China’s Hainan Duty-free Revenue Hits $9.47 Billion in 2021

Tianwei Zhang
·2 min read

LONDON — China’s pent-up demand for travel retail has sent offshore duty-free shopping at the nation’s most southern province Hainan Island off the chart.

According to data from the Department of Commerce of Hainan Province, duty-free revenue within the tropical island increased by 84 percent in 2021 to 60.17 billion renminbi, or $9.47 billion.

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Duty-free sales last year jumped 83 percent to 50.49 billion renminbi, or $7.94 billion. In 2020, the island logged a 127 percent increase in duty-free sales to 32.74 billion renminbi, or $5.05 billion.

The number of visitors who visited the island in 2021 rose 73 percent to 9.67 million, and the number of duty-free items purchased from the island’s 10 duty-free stores grew 71 percent to around 53.49 million.

The Hainan duty-free market is dominated by five duty-free license holders. They are China Duty Free Group, CNSC, Hainan Tourism Investment Duty Free Co., Hainan Development Holdings and Shenzhen Duty Free.

Due to a strict zero COVID-19 case policy, international travel is heavily restricted in China. Hainan is the only place Chinese citizens can travel to during the pandemic.

In June 2020, the Chinese government detailed its plan to establish a free trade port in Hainan, transforming the island into a hub not just for tourism and retail but medical, technology, high-end manufacturing and financial services.

It also boosted the duty-free spending allowance per person to 100,000 renminbi, or about $15,500 at current exchange, from 30,000 renminbi, the most generous offshore duty-free spending cap in the world.

According to a report from KPMG and Moodie-Davitt, Hainan Duty Free 2022 sales are expected to climb to at least $15.5 billion and to $46.5 billion by the end of 2025.

In comparison, China’s other retail hot spot, Hong Kong, logged a 97.7 percent decrease in visitors in the first 11 months of 2021 due to border controls.

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