第一太平戴维斯-零售热城·海南零售市场报告（英文）-2021.3-8页_2mb

Hainan Retail Summary

Core Content

Hainan's retail market has experienced significant growth since the introduction of the off-island duty-free policy in 2011. The market has shown resilience, particularly in 2020, when it recorded a 1.2% year-on-year (YoY) growth in retail sales, surpassing the national average by 5.1 percentage points. This growth was driven by duty-free sales and automobile consumption, with enterprises above designated size seeing over 20% growth and cosmetics and jewellery sales surging over 100%.

Tourism is one of Hainan's twelve key industries, contributing 7.3% to the island's GDP in 2020. As Hainan is positioned as an international tourism and consumption centre, tourism retail and consumer spending will remain central to its policy and development goals.

Main Points

• Retail Growth in 2020:

  • Hainan's retail sales grew by 1.2% YoY, 5.1 ppts above the national average.
  • Total retail sales reached RMB197.5 billion.
  • Enterprises above designated size saw over 20% growth.
  • Cosmetics and jewellery sales increased by over 100%.

• Duty-Free Expansion:

  • The off-island duty-free policy was introduced in 2011 and has been adjusted multiple times, with the latest changes effective from July 1, 2020.
  • Annual off-island duty-free allowance increased to RMB100,000 per person, and the number of tax-free categories expanded to 45.
  • Duty-free shops in Hainan recorded a 127% sales growth in 2020, with total sales (including tax-paid) reaching RMB32.7 billion.
  • Duty-free sales accounted for 17% of Hainan's retail sales in 2020, up from 7% in 2019.

• Duty-Free Market Structure:

  • Before 2020, only seven enterprises were authorized to operate duty-free businesses.
  • New entrants such as Hainan Tourism Investment Development and Hainan Development Holdings received licenses, increasing market competition.
  • CDF Group, which operates all duty-free shops in Hainan, holds nearly 90% of the Chinese duty-free market.

• Duty-Free Policy Trends:

  • Hainan aims to implement a zero-tariff regime across the island by 2025, targeting RMB300 billion in duty-free sales over the 14th Five-Year Plan period.
  • In-island duty-free policies are being explored to complement the existing off-island model, with a focus on local consumption and positive list management.

• Retail Market Segmentation:

  • Haikou and Sanya are the two largest consumption markets in Hainan, accounting for 42% and 19% of total consumption, respectively.
  • Together, they contributed 63% of Hainan's retail sales in 2020.
  • Haikou has a dominant retail property market with shopping malls accounting for most of the retail space, while Sanya's market is more diversified, featuring shopping malls, department stores, retail streets, duty-free shops, and outlets.

• Retailer Perspective:

  • Luxury retailers and developers express optimism about Hainan's future, particularly with the implementation of an independent customs regime.
  • There are concerns about the lack of precedent in independent customs operations.
  • E-commerce platforms like JD Worldwide are entering the duty-free market, offering a convenient shopping experience for residents.

Key Information

• Duty-Free Sales in 2020:

  • RMB27.5 billion, contributing 14% of Hainan's total retail sales.
  • A 104% YoY increase, compared to an annual average growth of 27% from 2015 to 2019.

• Growth Drivers:

  • Duty-free sales.
  • Automobile sales.
  • Increased household income and development of emerging industries.
  • Inflow of young talent.

• Future Goals:

  • Hainan aims to achieve RMB300 billion in duty-free sales by 2025.
  • Implementation of a zero-tariff policy for certain imported goods.
  • Development of an in-island duty-free market to support independent customs operations.

• Market Recovery:

  • Haikou and Sanya recovered rapidly from the pandemic, with YoY retail sales increases of 1.5% and 12.1%, respectively.
  • Vacancy rates rose across Hainan, reaching 16.9% in Haikou and 15.7% in Sanya by the end of 2020.

• Competitive Landscape:

  • New entrants are entering the market, aiming to compete with established players like CDF Group.
  • Operators are focusing on enhancing retail spaces, offering diverse product ranges, and improving the shopping experience for tourists.

Conclusion

Hainan's retail market is poised for continued growth, fueled by its duty-free policy, tourism industry, and economic development. The expansion of duty-free shops, the introduction of new licenses, and the planned zero-tariff regime will further boost the market. Haikou and Sanya remain key growth engines, with Haikou's retail market dominated by shopping malls and Sanya's market increasingly influenced by tourism. As the in-island duty-free policy develops, Hainan is expected to become a major hub for luxury consumption in China.