2022Hainan
TravelRetail
Market
Whitepaper
APowerhouseoftheNewRetail
July2022
ByKPMGChinaandTheMoodieDavittReport
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(c)2022KPMGAdvisory(China)Limited,alimitedliabilitycompanyinMainlandChina，andamemberfirmoftheKPMGglobalorganisationofindependent
memberfirmsaffiliatedwithKPMGInternationalLimited,aprivateEnglishcompanylimitedbyguarantee.Allrightsreserved.PrintedinMainlandChina.Foreword
ItisourpleasuretopresentthesecondeditionofourHainanTravelRetailWhitepaper,
discussingthechallengesandopportunitiesforHainanasitplaysaroleinreshapingretail
businessmodelsinChina.
InlightofongoingtravelrestrictionsduetotheCOVID-19pandemic,manyChinese
travellersandconsumersarefocusingonHainanastheirattentionhasshiftedtothe
domesticmarket.Further,manymarketplayersareseeingHainanasasustainabletravel
retailmarketthankstoitshealthygrowth.10offshoreduty-freeshopsinHainanmade
outstandingcontributionstoannualsalesexceedingCNY60billionin2021,achieving84%
YOYgrowth.ThefirstChinaInternationalConsumerProductsExpoMay2021turnedout
tobethelargesthigh-endconsumerproductsexhibitionsintheAsiaPacificregion.
Hainanstandsapartfromotheroverseastravelretaildestinationsbecauseofaseriesof
innovativeinstitutionalmeasuresimprovingthebusinessenvironment.In2021,moreand
morebrandsestablishedtheirpresenceinHainan.Theongoingpandemichasraiseda
greatersenseofurgencyandenthusiasmforbrandstolookforalternativewaysto
penetrateChina’sdomesticmarket,ensuresupplychainresilienceandimproveconsumer
experiencethroughofferingsinHainan.
Withtheplannedseal-offcomingin2025,thecurrentperiodisanexcitingmomentfor
retail,withbrandsfocusingintensivelyontheviabilityoftheirfuturebusinessmodels,
especiallytheimpactstostakeholdersalongthesupplychainduetothenewSalesTax
scheme.BrandsareacutelyawareofestablishingproperHainanstructuresandvehicles
thatwillempowertheircommercialcapabilitiesandallowsynergywiththeGreaterBay
AreaandtherestofmainlandChina.
Thepandemichasalsomadeconsumersmoreacutelyawareoftheneedfor
environmentalsustainabilityandsocialresponsibility,promptingmanytoincreasingly
identifywithbrandsthatalignwiththeirvaluesintheseareas.Thishaspromptedbrands
toexploremultiplechannelsfortheirESGcommunicationwithconsumers.
Throughthispaper,KPMGandTheMoodieDavittReportpresentinsightsontheHainan
travelretailmarket,withthegoalofenablingdutyfreeoperatorsandbrandstoseize
opportunitiesinthisrapidlyevolvinglandscape.
NicoleZhangMartinMoodie
Partnerin-chargeofHainanFounder&Chairman,
business,KPMGChinaTheMoodieDavittReport
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(c)2022KPMGAdvisory(China)Limited,alimitedliabilitycompanyinMainlandChina，andamemberfirmoftheKPMGglobalorganisationofindependent
memberfirmsaffiliatedwithKPMGInternationalLimited,aprivateEnglishcompanylimitedbyguarantee.Allrightsreserved.PrintedinMainlandChina.1Contents
DynamicShoppingDestination03
DynamicInvestmentDestination,14
forbrands
DynamicSeal-offSettingtoward26
2025
DynamicESGShowcase29
FinalWord33
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(c)2022KPMGAdvisory(China)Limited,alimitedliabilitycompanyinMainlandChina，andamemberfirmoftheKPMGglobalorganisationofindependent
memberfirmsaffiliatedwithKPMGInternationalLimited,aprivateEnglishcompanylimitedbyguarantee.Allrightsreserved.PrintedinMainlandChina.DynamicShoppingDestination
Theglobalduty-freeindustryinForthepurposesofassessingtheindustry’spost-
numberspandemicfuture,webelieve2019servesasan
appropriateglobalbenchmarkalthoughwedonot
AccordingtoGenerationResearch,theglobaltravelanticipateafullrecoveryto2019levelsuntil2024.
retail&duty-freeindustrywasworthUS$86.4billionThechartsbelowshowthe2019and2020
in2019,up10percentover2018andthelastbreakdownofglobalduty-freesalesbyregion,
‘normal’yearintheindustry.Thesamesource’schannelandproductcategory.Theyalsopainta
2020figures,though,revealedthebrutalimpactofrevealingpictureoftheimpactofthepandemic.
thepandemicwithworldwidesalescollapsingto
justUS$45.3billion.Allregionswereadversely
affected,exceptone:Hainan,wheresalesrose127
percent.
2019regionalbreakdown2020regionalbreakdown
AsiaPacific53.6%AsiaPacific71.3%
Europe24.5%Europe14.2%
Americas13.6%Americas8.9%
MiddleEast7.3%MiddleEast4.8%
Africa1.0%Africa0.7%
Source:GenerationResearch
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(c)2022KPMGAdvisory(China)Limited,alimitedliabilitycompanyinMainlandChina，andamemberfirmoftheKPMGglobalorganisationofindependent
memberfirmsaffiliatedwithKPMGInternationalLimited,aprivateEnglishcompanylimitedbyguarantee.Allrightsreserved.PrintedinMainlandChina.2019channelbreakdown2020channelbreakdown
Airportshops50.9%Othershops&sales59.0%
Othershops&sales43.6%Airportshops37.6%
Airlines3.0%Airlines1.7%
Ferries2.4%Ferries1.7%
Source:GenerationResearch
2019categorybreakdown2020categorybreakdown
Fragrances&cosmetics43.7%Fragrances&cosmetics60.0%
Wines&spirits14.8%Fashion&accessories11.1%
Fashion&accessories13.3%Wines&spirits8.1%
Tobaccogoods8.6%Watches,jewellery&finewriting6.5%
Watches,jewellery&finewriting7.4%Tobaccogoods5.9%
Electronics,gifts&other6.5%Electronics,gifts&other4.8%
Confectionery&finefood5.8%Confectionery&finefood3.5%
Source:GenerationResearch
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(c)2022KPMGAdvisory(China)Limited,alimitedliabilitycompanyinMainlandChina，andamemberfirmoftheKPMGglobalorganisationofindependent
memberfirmsaffiliatedwithKPMGInternationalLimited,aprivateEnglishcompanylimitedbyguarantee.Allrightsreserved.PrintedinMainlandChina.