Just how strong are duty-free sales to China’s travelers and bargain hunters?
According to Tax Free World Association experts, as reported by Women’s Wear Daily, Chinese duty-free shoppers, projected to have spent $80 million while taking 50 million overseas trips last year.
Duty-free industry folks flocked to the TFWA’s “China’s Century” conference in Beijing earlier this month to discuss ways to tap into the very idiosyncratic – and lucrative – market.
“Understanding why Chinese travelers are at our airports is key to selling to them,” said Freda Cheung, the chief executive officer for Canada of World Duty Free Group. She offered personal anecdotes of her experiences in Vancouver three years ago, when the city was hosting the Winter Olympics. At that time, visitors to the Games smashed the duty-free sales records in one day.
While Cheung cautioned colleagues to, “Remember this day, because you won’t see it again,” the airport recently managed to top even their Olympic record by preparing well in advance for a group of 600 Chinese tourists passing through. They responded exuberantly to the Chinese signs, Chinese-speaking staff, and appealing promotions that the duty-free store had designed and implemented just for them.
The takeaway seemed to be that despite some challenges – including a government crackdown on corruption and rising labor costs — China’s fast-growing travel market and the demand for high-end products at low prices means the duty-free industry will benefit from many opportunities. “The fact that we are gathered here to talk about one passenger is proof alone of the power of the Chinese traveler,” said Emmanuel de Place, CEO of LS travel retail ASPAC.
The high taxes imposed on everything from fashion accessories to cigarettes in China has made duty-free shopping all the more appealing. While Tokyo and Paris have become popular shopping destinations, Hong Kong has also developed a considerable tax-free shopping industry to lure in Chinese consumers.
China’s government has recently named Shanghai the country’s second duty-free shopping zone, and the government will “explore tax rebates on departure in coordination with national-level administrations and select locations to set up duty-free shops.”
The country’s first duty-free zone, Hainan Island, has seen significant hikes in the local real estate industry thanks to the prestige the duty-free destination lends it. A 7.7-square-mile residential, golf, spa and shopping development, specifically looking to attract duty-free shoppers, is in the works.
“We face the newest and most exciting travel retail audience in the world,” said Sunil Tuli, managing director for duty free of the King Power Group in Hong Kong. In addition to the growing demand for duty-free shopping, airports are expected to see increased traffic as regional airports in China open up to international connections. This is expected to further increase the market potential of Beijing and other large cities.
photo credit: grant wickes