China’s Duty-Free Haven Hands Out $3.4 Million Vouchers to Spur Spending

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From January to July, the value of duty-free sales in Hainan fell 30.4% year-on-year to 20.1 billion yuan

China’s tropical island province of Hainan is to hand out 24 million yuan ($3.4 million) in spending vouchers to encourage tourists to splash out and reverse falling retail sales in the duty-free haven.

The provincial government said it will distribute the vouchers, including 9 million yuan to buy airline tickets and 15 million yuan for tax-free shopping, between late August and October.

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Hainan province will distribute 24 million yuan in vouchers to boost tourism and retail sales, including 9 million yuan for airline tickets and 15 million yuan for tax-free shopping.
In the first half of the year, Hainan's duty-free sales fell 30.4% to 20.1 billion yuan, with average sales per customer dropping 24%.
China plans to transform Hainan into a free trade port by 2025; its duty-free market has seen significant declines in cosmetics and perfumes sales.

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Who’s Who

Hainan Airlines: Hainan Airlines is participating in a provincial voucher program to attract tourists to Hainan. Travelers can buy a bundle of flight tickets worth 500 yuan for just 1 yuan through the airline's mobile app or WeChat mini program, limited to 800 bundles per day. After using the inbound flight vouchers, travelers get a 500-yuan duty-free voucher.

China Tourism Group Duty Free Corp. Ltd.: China Tourism Group Duty Free Corp. Ltd. is the country's largest duty-free retailer. In the first quarter, it faced a 9.45% year-on-year revenue drop to 18.8 billion yuan but saw a slight net profit increase of 0.25% to 2.3 billion yuan. The decline reflects weakened spending amid a sluggish economic recovery.

Estée Lauder: Estée Lauder, a global brand, has reported a slowdown in its financial performance partly due to weakening spending in China and the broader Asian market. This decline mirrors a broader trend impacting the retail sector, including major duty-free retailers in Hainan struggling with decreased sales and weaker post-pandemic economic recovery in the region.

L’Oréal: Global brand L’Oréal has cited the slowdown in China and the broader Asian market as factors negatively impacting their financial performance, according to the article.

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What Happened When

As of January 2024：: Six duty-free retailers have operated 12 shops in Hainan, according to customs data.

January 2024 to July 2024：: The value of duty-free sales in Hainan fell 30.4% year-on-year to 20.1 billion yuan, with the number of shoppers dropping 11.2% to 3.7 million.

First quarter of 2024：: China Tourism Group Duty Free Corp. Ltd. reported a 9.45% year-on-year drop in revenue, falling to 18.8 billion yuan.

First half of 2024：: Hainan's average duty-free sales fell to 5,242 yuan per customer, a 24% drop year-on-year.

May 2024：: More than 100 million yuan in consumer vouchers were distributed across China as part of a month-long campaign to spur spending and boost tourism.

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