More luxury foreign brands are entering the island province of Hainan, a tourist destination that is gaining momentum in its development as an international center for tourism consumption, backed by lucrative preferential policies and measures.
Around 30 overseas luxury and beauty brands including fashion and leather goods, jewelry and watches, makeup and children's clothing have opened boutiques in Hainan so far this year, or made forays at the island's resort hotels, according to media reports.
Hainan has lured crowds of Chinese consumers who were used to traveling abroad and who bought nearly 80 percent of their luxury goods in Paris, London and Tokyo before the COVID-19 outbreak in early 2020.
Experts explained the continued entry of foreign brands to Hainan is a reaction to the new offshore duty-free policies updated by the central authorities in 2020.
These expanded the per capita quota from an annual 30,000 yuan ($4,700) to 100,000 yuan. Also, the magnetic effect of the China International Consumer Products Expo, which will hold its second edition sometime later this year, contributed.
More importantly, the bright prospects of Hainan Free Trade Port, which is expected to become a paradise for duty-free goods and a globally influential high-level free trade port by the middle of the century, played a role too.
International brands are preparing for future opportunities in the Hainan FTP.
According to the FTP master plan, the entire island could become duty-free after the year 2025, and Hainan will then become a paradise for duty-free goods and the tourism retail industry, said an official with the Hainan International Business Council.
China launched a consumer products expo in Hainan highlighting high-end goods in May 2021.
It aims to build a platform promoting high-level opening-up and promote global consumption of high-quality products, officials with the Ministry of Commerce said. The ministry jointly hosts the annual event with the Hainan provincial government.
Through the gathering of high-quality consumer products, as well as buyers and sellers from home and abroad, the expo helps to bridge the international and domestic markets, said the officials.
A total of 70 countries and regions attended the first four-day event where 2,628 leading brands of 1,505 enterprises from home and abroad participated. The expo, covering 80,000 square meters, attracted more than 240,000 visitors. After the closing ceremony last year, more than 80 percent of exhibitors－including L'Oreal of France, Shiseido of Japan and Tesla of the United States－expressed willingness to participate in the next expo.
Themed "Share open opportunities, co-create a better life", a schedule for the second expo has not been finalized due to COVID-19 pandemic concerns.
The exhibition area will cover 100,000 square meters, 80 percent of which will be dedicated to international exhibitors featuring fashion, jewelry, food, medicine and other professional services, said the organizers.
Michael Straub, associate partner of McKinsey, said that as the COVID-19 pandemic is expected to continue for most of this year, the Hainan market will continue to be the main investment focus of luxury brands. Straub believes Chinese tourists will keep flocking to Hainan and that after 2022, even when international travel recovers, the upcoming major policy changes in Hainan FTP will keep the island "a competitive travel and duty-free destination".
Industry experts estimate that the market scale of offshore duty-free products in Hainan is likely to exceed 160 billion yuan in 2025, becoming the largest offshore duty-free shopping market in the world.