Get 40% Off
🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

Brands look to China's tropical duty free island paradise for consumer comeback

Published 04/14/2023, 01:07 AM
Updated 04/14/2023, 02:22 AM
© Reuters. People walk past a booth of Estee Lauder at the third China International Consumer Products Expo, in Haikou, Hainan province, China April 12, 2023. REUTERS/Casey Hall
USD/CNY
-
DGE
-
EL
-
RACE
-

By Casey Hall

HAIKOU, China (Reuters) -Representatives of over 3,000 brands including Burberry and Estee Lauder (NYSE:EL) descended on China's Hainan this week to show off their latest wares, hoping to cash in on a post-COVID consumer rebound that has kicked off on the island known for its duty free shopping.

Around 300,000 people are expected to visit the China International Consumer Products Expo in Hainan between April 10-15 in what is seen as a comeback for the holiday destination, after it was badly hurt last year by China's tough COVID-19 curbs, including a lengthy lockdown that stranded thousands of tourists there.

The province, known at home as the "Hawaii of China", has since 2020 become a major shopping destination in the country as Beijing pushed its travel retail status. It especially boomed during COVID, attracting Chinese shoppers unable to travel abroad due to closed borders.

That has meant that while a rebound in consumption spending has remained sluggish in many parts of the country as the economy struggles to recover, it has started off strong in Hainan after China ended its zero-COVID policy in December: duty free sales on the island rose 20% over this year's seven-day Spring Festival holiday period in January.

And China further plans to elevate its status: by 2025, it plans to make the whole island duty free, essentially expanding the 10% to 40% cheaper prices on goods from beauty, to alcohol and luxury products from 12 existing duty free malls to the entire province.

That has made high-end global consumer firms keen to attend the expo as a way of demonstrating their commitment to China, industry executives said.

"Last year here was kind of quiet but this year's expo has been booming," said Amy Imbriaco, general manager of Greater China for luggage and bag maker Tumi. Some 3,300 brands participated this year, versus 2,800 last year, organisers said.

LVMH, the world's largest luxury company, reported a 17% rise in first-quarter sales, more than double analysts' expectations, largely to due to pent-up China demand.

Comestic giants such as Japan's Shiseido promoted products with exclusive packaging for the Hainan market while luxury car brands such as Bentley, Porsche and Ferrari (NYSE:RACE) showed off shiny high performance vehicles at the venue.

In the wine and spirits pavilion, makeshift bars were set up to provide taste tests of whiskey and wine, while Diageo (LON:DGE) offered soft serve Bailey's-flavoured ice-cream.

© Reuters. People walk past a booth of Japanese cosmetic brand Shiseido at the third China International Consumer Products Expo, in Haikou, Hainan province, China April 11, 2023. REUTERS/Casey Hall

"This year in particular we feel like every exhibitor is presenting new brands and products in order to capture the opportunity presented by China's consumption recovery," said Ella Yu, head of corporate communications for Japanese beauty conglomerate Shiseido in China.

($1 = 6.8677 Chinese yuan renminbi)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.