CHINA REPORT: CHINA DUTY FREE GROUP CDFG makes its biggest plays to date
The China Duty Free Group achieved two major ambitions recently with the reported 51% acquisition of Sunrise Duty Free and its successful joint venture tender for the Hong Kong L&T contract with Lagardére Travel Retail – all less than a year after CDFG and its CITS parent company merged with the Hong Kong-based China National Travel Service (HK) Group. Doug Newhouse and David Hayes report.
“T
he last two months have proved to be two of the most significant in the
33-year history of the China Duty Free Group (CDFG). Not only did TRBusiness exclusively
report that it had acquired 51% of Beijing and Shanghai airports’ operator Sunrise Duty Free in March, but just a month later CDFG added the Hong Kong International Airport L&T contract to its portfolio in a joint venture with Lagardère Travel Retail. Significantly, this contract was also
won against very stiff competition, delivering eight stores comprising around 3,400sq m, with CDFG President Charles Chen clearly extremely delighted. He said: “It is such a distinguished
honour to be awarded the Liquor and Tobacco concession at HKIA. This is a significant milestone for CDFG to grow globally. “We genuinely appreciate the
trust and confidence the Airport Authority has placed in us. CDFG in partnership with Lagardère Travel Retail, shall deliver a world class duty free shopping experiences at HKIA”. This ‘win’ is also very significant
from a buying perspective, with few other operations in Mainland China producing the sales turnover that is traditionally generated at HKIA.
Sanya is a world leader Of course, one exception is CDFG’s world-leading downtown Sanya International Duty free Shopping Complex in Haitang Bay on Hainan Island [see panel story on p82-Ed]. HKIA also further consolidates
CDFG’s dominant duty free presence in China and the Special Administrative Region of Hong Kong (HKSAR), where the operator already managed some 248 duty free stores on the mainland and beyond. The addition, the Sunrise Duty
MAY 2017
Free dimension is also expected to add significant sales turnover to CDFG, with this organisation historically backed for many years by the powerful Boyu Capital company. The extent of Boyu’s ambitions
was also evident only two years ago as a powerful organisation, having declared itself a serious player in the race to buy the World Duty Free Group when it was being sold by the Edizione/Benetton Group [eventually to Dufry] back in 2015. Part of this reasoning was clearly
related to the fact that the company obviously knew its Beijing Capital Airport duty free business would be coming up for tender. For the uninitiated, Sunrise Duty
Free operates all of the duty free airport concessions and most of the specialist shops at Beijing Capital, Shanghai Pudong and Shanghai Hongqiao airports. Meanwhile, CDFG has already
benefited hugely from last year’s merger of its parent CITS with the China National Travel Service
Group, which effectively created a RMB120bn ($19.2bn) giant. However, it also faces a number of
big challenges, including the ongoing retail tenders at both Beijing and Shanghai Hongqiao and the prospect of a brand new airport being built in Beijing in 2019 [at Daxing-Ed]. However, this new marriage
between CDFG and Sunrise will effectively remove one competitor from the duty free concession bid at Beijing Capital Airport (BCIA) – with this process well underway as this report went to press. It was last February when BCIA
finally released invitations ‘to Chinese companies’ interested in bidding for
As TRBusiness reported back in March, it is understood that Beijing and Shanghai airports duty free concessionaire Sunrise Duty Free has sold a 51% share in the company to the China Duty Free Group (CDFG).
TRBusiness TRBUSINESS 81
Above: The Swarovski store operated by CDFG at Guangzhou Airport.
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