The duty-free shopping market is full of vitality (consumption window), consumers | policies | windows

Tourists are shopping at Haikou International Duty Free City.

Photographed by Meng Zhongde

Officials from Beijing Customs and Tianzhu Customs conducted on-site inspections at the "Wangfujing Global Purchase" cross-border experience store.

Photo by Sun Tingting

There are three types of duty-free shops in China: port duty-free shops, offshore duty-free shops, and local duty-free shops. In the construction of a new development pattern with domestic circulation as the main body and domestic and international dual circulation promoting each other, promoting duty-free retail and developing duty-free economy are one of the nodes connecting the domestic and international circulation. With the upgrading of domestic consumption and the return of overseas consumption, duty-free sales have become an important force to stimulate domestic demand potential and prosper the consumer market.

Duty free shopping plays an important role in attracting consumption return and driving consumption growth

At the Gongbei Port, which connects Macau and Zhuhai, Beijing tourist Zhang Yuan was attracted by a duty-free shop: "We have a wide range of fragrant products, and we have also caught up with the entire store's promotion. On the basis of duty-free prices, we have discounted a lot, so we bought some for ourselves and our family."

The duty-free shop mentioned by Zhang Yuan is a newly upgraded entry duty-free shop of Zhuhai Duty Free Enterprise Group Co., Ltd. at Gongbei Port, with a business area of 3889 square meters, covering categories such as aromatherapy, daily necessities, and food. Since its trial operation on May 16th, the sales of the store have increased by about 20% month on month, and the average customer price has increased by about 10% month on month. Especially, the sales of fragrance and boutique products have increased by nearly three times.

As a node connecting domestic and international consumer markets, duty-free shopping plays an important role in attracting consumer return and driving consumption growth in industries such as tourism, aviation, and hotels. In April last year, the General Office of the State Council issued the "Opinions on Further Unleashing Consumption Potential and Promoting Sustainable Recovery of Consumption", which proposed to "improve the policy of duty-free shops in the city and plan to build a number of duty-free shops with Chinese characteristics." Since the beginning of this year, various regions have accelerated the implementation of the policy of creating new duty-free shops, and a number of new duty-free shops have opened one after another——

In April, Wangfujing International Duty Free Port officially opened in Wanning, Hainan, and the number of offshore duty-free shops in Hainan increased to 12;

In May, the duty-free Nanchang Airport store of Sinopharm and Sinopharm opened, providing travelers with a new consumption experience of "tourism+retail";

In early June, the newly built entry duty-free shop at Terminal 4 of Hangzhou Xiaoshan International Airport began operation, with the first batch of over 14000 duty-free items being put on shelves for sale

"Gongbei Port is one of the important intersections of people and logistics in the Guangdong Hong Kong Macao Greater Bay Area, with a daily inbound and outbound passenger flow of over 400000 people. Thanks to its unique geographical advantages, Gongbei Port and its surrounding areas are one of the most dynamic tourism retail markets in China." Pan Mingming, Assistant General Manager of Zhuhai Duty Free Enterprise Group Co., Ltd., said, "We hope to build Gongbei Port's inbound duty-free shops as an important tourist consumption destination in the Guangdong Hong Kong Macao Greater Bay Area and a demonstration benchmark project to showcase the commercial vitality of the Greater Bay Area, helping to stimulate new vitality in tourism consumption in the Greater Bay Area."

"The Ministry of Commerce has designated this year as the 'Consumption Boosting Year', and various regions have also made great efforts to stimulate market vitality through various measures. The growth momentum of the port duty-free shops under Zhuhai Duty Free Group is very obvious." Pan Mingming said that with the rapid recovery of the tourism market and the continuous increase in inbound passenger consumption, there is still significant growth space in the domestic duty-free shopping market.

This year, the implementation of Hainan's offshore tax exemption policy marks the 12th anniversary. Over the past 12 years, Hainan has actively promoted the synchronization of duty-free product brands, varieties, and prices with international standards. The offshore duty-free shopping brands have become more diverse, the shopping environment has been continuously optimized, marketing methods have become more diverse, and shopping convenience has continued to improve. According to statistics from Haikou Customs, since the implementation of Hainan's offshore duty-free policy on April 20, 2011, as of April 19, 2023, Haikou Customs has supervised a total of 185 billion yuan in offshore duty-free shopping, with a shopping volume of 34.28 million people.

"At present, the Chinese market has a large scale and strong consumer demand, and duty-free shopping has huge development opportunities." Chang Zhujun, Executive Vice General Manager of China Duty Free Group, said that China Duty Free Group will adhere to open development, work with international peers, and jointly provide higher quality and richer goods and services for domestic and foreign tourists.

Improve service level to meet personalized, diversified, and high-quality consumer needs

"Previously, I had to go to the airport to pick up my goods after shopping, and the flight time was tight, which made me a bit flustered. Now that it's good, I can take it away after buying on site, saving time and worry." Hu Xiaoxue, a tourist from Nanjing, Jiangsu who just returned from Hainan, hopes that more duty-free items can be included in the new pickup method.

