As droves of Chinese consumers choose to go overseas to buy luxury goods, the island province of Hainan in southern China is doing its part to try to bring some of that business back onto the mainland. In addition to touting itself as a prime beach tourist destination, Tan Li, the vice-governor of Hainan, announced during the 2014 Boao Forum for Asia that the city is set to build what is supposed to be the world’s largest duty-free mall in Haitang Bay.
“The duty-free store in Sanya will be moved to Haitang Bay and will be expanded from its current 10,000 square meters to 60,000 square meters,” says Tan to Chinese media outlet Xinhua. “It will become the largest duty-free shopping mall in the world when it goes into operation. Another duty-free store in Haikou, the provincial capital, will be enlarged from over 3,000 square meters to more than 4,000 square meters.”
Called the “Haitang Bay International Shopping Center,” this expansion will set Haitang Bay to overtake the current largest duty-free shopping area, located in London’s Heathrow Airport, with 52,000 square meters of retail space.
The new Haitang Bay mall is part of a tax-free policy that the Ministry of Finance launched in Hainan in April 2011, recognizing that shopping is as important to tourists as sightseeing. The policy allows ports, airports, and shops in various Hainan cities to sell their wares duty-free. This would mean a lot to consumers as they get to avoid paying China’s high luxury taxes—the price of imported luxury goods on the mainland can be up to 30 to 80 percent higher than in their home markets.
The purpose of the new policy is aimed at competing with many popular beach destinations around the world, which have stepped up their game to attract Chinese tourists with easy access and their own duty-free programs. The Bahamas made China travel visa-exempt, Thailand plans to scrap its luxury taxes, and Bali has opened up more direct flights from China. Many beach locales, such as Hawaii, are already attracting droves of Chinese tourists for both beautiful scenery and duty-free shopping.
Liu Baocheng, professor at Beijing-based University of International Business and Economics, told Xinhua that once the store is operational, the increased traffic and cheaper prices will benefit both the local economy and consumers. However, he dismisses claims that Chinese consumers will be able to abuse the daigou system, a parallel purchasing practice where cheaper luxury goods are bought overseas and sold on the mainland to avoid tariffs. Liu says that duty-free limits and supervised transactions mean it’s unlikely that customers would be able to perform tax evasion on a large scale.
A total of 30 hotels will be built in the coastal Haitang Bay area, according to HASSELL, the studio that won the mall’s design bid. The Hainan tourism board also launched an international wedding tourism campaign in December of last year. The campaign seeks to tie in its picturesque views with its local cultures and festivals, such as Li or Miao folklore weddings, beach resort weddings, and more. With these developments, Hainan appears to be making strides to become known for more than simply a beach destination, and win big on the tourism front.