Joint research report of two foreign institutions: Hainan is expected to become the world's largest tourism duty-free retail market

　　After Hainan's outlying islands' tax exemption has set off a consumer boom, the duty-free industry has attracted more and more attention.

On May 7, during the first China International Consumer Goods Expo, KPMG China and Moody's Davit report jointly released the "White Paper on Hainan Free Trade Port Tourism Retail Market" (hereinafter referred to as the "White Paper"). The "White Paper" pointed out that Hainan The Free Trade Port is expected to become the world's largest tourism duty-free retail market in the next two years.

　　Global duty-free sales fall off a cliff in 2020

　　The tourism duty-free retail industry is a global sub-product of the tourism and aviation industry, which mainly sells certain duty-free products to international travelers.

Therefore, the development of the tax-free industry is not only affected by the policies of different countries and regions, but also closely related to the tourism and aviation industries. This data is obviously not optimistic in 2020 when the new crown pneumonia epidemic sweeps the world.

　　The "White Paper" shows that affected by the epidemic, the global aviation industry will collapse across the board in 2020.

According to data from the Association of Airports International (ACI), compared with the forecast baseline passenger flow, global passenger traffic in 2020 has dropped by 65%.

This year, it is estimated that there will be 9.5 billion passengers, but there are only 3.4 billion passengers, and 6.1 billion passengers have been lost.

　　The World Tourism Organization (UNWTO) believes that in 2020, the global tourism industry has experienced its worst year in history, with the number of international tourists falling by 74% year-on-year.

Due to the new crown pneumonia epidemic, related decline in demand and extensive travel restrictions, the number of international tourists received around the world in 2020 has decreased by 1 billion compared with the previous year.

In contrast, during the 2009 global financial crisis, this drop was only 4%.

　　Affected by the epidemic, global tourism duty-free retail sales will drop sharply in 2020.

Research data from Generation Research shows that the epidemic has a huge impact on the monthly sales of the tourism duty-free retail industry. Revenues in April and May of 2020 almost completely disappeared, and a mild recovery in June and July, which remained stable from August to October, and November There was a decline, and a slight increase in December.

　　According to data reported by Moody's Davit, in the second half of 2020, tourism duty-free retail sales will fall by approximately 70% year-on-year.

The Dubai Duty Free Airport, the traditional rival that competes with South Korea's Incheon International Airport for the industry leader, saw its sales drop by 67% in 2020.

　　Hainan's outlying islands have broad prospects for tax exemption

　　While the epidemic has severely hit the global tourism duty-free industry, Hainan Free Trade Port’s duty-free sales are unique here, and it has also greatly increased the sales of CDFG, a leading domestic duty-free company.

　　The "White Paper" pointed out that the sharp drop in sales has had a great impact on the world ranking of travel duty-free retailers.

In 2019, according to the industry benchmark "Top 25 Global Travel Retailers" compiled by the Moody's Davit report, CDFG (the leading company in Hainan Province) ranked 4th in the world, second only to Dufry Group, Lotte Duty Free Group, and New York. Luo Duty Free Group.

By the end of the first half of 2020, CDFG is leading Lotte Duty Free Group, leaping to number one, becoming the world's highest revenue travel retail operator.

This position will be further consolidated by the end of the year.

　　In addition, in the first quarter of 2021, Hainan's tourism duty-free retail market has a quarter-on-quarter growth rate of 22%, reaching 13.9 billion yuan (approximately US$2.13 billion), of which CDFG accounted for about 90%.

Despite the emergence of a number of new competitors at the end of December last year and the beginning of January this year, CDFG’s revenue in Hainan still increased by 329% year-on-year to RMB 12.8 billion (approximately US$1.96 billion), with a quarter-on-quarter growth rate of 12. %.

　　Since Hainan Province implemented the tax exemption policy for outlying islands in 2011, its outlying island tax-free market has been given a certain amount of imagination, and this space will continue to expand with the implementation of the new tax exemption policy for outlying islands in 2020.

　　The "White Paper" shows that in 2019, more than 83 million tourists entered Hainan, most of which came from other provinces in China, driving about 15 billion U.S. dollars in tourism revenue.

Even in 2020, when the epidemic is raging, Hainan has attracted about 64.6 million tourists, and the number of tourists is only 22.2% lower than in 2019.

Although the number of arrivals decreased by 22.2%, the sales of duty-free shops (including duty-paid goods) in Hainan Islands increased by 127% year-on-year in 2020, reaching approximately RMB 32.74 billion (approximately US$5.05 billion).

　　The "White Paper" believes that if the best results of the Korean tourism duty-free retail market ($21.3 billion, the world's largest) before the epidemic in 2019 are used as a reference to examine these figures, Hainan Free Trade Port is expected to become the world's largest in the next two years. Tourism duty-free retail market.

　　According to the 14th Five-Year Plan of Hainan Province, Hainan’s outlying islands’ duty-free sales will strive to reach 60 billion yuan (approximately US$9.3 billion) in 2021, an increase of more than 80% on the basis of 2020.

By 2022, sales are expected to climb to over 15.5 billion U.S. dollars and reach 46.5 billion U.S. dollars by the end of 2025.

　　Our reporter Pei Yu reports from Haikou