Rich Shoppers Stuck in China Fuel an Unlikely Boom in Duty Free
Stores in Shanghai, Beijing, Hainan, and beyond try to woo domestic tourists during the Chinese New Year holiday.
A duty-free mall in Sanya, China.
Photographer: Guo Cheng/Xinhua/Getty Images
Bargain-hunting travelers have long fattened the profits of duty-free shops, but Covid-19 travel restrictions have hammered those perfume-suffused emporiums. Except in one place: China’s Hainan Island, where even domestic visitors can shop duty free. Last year the government eased restrictions on such purchases as more Chinese tourists unable to journey abroad flocked to the island, providing a lifeline for the global industry. Duty-free sales in China “have been extremely solid in the last 12 months,” says Jean-Marc Pontroué, chief executive officer of high-end watchmaker Panerai, which is adding two duty-free locations on Hainan this year. “We remain optimistic, because the Chinese can hardly get out of China.”
China is now extending parts of that Hainan policy to the mainland, with duty-free shops in central Shanghai, Beijing, and about a dozen other cities. Those operations look pretty much like other upscale retail outlets—pricey skin creams, displays of hand-made wristwatches, sumptuous leather handbags—except that shoppers who can prove they’ve been overseas in recent months don’t have to pay levies as high as 30%.