Moddie's Connection ①: Hainan - The Hotspot of World Duty-Free

By Martin Moodie / HICN / Updated: 16:29,22-April-2021

It is my great pleasure to become a regular columnist for the Hainan International Media Center. Over the coming months, I will be helping readers understand the duty-free industry in Hainan and overseas and examining some of the most exciting developments.

Hainan is now the hottest word in the global duty-free industry’s language. The island has long been a natural paradise, combining a pristine environment, a balmy winter-free climate, soft sand beaches, and beguiling tropical scenery. But since 2011 it has also become a shopping paradise.

In that year, a visionary government policy saw the introduction of ‘offshore duty-free’ shopping, an initiative designed to stimulate the island’s economy and raise domestic consumption. Boosted by regular improvements to the policy, those dual aims have been triumphantly met and in 2020 Hainan became the epicentre of the global duty-free industry, a ‘lighthouse’ in an otherwise darkened sector.

While the duty-free industry worldwide stalled due to the COVID-19 pandemic, Hainan went into overdrive. After a slow start to the year due to the coronavirus, visitor numbers and duty-free sales picked up fast. And although 2020 did see a 22.2% drop in visitors to Hainan to 64.6 million, offshore duty-free sales (including tax-paid items) surged by 127% over 2019 exceeding RMB32 billion.

This was an astonishing result in a year when sales at the world’s previous duty-free hot spots, the Republic of Korea and Dubai Duty-Free, fell by 38% and 65% respectively over 2019. Hainan’s performance was driven by a combination of factors. Firstly, the travel restrictions resulting from the pandemic meant that mainlanders could not travel overseas. With Hainan COVID-free from early in the year, the prospect of a domestic holiday on an island paradise grew in attraction. Secondly, that attraction soared following the introduction of an enhanced shopping policy in July.

The annual duty-free shopping allowance was tripled to RMB100,000; the number of categories of duty-free items extended from 38 to 45 (including cell phones and alcohol); the previous single purchase limit of RMB8,000 (US$1,250) removed; and the limit on cosmetics items raised from 12 to 30.

The impact was startling. From July 1 to December 31, sales of cosmetics rose 1.4-fold to RMB10.53 billion. Watches and jewellery – helped by the removal of the single purchase limit – saw sales boom by 3.4 times to RMB4.89 billion.

Buoyed by its performance in Hainan, where it operates several shops including the spectacular Sanya International Duty-Free Shopping City in Haitang Bay, China Duty-Free Group became the world’s number one duty-free retailer last year, according to data compiled by The Moodie Davitt Report, up from number four in 2019.

That status is a testament to the success of the Hainan offshore duty-free shopping policy. I expect the business to flourish even more in the future, especially as more retailers have opened in recent months in Haikou and Sanya. The temperature in duty-free’s hot spot is about to be turned up even further.

Martin Moodie is Founder and Chairman of The Moodie Davitt Report, the world’s leading information and media source for the duty free and travel retail industry. He has worked in the industry for 34 years and is respected throughout the world as its leading editor and commentator.

The Moodie Davitt Report owns and organizes the leading airport commercial revenue conference, The Trinity Forum, now in partnership with Airports Council International (ACI) World and ACI Asia-Pacific. It also owns the annual Airport Food & Beverage (FAB) Conference & Awards and ‘The Moodies’ – the industry’s largest social & digital media awards. In 2020, The Moodie Davitt Report created the pioneering Virtual Travel Retail Expo.

Born in New Zealand, Martin Moodie is now based in Hong Kong, China, and has visited China many times during his career.



Having questions about living or working in Hainan? Leave it below. 

We shall contact you by email once we have the answers for your questions.

Our Privacy Statement & Cookie Policy

By continuing to browser our site and use the services you agree to our use of cookies, Privacy Policy and Terms of Use. You can change your cookie settings through your browser.

I agree