Hainan Island gets biggest duty free store

I have a soft spot for China’s Hainan Island because I managed to visit the island before most of the tourist development took place, and before the southern city of Sanya even had a commercial airport.  Since then Hainan Island, and Sanya in particular, has become a huge tourist destination, although mainly catering for the Asian trade.  Where there were once quite beaches, there are now huge resorts, and it is no surprise that Hainan Island continues to be developed at a very quick pace.

It has just been announced that the China Duty Free Group (CDFG) has unveiled plans to open the world’s largest duty free complex in Hainan.

The complex will be located at Haitang Bay in Sanya and will cover a total area of 350,000 square metres, including 150,000 square metres dedicated to commercial services.

2011 has seen the growth of duty free shopping on Hainan Island with the island becoming the world’s fourth duty free zone. A pilot duty free program was launched on April 20 that allowed both domestic and international travellers to Sanya to enjoy duty free shopping.

Over 14,000 Mainland Chinese tourists visited the 7,000 square metre Sanya Store on its opening day on April 20, and visitor traffic reached record numbers over the recent May Day holidays as shoppers flocked to the island province to grab a bargain.

According to CDFG, 98.9% of business is from ‘offshore duty free sales’, which target customers who leave Hainan Province through Sanya or Haikou Airports to return to Mainland China. Foreigners who leave China from Sanya account for only 1.2% of total sales.

The five best-selling categories at the Sanya store have been cosmetics, watches, luggage and large leather goods, perfume, and small leather goods.

Certain brands have been so popular that CDFG has had to implement ‘traffic restriction’ measures to minimize crowding in the stores. An ordered queuing system has been established to handle the ‘huge traffic’, and parking has been moved to a separate plaza across the road to avoid traffic flow problems and improve customer safety.

The Sanya store has drawn tourists in such large numbers that CDFG has entered into co-operation agreements with over 100 local tour agents.

This means that tourists on group tours, which is the majority of domestic tourists, really don’t have any choice about where to shop.  They are herded into shops at pre-determined times.  The tour companies even send their clients ID numbers and flight details to the store ahead of time so that their shopping cards are ready for them before they even arrive at the store.

In the west this system would be called collusion and a cartel, and it would not be acceptable, but in China it is, sadly, a normal part of the tourism business.

The new complex will be built in two stages, with stage one being completed and opened in two to three years time.

It may be duty free, but there’s nothing free about the lack of shopping choice given to China’s domestic tour groups.

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