Will Luxury Cash in On Shenzhen’s New Duty Free?

What Happened: The Luohu District of Shenzhen has announced plans to build a high-end duty-free shopping hub and a Guangdong-Hong Kong-Macau Greater Bay Area duty-free shopping area. This follows Yantian and Qianhai, two other districts in the southern first-tier city, signing agreements with Shenzhen Duty Free Group. Although planning is still in its early stages and awaits government approval, local media is optimistic about its prospects given how China’s 14th Five-Year Plan already proposes extending duty-free areas to Shenzhen, among other cities.  

The Jing Take: It’s no surprise that duty-free consumption is on Beijing’s agenda. Since the pandemic, the country has seen the market boom in Hainan, which in early January averaged $27 million (180 million yuan) a day in duty-free sales, more than three times the level a year earlier. With global lockdowns still in place, the province has become a prime travel retail destination for domestic luxury shoppers.

Now, the potential expansion of duty free into Shenzhen spells good news for luxury, especially if it can mirror the success of its island counterpart. In fact, the city should already be on the industry’s radar: not only is it a tech powerhouse — the birthplace of Huawei and Tencent, the latter helping to inject innovation into China’s fashion sector — but it recently ranked among the top ten most competitive financial centers in the world. Shenzhen also hosts its own fashion week, houses 2,500 fashion brands, and boasts the highest local market share of high-end shopping malls. Additionally, it is where Burberry chose to launch its social retail store last year, reaffirming its luxury fashion appeal.  

However, one party that might be put off by this proposal is Hong Kong. With Shenzhen located just a few minutes away by bullet train, Hong Kong could lose its competitive edge with both mainland consumers and global businesses, particularly as political tensions with Beijing paint a uncertain future for the city.

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.


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