Starting from April 1st this year, Hainan's offshore duty-free shopping has added two new pickup methods, namely "guarantee pickup" and "purchase pickup", on the basis of the original pickup model. Previously, the duty-free pickup methods for Hainan's outlying islands mainly included self pickup, mail delivery, and island residents returning to the island for pickup. All three pickup methods needed to be carried out after the island was off.

Driven by relevant policies, duty-free business entities are accelerating their embrace of the Hainan offshore duty-free market, continuously improving their service level, and better meeting the personalized, diversified, and high-quality duty-free consumption needs of consumers.

The China Duty Free Haikou International Duty Free City, which opened in October last year, has a variety of customized themed private rooms that can meet various needs for business negotiations, shopping, and leisure. At the same time, consumers can not only enjoy services such as luggage storage, wheelchair rental, and medical kits at the tourist service center, but also quickly and conveniently find the store location through electronic navigation systems and AR navigation, significantly improving the comfort of the shopping experience.

Chang Zhujun introduced that in response to changes in consumer demand, China Duty Free Group continuously improves its online and offline integration strategy, continuously optimizes its member ecosystem and customer management service system. At present, the number of China Duty Free members has exceeded 26 million.

Experts say that cities such as Beijing, Shanghai, and Guangzhou have strong advantages in tax-free economy. Innovating consumption scenarios and promoting the development of tax-free economy is conducive to guiding consumption return, while also promoting consumption upgrading, driving tourism and shopping to align with international standards, and promoting the transformation of modern service industry.

Beijing proposes to enhance the international competitiveness of duty-free shops and promote the implementation of more duty-free and refund policies. The Canal Business District, the sub center of Beijing, proposed to explore the establishment of duty-free stores to attract tourists from the "Universal Studios" and consumers in Beijing Tianjin Hebei region; The Dongcheng District of Beijing has issued the "Three Year Action Plan for Innovation and Development of Old Time Brands in Dongcheng District", proposing to support old time brands to enter duty-free stores and cross-border e-commerce platforms, and promote digital transformation. In the first quarter of this year, the sales revenue of Beijing's outbound tax refund increased by 8.9 times year-on-year, and the number of tax refund application forms issued increased by 6 times year-on-year.

Guangzhou proposed to further expand the radiation and influence of duty-free consumption by relying on transportation port hubs. Expand the operating scale of duty-free shops at ports such as Baiyun International Airport, and support the opening of duty-free shops at ports such as Guangzhou East Station and Nansha International Cruise Home Port. We will expand the coverage of duty-free stores and support China-Chic's products to enter duty-free stores. Develop bonded exhibition and sales experience consumption, as well as overseas passenger shopping and departure tax refund services, and cultivate and build demonstration blocks for departure tax refund.

Beauty, clothing, luggage... The China Duty Free Shanghai store is the largest duty-free store in the center of Shanghai, covering an area of 3300 square meters, with over 10000 products in 10 categories for sale. During this year's May 5th Shopping Festival promotion, the China Duty Free Shanghai store launched customized promotional activities, allowing more consumers to enjoy the benefits and convenience of duty-free shopping.

Further adjust and optimize tax exemption policies, tap into market potential, and provide consumers with a better shopping experience

Driven by factors such as consumption upgrading and policy promotion, China's duty-free market is flourishing. How to further tap into policy potential and drive the release of tourism consumption demand?

Guo Da, Vice President of the China Academy of Reform and Development, analyzed that in 2022, the proportion of duty-free shopping and tourism in Hainan was only 7%, which is still a gap compared to globally renowned tourist destination cities. This requires a shift from policy advantages to service advantages. We should focus on the needs of tourists and improve the convenience of duty-free shopping. At the same time, we will improve the duty-free product processing, production, and service industry chain in Hainan, and maximize the policy effect.

Haikou Customs, in response to the development trend of the new duty-free business model, continuously promotes the reform of the "one store, multiple warehouses" and "guarantee exemption mutual transfer" regulatory model, achieving the "immediate arrival, immediate review, and immediate unloading" of duty-free products throughout Hainan Island. At the same time, it strictly crack down on illegal and irregular behaviors such as "buying through agents" to ensure the orderly and steady implementation of offshore duty-free policies.

At the beginning of this year, in order to better protect the legitimate rights and interests of consumers, the State Administration for Market Regulation emphasized that duty-free enterprises selling imported goods to domestic consumers should comply with domestic laws and comply with various provisions of the Consumer Rights Protection Law, and "duty-free enterprises are not exempt from responsibility.". We must strictly fulfill the seven day no reason return obligation for online shopping, fully fulfill our quality guarantee responsibility, and improve product information disclosure. Distinguish between duty-free and non duty-free products on different sales pages, clearly identify product categories, and standardize price labeling.

Experts suggest further adjusting and optimizing tax exemption policies. Fully drawing on international experience, based on national conditions, accelerate policy research and reform on relaxing the quantity, quota, and variety restrictions of duty-free goods, tap into market potential, and expand consumer choice space. At the same time, accelerate the construction of duty-free shops in the city to provide consumers with a better shopping experience.