TOP 10 OPERATORS 4: CHINA DUTY FREE GROUP


the results there have also been very encouraging,” says Chen. “The duty free allowance increased a lot and we honestly didn’t expect for it to happen just like that. We are currently at about double the sales of last year, if you compare year-on- year figures.” Taking this into account, it is not


“We are currently at about double the sales of last year [at the Haitang Bay Mall], if you compare year-on-year figures.”


Charles Chen, CDFG


Above: CDFG's new stores at Beijing Daxing Airport opened in November of last year.


travel retail because they are used to spending and have done for many years. So even then we believed that the impacts to our business from Covid-19 would be temporary.” In order to boost domestic


tourism at a time when international travel was forbidden, the Chinese government made the decision to increase the offshore duty free allowance for shoppers travelling to Hainan. As reported, new regulations


included the tripling of the purchasing quota from RMB30,000/$4,285 to RMB100,000/$14,284 and the expansion of the duty free category list from 38 to 45. Liquor, tablet PCs, clothing and


phones are among the seven new categories introduced. News of the increased quota for offshore duty free shopping was announced in early June when the Chinese authorities revealed the overall plan for the Hainan Free Trade Port (FTP). “From 1 July, when the new policy in Hainan was introduced,


difficult to see why Chen says he feels ‘a level of optimism’ and is ‘very confident’ that by the end of 2020 the company could see its sales exceed those reached in 2019. “I do feel a level of optimism that


by the end of this year we can at least reach 2019 sales and maybe even better sales in 2019. As I tell our vendors very clearly, around 60% of the travel retail business in Korea and Japan comes from the Chinese. And because the Chinese cannot travel to Korea and Japan they want to spend money within China.”


Big ambitions for Hainan In line with the current trend, by the end of this year, sales in Hainan – where CDFG has four stores – should finish at around twice those registered in 2019. “All the vendors are excited by the


business prospects in Hainan,” adds Chen. “They are encouraged by the sales results in Hainan. Every day is like Chinese New Year at our Haitang Bay store where receive between 40,000-50,000 people a day just in that shopping mall. “It’s a similar situation at our store


in downtown Haikou.” On the topic of Haikou, Chen


reveals that while the company has already constructed its 9,000sq m store there, it won’t be operational until early next year. “I personally went there several


months ago and I saw the new terminal. Compared to Terminal 1, the new T2 is very modern with much higher ceilings.” Construction of the new Terminal


2 completed on 30 June and a permit permitting the terminal to be used was received on 26 August. According to a Hainan government


Sales have doubled at CDFG’s Sanya international duty free complex in Hainan since the duty free allowance increased in July.


20 TOP 10 OPERATORS


news release, the new facility (known as the airport’s Phase 2 expansion project) covers an area of 300,000sq m and is located 500 meters away from the existing Terminal 1.


The total commercial space in the new terminal is around 33,000sq m, with 10,600sq m devoted to tax free. Chen says that the new


developments in China along with the recovery in travel retail sales has attracted a lot of attention at this time from companies based in Europe who are eager to see things for themselves. “Lots of people are interested


to know what’s going on in China, particularly those in Europe. They are so eager to come to China to see what’s happening in Hainan, and I say ‘that’s no problem but you have to quarantine for 14 days’.” Chen reminds TRBusiness that


as of September, Beijing is now accepting direct flights to and from eight countries: Greece, Denmark, Austria, Sweden, Canada, Thailand, Cambodia and Pakistan. Still, Chen is under no allusion that


the global duty free airport business won’t see a recovery to pre-crisis levels until at least 2023. “It’s going to be difficult for the


airport business to return to pre- crisis levels. From the forecasts provided by air traffic analysts [such as ACI] it looks like the business will not return until 2023-2024.” In the meantime, airport stores


must adapt to survive, leaning on ecommerce solutions to allow customers to continue to shop. “We must allow our customers to


continue shopping,” declares Chen. “I know our competitors such as Lotte, Shilla, DFS and KrisShop are doing the same.” CDFG, much like its competitors,


has been making full use of social media platforms and ecommerce sites to continue serving its customers. It recently launched new e-duty free stores at Chengdu Shuangliu International, Kunming Changshui International, Shenyang Taoxian International, Xi’an Xianyang International, and Xiamen Gaoqi Airports on the TripurX WeChat platform. However, while Covid-19 has


forced the company’s hand, Chen is confident that services such as pre-order, click-and-collect and home delivery will not be the only way customers will want to shop in the future. «


OCTOBER 2020


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