NEWS/ANALYSIS: CHINA


China domestic traffic uptick leads Asia Pacific recovery amid Covid-19


As travel within China continues its recovery, the government is doing its best to drive domestic consumption in Hainan and elsewhere. Andrew Pentol reports.


T


he city of Wuhan in China may have been the epicentre of the deadly coronavirus


(Covid-19) pandemic, but the revival of domestic travel in the country is now leading the resurgence across the entire Asia Pacific region. At the end of August, travel


analytics company ForwardKeys predicted that domestic air travel in China would make a full recovery by the beginning of September. ForwardKeys, which noted the


progressive recovery of Chinese air travel during the pandemic, revealed domestic arrivals at Chinese airports reached 86% of 2019 levels in the second week of August. Bookings (issued air tickets) also hit


98% of 2019 levels, with most being for travel in mid-to-late August. Time will tell if ForwardKeys was


accurate in its prediction, but one thing is certain: the recovery of domestic traffic in China is certainly gathering pace.


Load factors rising Speaking at the recent Duty Free World Council ‘Planning to Restart’ webinar, Patrick Lucas, Director Economics, ACI World said: “China is leading the recovery [in Asia Pacific] and passenger load factors continue to increase domestically.” As domestic travel increases in


China, the government is doing its best to drive domestic consumption to further boost China’s economy. On 1 June 2020, the overall plan


for the Hainan Free Trade Port was released to the world. This was after Chinese President Xi Jinping revealed in 2018 that China would support Hainan in building the pilot free trade zone throughout the entire island. The plan was to ‘gradually explore and steadily promote’ the


OCTOBER 2020


establishment of a Free Trade Port with Chinese characteristics. Announcing the overall Free Trade


Port plan on 2 June, the Chinese central government revealed a new game-changing offshore duty free shopping policy on Hainan Island. The policy, which was


implemented on 1 July, contains new regulations that more than triple the offshore duty free purchasing quota from RMB30,000/$4,431 (at current exchange rate) to RMB100,000/$14,772. Consumers can benefit from an expanded duty free category list and liquor, tablet PCs, clothing and phones were among seven new categories introduced. China Duty Free Group, whose


owner Chinese International Travel Service Corporation Limited acquired a majority 51% stake in Hainan Duty Free Co in June, runs the impressive Sanya Duty Free shopping complex on the island. It will also operate the new Haikou International Duty Free Mall. Speaking to Charlotte Turner,


Editorial Director at TRBusiness, Charles Chen, President, CDFG said: “The adjustments [to the Hainan offshore duty free policy] will deeply release consumers’ shopping enthusiasm and purchasing power. This will help greatly in terms of conversion rate and our ability to increase average transaction value.” CDFG can also look forward to


the start of operations in the new Haikou Meilan International Airport Terminal 2 next year. Construction of the facility was completed on 30 June and approval was granted for the terminal to open on 26 August. At the time of writing, the retailer


was preparing to host the 2020 Watches and Wonders event (29


September - 31 October) at its CDF Mall in Sanya. The event will take place on the island for the first time. Away from Hainan, a number of


Chinese companies have applied for new duty free licences in China. These include Wuhan Wushang Group and Guangzhou Lingnan. Chinese department store operator Wangfujing Group has already created a new wholly-owned subsidiary duty free company after being awarded a duty free licence by the Chinese Ministry of Finance in June. As domestic travel recovers from


the coronavirus pandemic, the Chinese government is showing its intent to promote domestic consumption while driving healthy competition among downtown tax free retailers. «


“The adjustments [to the Hainan offshore duty free policy] will deeply release consumers’ shopping enthusiasm and purchasing power.”


Charles Chen, President, China Duty Free Group


TRBUSINESS 21


Above: China Duty Free Group, which operates at the impressive Haitang Bay Duty Free Shopping Complex (pictured), is looking forward to the opening of Haikou Meilan Airport Terminal 2.


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