Caixin
Oct 10, 2020 04:23 AM
ECONOMY

Tourists Spend $155 Million at Hainan’s Duty-Free Shops During Golden Week

Shoppers at a cosmetics counter in the Riyue Plaza Duty Free Shop in Haikou.
Shoppers at a cosmetics counter in the Riyue Plaza Duty Free Shop in Haikou.

Sales at the duty-free stores in Hainan Island in southern China exceeded 1 billion yuan ($155 million) over the National Day holiday week, an increase of nearly 150% from the same period in 2019, according to customs authorities.

Pent-up tourist demand fueled the shopping spree the since Covid-19 pandemic has been largely contained in China. During the eight-day holiday, which began Oct. 1, more than 146,000 people made more than 998,000 purchases while visiting the island’s duty-free stores, data from the General Administration of Customs showed.

At Riyue Plaza Duty Free Shop, one of the newest and largest shopping malls in provincial capital Haikou, customers lined up outside as early as an hour before opening. Waiting time at some cosmetic checkout lines was more than 20 minutes.

The resort island of Hainan has long been a hot tourist destination. Beijing’s recent decision to more than triple the amount that Chinese citizens are allowed to spend each year at duty-free shops also significantly drove sales.

Starting July 1, the duty-free shopping quota per person was raised to 100,000 yuan a year from 30,000 yuan. The duty-free product catalogue will be increased from 38 items to 45, adding new options including mobile phones, tablets and wine. The limit of 8,000 yuan for a single tax-free commodity was removed.

Exemption from tariffs, value-added taxes and consumption taxes usually results in a 20%–30% saving at duty-free shops compared with conventional stores. Taxes on cosmetic products are normally 35%, making the duty-free shops particularly attractive.

At the beginning of this year, duty-free shops in Hainan were hit hard amid the Covid-19 pandemic. To boost sales, the Hainan government expanded the duty-free shopping policy in April. Passengers departing the island now can purchase duty-free goods at online duty-free platforms as long as they have shopped at the physical store in the past six months.

Online sales reached 2.5 billion yuan in the past five months, according to a Haikou warehouse employee from China Duty Free Group, the state-owned operator of duty-free shops.

During the three months before the National Day holiday, sales at Hainan’s duty-free stores increased by 227.5% to 8.61 billion yuan.

China Duty Free Group operates four duty-free stores in Hainan — two in Haikou, one in Sanya and one in Boao. Local authorities recently said three more duty-free shops will open in Sanya by the end of 2020. Shen Danyang, vice governor of Hainan, said Sept. 29 that total sales at the province’s duty-free shops is expected to reach about 30 billion yuan this year.

Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bobsimison@caixin.com)

Download our app to receive breaking news alerts and read the news on the go.

You've accessed an article available only to subscribers
VIEW OPTIONS
Share this article
Open WeChat and scan the QR code