Tourists fill a duty-free mall in Sanya city, Hainan province, which is seeing a boom in sales during the “golden week” holiday period. Photo: Xinhua


Tourists fill a duty-free mall in Sanya city, Hainan province, which is seeing a boom in sales during the “golden week” holiday period. Photo: Xinhua

Chinese tourists who traditionally rush to duty-free outlets in South Korea or Hong Kong for holiday shopping are being lured to southern China’s island province of Hainan this year as the coronavirus continues ravaging most of the world.

Long queues are a common sight at shopping malls such as the Haitang Bay Duty Free Shopping Complex in Sanya city, photos and videos posted on social media show. For the first five days of the eight-day “golden week” holiday that lasts from October 1-8 this year, the tropical island saw revenue of 530 million yuan (US$78 million) on duty-free goods, a year-on-year increase of 136.9 per cent, China’s state television reported on Wednesday.

This year’s National Day holiday overlaps with the Mid-Autumn Festival, which is traditionally a time for family reunions, extending the break to eight days from the usual seven.

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Gao Yan, the deputy manager of a duty-free store, told Hainan’s official radio broadcaster that the sales boom during the holiday week was due to the suspension of international travel, which has increased visits to Sanya by tourists who are traditionally fans of tropical climates and duty-free shopping.

China is cultivating Hainan as a shopping paradise in an effort to boost the island’s development and to keep consumer spending domestic.

About 155 million Chinese travelled abroad in 2019 – up 3.3 per cent from the previous year, according to the Ministry of Culture and Tourism. During the seven-day golden week holiday last year, 7 million Chinese tourists travelled abroad. In 2018, Chinese tourists spent US$277 billion overseas, beating the United States and Germany combined.

As a result of travel restrictions, demand for luxury goods has been largely met by domestic sellers this year. In the first half of the year, the revenue of CTG Duty Free – the state-owned giant that is the largest duty-free operator with an 80 per cent market share in the country – surpassed that of the Basel-based Dufry Group, the world’s largest operator of airport duty-free shops.

On July 1, Hainan increased the duty-free quota from 30,000 yuan (US$4,416) to 100,000 yuan per person each year and expanded the tax-free goods categories to include electronic products and wine – a move to drive consumption amid mounting pressure on the already sluggish economy that was further strained by the Covid-19 pandemic.

Following the introduction of the new policy, the revenue of the four duty-free outlets on the island – monopolised by CTG Duty Free – grew 227 per cent year-on-year to 8.61 billion yuan (US$1.27 billion) by the end of September, according to local authorities.

Mobile phones, wine and tablets have been among the most popular items. High-end Swiss watches also quickly vanished from store shelves, and one visitor even bought 300 Apple AirPods in Sanya, according to Chinese media reports.

China’s economic outlook boils down to whether consumers start spending

“Overseas duty-free shops are the biggest competitors to Sanya,” said Zhang He, who lined up outside a duty-free store in Sanya on Friday. “This long queue is something that would be happening in South Korea if there were no coronavirus, because the prices in Sanya are not competitive at all. The pandemic has made Sanya more appealing.”

On Weibo, China’s Twitter-like microblogging site, one user said, “Unless I cannot travel abroad in the future, I won’t join this frenzy again.”

Last month, Hainan authorities announced that three more duty-free shops would open in Sanya by the end of this year, and the total revenue from sales of duty-free goods across the island province was expected to reach 30 billion yuan this year.

In contrast, Hong Kong, whose retail sector relies largely on mainland visitors, is suffering more than HK$2 billion in lost tourism revenue for the golden week, as Covid-19 border curbs keep mainland Chinese visitors away, according to local lawmaker Yiu Si-wing’s estimation.

Figures from the Hong Kong Immigration Department show that there were only 894 mainland visitors to the city from October 1-6, compared with the 670,000 mainlanders who visited the city during the holiday week last year.

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This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.

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