duty-free shop in Hainan (pic: file image)
China Wine

China’s new luxury mecca Hainan rakes in billions in first year

China's biggest duty-free island province, Hainan, has reported RMB 46.8 billion in sales from last July to June this year, aided by increased spending limit and global travel restrictions.

China’s biggest duty-free island province, Hainan, has reported RMB 46.8 billion (US$7.24 billion) in sales from last July to June this year, aided by increased spending limit and global travel restrictions.

According to customs in Haikou, capital of the tropical island, from July 1 last year to June 30 this year, the sales represent 226% increase year on year, and tourist number jumped 102% to 68.2 million.

The growth signals that China’s once booming overseas luxury spending is coming home.

In 2019 prior to the global pandemic, China accounted for 35% global luxury sale. While with prolonged travel restrictions, deep-pocketed consumers are flocking to Hainan, the newest duty-free destination, for their luxury spending.

By 2025, the whole province of Hainan is expected to be duty free (pic: People’s Daily Online)
By 2025, the whole province of Hainan is expected to be duty free (pic: People’s Daily Online)

The growth is boosted when Hainan raised the annual duty-free shopping quota from RMB 30,000 to RMB 100,000 on July 1 last year. The categories of tax-free goods were also expanded from 38 to 45, with alcoholic beverage and electronic products added.

Meanwhile, single transaction spending limit for one product is also lifted from RMB 8,000.

For wine and spirits, the category benefited from the luxury shopping mecca when the list of duty-free goods was expanded to include alcoholic beverage last July, prompting merchants and even individual wineries to open duty-free shops.

Beer, wine, sake, imported spirits and other fermented beverages are among duty-free products that have become available to domestic consumers. However, sales of these drinks should not exceed 1500ml in total, according to Chinese government.

Hainan opened up five new duty-free shops last year, bringing the total to nine.

In June last year, China announced that it plans to turn the tropical island in southern China to the world’s largest duty-free shopping center.

By 2025, the coverage of duty-free zone is expected be extended to cover the entire province, freeing up brands to operate their own shops instead of collaborating with duty-free license holders.

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