Duty-Free, With Restrictions
Following a three-month trial run, this weekend Kunming, capital city of southwest China’s Yunnan province, launched its first duty-free store. Overseen by the General Customs Administration and China National Service Corporation (CNSC), the store is one of the first free-standing duty-free shops in the region, and reflects growing travel and luxury consumption in southwest China.
Unlike the tax-free program launched this summer on Hainan island, which is mostly aimed at domestic Chinese tourists, the new duty-free store in Kunming is aimed solely at Chinese individuals regularly working or traveling overseas. This allows diplomats, contractors, students, laborers, visiting academics, airline crews and tourists with valid passports to buy duty-free imported items within six months of their return to China. This policy in many ways echoes similar regulations created by the government in Beijing in the “reform and opening” period of the 1980s, when Chinese professionals and students began to travel outside the country in greater numbers.
Located at Wujing Road, Kunming’s two-story duty-free store stocks jewelry, handicrafts, watches, perfumes and cosmetics over the space of 1,200 square meters. The store carries 86 global luxury and premium brands, including Gucci, Bally, Burberry, Giorgio Armani, D&G and Coach. At its grand opening, the store advertised Gucci and Burberry sunglasses at steep discounts of up to 80 percent and D&G and DKNY watches for up to 95 percent off.
As on Hainan island, not everything in Kunming’s new store is duty free. ChinaNews (Chinese) points out that around 40 percent of the items for sale are duty free, and everything on display is strictly supervised “by the countries that produced the products as well as China Customs.” As one customer told ChinaNews at the grand opening, “I just came back from Hong Kong, but I didn’t buy much there because I heard about this store opening. I came today to buy perfume, handbags and a belt for my father.” As one staff member said this weekend, over the course of the three-month trial period, the duty-free store recorded impressive sales, with some popular items selling out. The staff member added that most shoppers are middle-aged, and that men’s products are selling briskly.
One of southwest China’s more international cities and one of the region’s key ports, the number of Kunming residents traveling abroad has increased rapidly in recent years, particularly as the city has become more involved in ASEAN (the Association of Southeast Asian Nations) events. As Jing Daily wrote this past May, major luxury brands have flocked to Kunming in recent years, with the city now home to the region’s largest Louis Vuitton store:
Once-sleepy Kunming — long a stopping-over point for itinerant backpackers — has quietly become one of the most lucrative luxury markets in southwest China. In recent years, brands like Cartier, Max Mara and Burberry have set up shop in fast-growing Kunming, which has benefited from increasing cross-border trade with neighboring Vietnam, Laos and Myanmar (Burma). Considering the city’s Gingko Center mall recorded a respectable 2 billion yuan (US$308 million) in sales last year, and Kunming has become a destination for villa-buying Chinese celebrities, expansion into Yunnan’s capital is probably a smart move.