CHINA: CHINA DUTY FREE GROUP (CDFG)


Uncertainty in Beijing for CDFG, but recovery on track in Hainan


While a new spike of Covid-19 infections in Beijing is throwing some businesses ‘into a new round of chaos’ – according to a reliable industry source based in the company’s capital – China Duty Free Group focuses its investments on the island province of Hainan, where the company recently opened two duty free ‘experience stores’. Charles Chen speaks to Charlotte Turner.


C


DFG President, Charles Chen first mentioned the company’s duty free


‘experience stores’ in an interview with TRBusiness back in April at which point he disclosed that the emphasis would not be on transactions. In a subsequent exchange with


TRBusiness he confirmed that CDFG opened two duty free experience stores located in Mangrove Tree Resort and Nanshan Scenic Spot, in Sanya on 13 May. The 740sq m store in Mangrove


Tree Resort is said to offer a personal shopping service and guides, which help to fully explain the offshore duty free policy to tourists. The so-called ‘experience stores’


allow tourists to “experience the products and get immersed in a brand’s culture and values,” said Chen. “Customers can order products


that they experienced in-store, online for collection at the pick-up point. The experience stores in Sanya Phoenix International Airport, however, are still under construction.” Aside from these openings Chen also updated TRBusiness on


the


construction of CDFG’s new Haikou International Duty Free Mall, which is now due to be completed in 2022. TRBusiness


understands


development has been accelerated during lockdown and it appears that opening cannot come soon enough, as Chen told TRBusiness that space in its existing Sanya International Duty Free Shopping Complex has become ‘saturated’. “Up to now, numerous


international well-known brands have been attracted to Sanya International Duty Free Shopping


JULY 2020


Complex and the sales are all beyond their expectations,” Chen told TRBusiness. As more Chinese travellers


emerged from quarantine during the May Labour Day holiday period, their strong propensity to spend was evident in Hainan, said Chen during a conversation had with TRBusiness in May. “However, the space is saturated


while many other brands still wish to open flagship stores in the complex. “We will try our best to offer


good opportunities for them with reasonable planning and arrangement based on their sales. We welcome more international brands to set up showcases in the complex.”


Hainan allowance increase Construction on the mall, which will house duty free stores, but also duty paid shops, offices and a hotel, began in 2019. It is worth noting that the duty free


allowance on China’s Hainan Island will more than triple to RMB100,000 ($14,063), in line with plans for a Free Trade Port (FTP) (see page 27 for more analysis). It was also in June that CDFG’s


parent company, China International Travel Service Corporation Limited (CITS) acquired a majority stake (51%) in Hainan Duty Free Co. Ltd (HNDF). Whilst hopes of a sustained


recovery have been dashed for CDFG’s business at Beijing Airport in particular, Chen remains positive that CDFG’s performance in Hainan will only continue to excel. “At present, domestic airlines and traffic in China’s airports are


“At present, domestic airlines and traffic in China’s airports are recovering rapidly, however, as we all know the worldwide pandemic has not been controlled effectively, so international passenger volume has not yet increased.”


Charles Chen, President, CDFG


recovering rapidly, however, as we all know the worldwide pandemic has not been controlled effectively, so international passenger volume has not yet increased,” said Chen. “Based on the performance of our


stores, there is an obvious uptrend for the Hainan tourism market and the traffic has also increased significantly…Our sales grew year- on-year in Hainan during the Labour Day holiday and on 1 May reached CNY 200 million/$28m; much higher than our expectations. It is a very encouraging result and signal to us. Offshore duty free has become a popular choice for Hainan tourists, whose purchasing power remains strong.” «


CDFG duty free ‘experience store’ in Sanya. TRBUSINESS 31


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