS Yalong Bay is an incredibly exciting development for DFS, and I believe for the Chinese travel industry,” said Benjamin Vuchot, DFS Chairman and CEO, in a statement. “Think the glamor and experience of Shanghai, Macau, Dubai, and Las Vegas: Now add Sanya to these dream destinations.” 

The Jing Take: DFS Group, which has over 400 points of sale across 13 countries, has its eyes on the future. As Vuchot says, Hainan is on course to become one of the world’s largest luxury retail markets in the next five years. Even as China faces a slower-than-expected post-pandemic recovery, the island’s economy has steadily expanded, growing 8.6 percent year on year to generate $48 billion (345.88 billion RMB) in GDP in the first half of 2023.

In March this year, Hainan unveiled plans to achieve independent customs operations by 2025, providing global traders with benefits such as zero tariffs, duty free shopping and preferential import and export policies. This could make Hainan’s free trade port an attractive entry point for global brands seeking to expand to the broader Asia-Pacific market, providing stiff competition for cities such as Hong Kong. Domestic tourists will also be able to access duty free goods without leaving the mainland or applying for visas (the application process for some has become extremely tedious since travel was opened up in January this year). 

Hainan will also allow nationals from 59 countries to enter visa-free in the hope of attracting more international tourists and foreign professionals.

In particular, the investment in Yalong Bay, considered the most popular beach in Sanya, puts DFS Group at the forefront of this transformation. DFS Yalong Bay will be the only luxury retail property in the area.

“Yalong Bay area is undoubtedly the most developed luxury natural cove in Sanya, where DFS will provide unparalleled personalized services to our patrons,” said Nancy Liu, President, DFS China. “This truly represents a substantial stride in DFS’ global strategy to expand in the China market through a multi-format, multi-channel expansion in the luxury travel retail sector.”

If brands weren’t keyed into Hainan, they will be now. With its white, sandy beaches, duty-free policies, and DFS’ major shopping and entertainment complex on the way, the island is ready to cater to high-spending tourists from near and far.

The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.