The Moodie Davitt Report Founder & Chairman Martin Moodie gave the closing keynote address during the fifth annual Luxury Symposium event hosted by the French Chamber today (21 April) in Hong Kong which was broadcast worldwide.
Moodie’s presentation, entitled ‘Hainan — The Lighthouse of Travel Retail’, highlighted the growing importance of Hainan to the global travel retail industry amid the context of the COVID-19 crisis. It also placed particular emphasis on the island’s enhanced offshore duty free shopping policy, the related liberalisation of allowances across categories and the recent proliferation of duty free licences.
“That’s an important global context, for the events of 2020 and indeed early 2021 have elevated Hainan’s importance within a travel retail channel that had hitherto been a star turn for many of the world’s great brands across categories such as luxury, beauty and wines & spirits in recent years. A dual star turn really, in that travel retail serves as a window to the world, an international showcase, as well as a very valuable direct revenue and profit generator.”
Since its introduction in September 2011, Hainan’s offshore duty free business had grown into a USD 5 billion channel by the end of 2020, Moodie said. Even after experiencing a -22% decline in visitor numbers because of COVID-19, sales rose by +127% last year and the growth is set to continue. UBS projects a compound annual growth of +40% from 2019-2025, Moodie noted.
He said that Hainan’s allure as a shopping paradise had been greatly enhanced by the 1 July 2020 enhancement of the offshore duty free policy, which tripled the annual allowance to RMB 100,00 (USD 15,300).
Moodie also painted a picture of Hainan’s rapidly-evolving landscape as an ‘industry within an industry’ and outlined the latest policy developments and key players. The line-up includes state-controlled giants such China Duty Free Group and CNSC; plus Shenzhen Duty Free and local Hainan government-controlled players in varying degrees of partnership with international travel retailers such as DFS Group, Dufry and Lagardère Travel Retail.
According to Moodie, authorities expect the offshore business in Hainan to rise to RMB 60 billion (USD 9.3 billion) this year and climb to at least USD 15.5 billion in 2022. Recently, Hainan Free Trade Port suggested on its WeChat Official Account that sales could climb to USD 46.5 billion by the end of 2025 in line with the province’s 14th Five-Year Plan.
Read original article
