Hainan cements status as duty-free shopping mecca

    The island’s investor-friendly policies, high duty-free allowance and infrastructure upgrades attract brands and tourists.
    Dragon-themed limited edition wines are displayed for sale at GDF Plaza on February 7, 2024 in Haikou, Hainan Province. Photo: Ghetty Images
    Jing DailyAuthor
      Published   in Travel

    Hainan Province is solidifying its position as an international tourism and duty-free retail hub, according to new data released by the provincial government. In the first quarter of 2024, Hainan’s service trade grew by an impressive 29.62% YoY to $2.03 billion, with service exports surging 40.22% YoY to $1.01 billion.

    Fueled by an influx of international visitors, particularly from South Korea, Malaysia, Russia, Mongolia and Singapore, Hainan’s inbound travel services revenue spiked to $273 million. The island's tourism sector rebounded last year, with tourist arrivals and revenue expanding by 49.9% and 71.9%, respectively, both record highs.

    The robust figures underscore China’s ambitious plans to develop the island into a world-class free trade port by 2025.

    “Hainan is delivering on its promise to become the world's largest duty-free market by introducing investor-friendly policies and upgrading its infrastructure,” said Nicole Zhang, Hainan Office Senior Partner at KPMG China in a white paper published earlier this month. “The province’s tax-free shopping allowance of $14,000 per visitor is unmatched globally.”

    According to the white paper, duty-free sales on the island surged 25.4% in 2023 to $6.13 billion. Luxury spending is expected to be a key growth driver, with high-end boutiques forecast to comprise 40% of duty-free sales by 2025.

    Image: KPMG
    Image: KPMG

    Major travel retailers like China Duty Free Group (CDFG) are banking on Hainan’s luxury potential. CDFG’s Haikou mall, opened in 2022 and billed as the world’s largest offshore duty-free complex, will add boutiques for Prada, Miu Miu and Gucci this year. It generated $950 million in sales last year.

    “Brands recognize Hainan as an invaluable showcase to reach Chinese consumers who previously purchased overseas,” said Martin Moodie, founder of The Moodie Davitt Report. “Luxury groups are investing heavily to capture this burgeoning travel retail market.”

    Beyond duty-free, Hainan is cultivating a complete high-end retail ecosystem. Swire Properties’ new $1 billion Sanya mall hosts flagship stores for dozens of luxury labels, while DFS Group is developing a $2 billion “seven-star” retail-dining-entertainment resort in Yalong Bay slated for 2026 completion.

    With pro-growth policies, upgraded infrastructure and an influx of premium brands, Hainan is making its mark as China’s glitzy travel retail wonderland.

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