The Tax Free World Association (TFWA) has praised the Chinese government for the steps it is taking in Hainan and elsewhere to open the country to the rest of the world.

As reported, the Chinese government recently revealed its overall plan to create a Free Trade Port (FTP) on the tropical island of Hainan in Southern China. Details emerged on 1 June 2020.

The decision to more than triple the duty free purchasing allowance on the island from RMB30,000/$4,300 to RMB100,000/$14,336 and extend the duty free product category list from 1 July 2020, was in line with plans for the FTP.

The raised allowance increase and extended duty free product list appear to be having the desired impact. Total daily duty free sales in Hainan have increased around 100%, according to Han Shengjian, Director General of Hainan International Economic Development Bureau, who participated in a recent webinar hosted by the International Tax Review business to business publication.

Speaking to TRBusiness as part of a wide-ranging interview, Alain Maingreaud, President, TFWA described recent developments in Hainan and elsewhere in China as positive news. “The sales increase we are seeing [in Hainan] clearly shows what can be achieved when stimulus is provided by a government.

“The measures demonstrate that the Chinese authorities understand the vital role commercial revenues play in the wider travel and tourism industry.”

GOVERNMENTAL SUPPORT VITAL

He added: “We very much hope that governments in Europe and elsewhere will follow suit with similar steps. Governmental support is something the industry has been campaigning for over considerable time, but it has never been more important.”

Aside developments in Hainan, the Chinese government has awarded a number of new domestic duty free licences in China as part of its plans to drive domestic consumption and develop the country’s tax and duty free industry.

Chinese department store retailer Wangfujing Group Co obtained a duty free licence in June, as first reported by TRBusiness. The Beijing-based company, which operates more than 40 department stores subsequently created a new duty free company (Beijing Wangfujing Duty Free Management Co. Ltd) earlier this month.

Further licences have also been awarded in Guangxi at Nanning Wuxu International Airport and the Pingxiang Youyi and Longzhou Shuikou border ports, which was exclusively reported by this publication.

A slew of state-owned companies have also applied for downtown duty free licences, including Wuhan Wushang Group and Guangzhou, which once again was first reported by TRBusiness. Time will tell if applications are successful, but with an increasing number of entities expressing uncertainty from the outset as to whether they will be awarded licences, the situation is somewhat unclear.

Regarding the buying habits of Chinese consumers and how purchasing behaviour will be impacted by the coronavirus (Covid-19), Maingreaud believes the pandemic will accelerate changes which were already underway. “We were already starting to engage with our customers digitally and online. These channels will become an even more important pathway to markets in the future.

“The Chinese passenger was already somewhat ahead of the game in this respect. With the growing presence of services such as Alibaba and Fliggy and new initiatives from retailers such as China Duty Free Group, these technologies will only become more important.

“It is, therefore, essential for any parties looking to gain traction in this market to seek collaborations with new partners and new ways of engaging.”

On the travel front, there remains a certain degree of anxiety among Chinese and other Asian passenger groups, who are conscious of health issues. Maingreaud commented: “Airlines and airports are already doing plenty to reassure passengers it is safe to travel. They must continue doing this.

“We all have a duty to protect our staff and customers. Initiatives such as the Duty Free World Council’s protocols help ensure we all understand what is required.”

‘SIGNS OF RECOVERY’

Domestic travel in China is gradually increasing, but inbound and outbound international travel is heavily restricted. “We are indeed seeing signs of recovery in the region, which should have gained some momentum by the time of our China Reborn [virtual] event in December.

“The event is well timed, as the industry will be preparing for the uptick that comes with Chinese New Year,” Maingreaud remarked.

Acknowledging the considerable pent-up demand among Chinese travellers and consumers, Maingreud said there was every reason to believe the Chinese will travel again once the situation stabilises. “The Chinese market will be among the first to see a durable recovery,” he predicted.

Last month, TFWA announced it will host the aforementioned China Reborn virtual event. Running for three days (1-3 December), China Reborn will feature a series of seminars.

Guests will enjoy insights unboxing the industry’s recovery in China, including the latest traffic data, market developments and changes to shopping behaviours.

Looking ahead to the event, Maingreaud commented: “TFWA has always been strongly committed to the Chinese market.

“As you know, we recently demonstrated this commitment with the opening of a new office in Shanghai. China remains key for the duty free and travel retail industry. Even during these difficult times, we see much dynamism in this market, as evidenced by recent developments in Hainan and the number of new players entering the market.”

Despite the postponement of next year’s TFWA China’s Century event, there remains the need for a China focussed event, emphasised Maingreaud.

TRBusiness has been the official magazine publisher of the China’s Century event for three consecutive years. The next version is due to take place in 2022.

Maingreaud said: “The reaction to China Reborn has been very positive. We’ve had strong interest from TFWA members and other stakeholders in the region.

“Although international travel may not have returned to previous levels, the size and nature of the Chinese market makes this event an essential diary date for all suppliers and other industry players.

“Taking a closer look at the shifting Chinese retail climate, the data illustrating those changes and the place China will assume in the new global geopolitical landscape, the event will help those looking to capitalise on this growth secure a deeper understanding of this complex market.”

See the September edition of the magazine and stay close to TRBusiness.com for more from our interview with Alain Maingreaud, President, TFWA.