Located on the south side of the island, Sanya enjoys a warmer tropical climate than that found in Haikou, the capital city and political centre of Hainan, and therefore is a more popular travel destination. Over 60% of duty-free sales revenue in Hainan is generated in Sanya. However, benefiting from the bonded zone and the free trade port, Haikou is the first stop for most duty-free goods entering the island. In October 2022, the world’s largest duty-free complex, Haikou International Duty-free City (海口国际免税城) operated by China Duty Free Group (“CDF”) officially opened: marking Haikou’s ambition to attract duty-free shoppers from China and around the world.

Photo: Haikou International Duty-free City on 19th December 2022, deserted due to Chinese consumers going through the first wave of Covid infections. By Ran Guo.

Duty-free consumption in Hainan and the fragrance and cosmetics sectors lead the sales and accounts for nearly 50% of total sales revenue in the region, followed by jewellery and watches. According to 2021 sales figures from CDF’s major duty-free mall in Sanya - brands including Estee Launder, Cartier, Bvlgari, and Tiffany are market leaders.

Photo: Hainan Duty-free Sales Revenue Makeup

The recent lifting of all Covid-related domestic travel restrictions has set consumers free. According to GACC data, from 13th to 19th December 2022, duty-free sales revenues in Hainan exceeded RMB 100 million every day for seven days in a row. In the year to come, policies and guidelines will be released for Hainan to turn it into a complete free-trade island. Residents and travellers to the island will not need to pay duties on imported goods within the island. We are expecting a detailed product list and implementation guidelines to be announced. In 2023, CBBC will aim to organise a member company delegation to meet with the Hainan government to further explore how these policies can benefit UK companies to help change their respective strategies for China.