Now, buying duty-free products at home a trend

Chinese consumers are expected to shop for more overseas high-end products at domestic duty-free stores, thanks to the growing demand for such products and the ongoing restrictions on outbound travel, experts said.

Indications that the duty-free shopping sector in the country is ready to ride the trend are evident from the duty-free outlet plans of various provinces and cities. Duty-free shopping outlets enable inbound and outbound tourists to purchase duty-free goods from specific retailers in certain areas, without paying value-added tax on imports or the consumption tax. Normally they are located at offshore locations, ports or in the cities.

Qingdao, Shandong province, is planning to set up more duty-free stores.

On Dec 28, Sun Zubin, Party secretary of Qingdao Jiaodong Airport Economic Demonstration Zone, told news portal Jiemian.com that the zone was planning to set up a duty-free mall for high-end products from abroad and will allow local residents to shop at the mall.

Qingdao Cruise Terminal has also received indirect approval for duty-free operations after it set up a joint venture with China Tourism Group Duty Free Corp for the purpose.

China Tourism Group Duty Free Corp, a duty-free retail giant in China, operates four offshore duty-free stores in Hainan province. Revenue from all the stores in Hainan doubled to 25 billion yuan ($3.87 billion) between Jan 1 and Dec 14 last year, on a yearly basis. Three new offshore duty-free shops opened in Sanya, another city on the island, to promote tax-free consumption, taking the total number of duty-free shops on the island to seven.

Sales at the offshore duty-free shops in the province exceeded 31.58 billion yuan till now. The number of shoppers has exceeded 3.4 million, while the number of purchases has crossed 19 million items, up 130 percent on a yearly basis, according to the provincial commerce department.

According to data published by market research firm Bain & Co and Tmall Luxury Division, duty-free shopping was introduced in Hainan over a decade ago. But the business really boomed last year, thanks to the COVID-19 travel restrictions and attractive shopping incentives.

Zhejiang China Commodities City Group Co Ltd is another company that has sought a license to set up duty-free outlets in Yiwu, Zhejiang province, according to Jiemian.

Wangfujing Group, a leading department store, obtained a license for duty-free business in June and is planning to expand its reach to more cities, including Wuhan in Hubei province. It also plans to build a large-scale shopping complex at the upcoming Beijing Universal Resort in the nation's capital.

Zeng Guang, chief analyst at Guosen Securities, told Jiemian that the rebound in consumption from outbound tourism and the domestic economic rebound have boosted the domestic duty-free market.

Spending on luxury products has rebounded in China after the slow start due to COVID-19 lockdowns, with more Chinese consumers preferring to make the purchases at domestic outlets due to travel restrictions.

Chinese consumers are most likely to remain cautious about international travel even after the pandemic ends. As a result, most luxury brands believe that domestic growth will likely continue in 2021 at about 30 percent. The luxury market on the mainland is likely grew by 48 percent to 346 billion yuan last year, said the Bain report.