Shoppers flock to Hainan Duty-Free during Lunar New Year holiday, spending record 2.49 billion yuan
Shoppers visiting China's island province of Hainan made use of the duty-free facilities and spent a staggering 2.49 billion yuan during the eight-day Lunar New Year holiday, according to data from Haikou Customs. This represents a significant increase of 60% compared to the previous year. Over the course of February 10 to 17, more than 297,000 shoppers visited Hainan, with each individual spending an average of 8,358 yuan on duty-free goods.
The surge in spending can be attributed to the decision made by China in 2020 to triple the duty-free purchase limits to 100,000 yuan in the 12 duty-free malls in Hainan. The result has been a threefold increase in overall duty-free spending, rising from approximately $2 billion in 2019 to a remarkable $6.1 billion in 2023. The growth is expected to continue as Hainan is set to become entirely duty-free by 2025.
Even though Chinese borders reopened a year ago, many Chinese travelers are still drawn to Hainan for its duty-free shopping experience. Factors such as flight restrictions, visa delays, and the high cost of international travel to far-flung destinations have all contributed to the popularity of Hainan duty-free.
During China's Lunar New Year holiday, Hainan's duty-free spending stood out as a bright spot in tourism spending. While overall domestic Chinese tourists spent less per trip compared to 2019, this year saw a significant increase in the number of trips. The total domestic tourism spending during the holiday period rose by 47.3% to 632.7 billion yuan compared to the previous year. Additionally, domestic trips increased by 34.3%, reaching a total of 474 million. Railways were used by nearly 100 million passengers, while 18 million passengers chose to fly during this period.
Although the Ministry did not provide a breakdown of tourism spending per trip, the average spending per trip during the holiday period this year was 1,335 yuan. However, this figure remains 9.5% lower compared to the 1,475 yuan spent per trip in 2019.
In recent years, Chinese shoppers have increasingly turned to Hainan as the pandemic-related border closures have limited their options for duty-free shopping. The inability to purchase beauty brands at duty-free counters in Korea or Hong Kong led many to explore Hainan as an alternative. Luxury brands, including those owned by leading conglomerates LVMH and Kering, have recognized this trend and have established a presence in Hainan to cater to domestic consumers. With the upcoming expansion of duty-free shopping in Hainan in 2025, luxury brands will have the opportunity to operate their own duty-free stores instead of relying on partnerships with local players such as China Duty Free Group.
Analyst comment
The news is positive for the market. Shoppers in China’s Hainan province spent a record amount on duty-free goods during the Lunar New Year holiday. With duty-free spending tripling since 2019 and the entire island becoming duty-free in 2025, the market is expected to continue growing. The allure of duty-free shopping in Hainan remains strong due to travel restrictions and visa delays. However, domestic tourism spending overall is still lower than in 2019, despite a boom in trips. Luxury brands are also benefitting from the expansion of Hainan’s duty-free shopping.