Shenzhen Duty Free has vowed to build a ‘unique downtown duty free shop’ in the Qianhai and Shekou Free Trade Zone, following the finalisation of an agreement with the Qianhai Cooperation Zone Authority earlier this year.

The planned opening of a new duty free store in the Guangdong-Hong Kong-Macau Greater Bay is another major project following the opening of its downtown DF&TR complex at Hainan island’s Mission Hills resort in partnership with DFS Group.

Speaking as part of a lively and informative Hainan-focused session yesterday (23 June) during the TFWA Hainan Special Edition event, You Jiangwei, Chairman, Shenzhen Duty Free Group said: “We are aiming to build a downtown duty free shop in the future and are open to cooperating with partners at home and abroad.”

He added: “We were inspired by Chinese central government documents issued last year and are optimistic about domestic consumption prospects and the government’s attempts to drive overseas consumption. The scale and timing of the project will largely depend on government policies.”

Jiangwei, who was part of a panel comprising Han Shengjian, Director, Hainan International Economic Development Bureau, Xie Zhiyong, Chairman and General Manager of Hainan Tourism Investment Duty Free Co; Ken Chu Chief Operations Officer, CNSC Sanya Duty Free Co Ltd, Peter Mohn, Founder and President, m1nd-set and Clara Susset, Travel Retail Research Director, m1nd-set, offered a fascinating insight into the Mission Hills project.

‘A SMALL TOWN WITH 14 BUILDINGS’

“Our offshore duty free project is not a mall, but a small town with 14 separate buildings. The total business area is about 100,000sq m and there is enough space for brands to set up their flagship stores. This is why we are confident in our ability to build a unique and high-end duty free destination.”

On Hainan island’s future growth prospects, Jiangwei said: “I am optimistic Hainan will become an international tourist island. This optimism is based on three factors. One is the preferential policies introduced by the Chinese Central government and another is the convenient geographical location of the island.

“Hainan is in the centre of east and southeast Asia. It is very convenient. Tourists from east and southeast Asia can get there easily.

“There is also great business potential on Hainan island which is developing all the time.”

The island’s growth potential is not lost on Han Shengjian and his Hainan International Economic Development Bureau colleagues who are responsible for generating foreign investment in the Hainan Free Trade Port and providing a non-stop service for global investors.

“On 10 June, the China Central government passed the Hainan Free Trade Port law. This means the island of Hainan can now stipulate specific laws to ensure it becomes the most open society in the world when it comes to taxes and other aspects,” Shengjian remarked.

Last year, total offshore duty free sales on the island amounted to RMB30 billion/US$4.6 billion, according to Shengjian.

“Growth has been even greater in the first half of this year [compared to the same period last year] and with more and more domestic tourists, sales will continue increasing.

“This year, we are expecting sales of RMB50 billion/US$7.7 billion. In the future, we will promote the return of overseas consumption.”

He added: “If overseas consumption gradually returns and increases 10% each year, we will soon reach sales of RMB100 billion/US$15.4 billion.”

HAINAN GROWTH POTENTIAL

Such growth potential will be music to the ears of Hainan Tourism Investment Duty Free Co, which opened a large-scale downtown duty free store in Sanya on 30 December 2020 in partnership with Lagardère Travel Retail.

“In the first part of 2021, we have generated sales of around RMB1.1 billion and focused on attracting different brands to our mall,” Zhiyong commented. “We are still contacting new brands, but those that are in place have completed the interior design of their shops.

“The aim is to differentiate ourselves from competitors. We will obviously introduce the popular brands, but we will not forget the alternative brands which are popular among consumers.”

Perfumes and cosmetics and skincare dominated the sales charts in the first half of 2021, accounting for 51% of total sales. Electronics, watches and jewellery, clothing, alcohol and other drinks also performed well.

Casting an eye on the future, the company is targeting total sales of RMB7 billion at the store in 2021. “In the first half of the year, the focus was on attracting new brands. From July, our attention will return to promotions and trying to achieve our sales target which will not be easy.

“We have ambitious goals over the next five years and will probably expand our mall and embark on various other projects. We are a state-owned company and must do whatever we can to contribute to the success of the Free Trade Port.”

Another company which has made a strong impact on Hainan island is The China National Service Corporation for Chinese Personnel Working Abroad (CNSC), which also opened the first phase of its new downtown duty free plaza on 30 December 2020.

“Between January and May 2021, the plaza has recorded 100% growth,” said CNSC’s Chu. “This is thanks to the location of the store, comfortable shopping experience and competitive price points.”

Chu, who revealed the number of brands in the plaza has increased from 220 to 309 added: “We have introduced brands such as Brietling, Estée Lauder and other world class L’Oréal Group labels and are currently negotiating with LVMH, Chanel, Swatch and other brands.”

The number of SKUs in the Sanya complex has also increased from 8,000 to 15,000. “We want to offer customers a better experience, share our knowledge and to communicate with them. In addition, we would like to interact more with our [brand] partners in order to create better synergies.”

More to follow…