City aims to stimulate with duty-free shopping project

TIANJIN / BEIJING - With the once-famous Exotic Cargo Market having lost its appeal, Tianjin authorities are looking at turning Dongjiang Island into a duty-free shopping destination.

The island is in Binhai New Area, a production base for about 120 Forbes 500 companies. It is only 45 minutes by car from downtown Tianjin and fewer than two hours from the capital.

"Situated adjacent to Beijing and Tianjin, where consumption is robust, the zone will mean residents do not have to travel to Hainan or Hong Kong (to shop)," Yu Rumin, chairman of Tianjin Port, told China Daily.

Hainan province, an island off the coast of South China, began offering duty-free shopping to Chinese citizens to boost its tourism industry. Several other cities, including Shanghai, now want to follow in its footsteps.

Sales of luxury goods on the Chinese mainland totaled $1.75 billion in January, less than one-fourth the amount spent overseas, the World Luxury Association reported this month.

A survey by the nonprofit organization found that 72 percent of respondents cited the fact that prices are lower overseas, said Ouyang Kun, head of its China office.

Hainan started providing tax refunds to tourists in April. Chinese visitors can purchase duty-free goods worth up to 5,000 yuan ($790) at selected stores twice a year, with duty on most goods ranging from 15 to 35 percent.

The first store in Sanya had a sales volume of more than 800 million yuan in the first eight months. A second was opened in Haikou, the provincial capital, last month.

Experts said duty-free stores will boost China's domestic consumption, although it will be a slow process.

Hainan's duty-free zone, which is based on similar projects at Jeju Island in South Korea and Japan's Okinawa, came after the State Council's vow to build the province into a top international tourism destination by 2020.

"Many cities are now applying to be the 'second Hainan'. In the long term, there will certainly be more, but the process will not be quick," said professor Liu Huan at the Chinese University of Finance and Economics.

"It takes time for the central government to study the effects of the pilot program and to discreetly choose the next one."