THE BRAND PERSPECTIVE
“Limitless potential”
Foreo Global Travel Retail Director Gary Leong talks about the significance of the cdf Haikou International Duty Free Shopping Complex in bolstering Hainan as a duty free hotspot and attractive international tourist destination. He also explores the “limitless” potential of Hainan’s duty free market and talks about Foreo and FAQ’s own strategic expansion in Haikou.
THE BRAND PERSPECTIVE
“Limitless potential”
Foreo Global Travel Retail Director Gary Leong talks about the significance of the cdf Haikou International Duty Free Shopping Complex in bolstering Hainan as a duty free hotspot and attractive international tourist destination. He also explores the “limitless” potential of Hainan’s duty free market and talks about Foreo and FAQ’s own strategic expansion in Haikou.
In your view, how important a landmark is the cdf Haikou International Duty Free Shopping Complex for travel retail in China?
The Cailan Press, the China Associated Press of Finance and Economics, predicted that the recovery of the Hainan duty free market will reach CNY100 billion (US$14.8 billion) in the next three years. Hainan is truly living up to that expectation, bolstered by the opening of the world’s largest duty free mall, the cdf Haikou International Duty Free Shopping Complex.
This milestone opening has further built Hainan into an international tourism and consumption centre, offering more than 800 international and domestic brands, including 25 Hainan first brands and 78 cdf-exclusive brands.
The distinct combination of duty free, arts, culture, and experience that the complex offers promotes not only the return of international tourism and domestic consumption, but also solves the issues of declining passenger flow and the interruption of store and logistical operations, which therefore eases business fluctuations.
The complex, located on the west coast of Haikou City close to the new port, also serves as an important transportation hub for Haikou and covers a wide variety of business areas such as duty-free, tax-free, high-end offices and high-end hotels.
The opening of the complex has symbolic significance for Hainan. It puts China Duty Free Group (CDFG) and its brand partners in a prime position to optimise domestic offshore duty free consumption in Hainan.
At the beginning of last year, duty free sales from Hainan were on a generally positive growth trajectory, especially during the Spring Festival, where sales doubled. However, faced with a new round of COVID-19 cases, tourism dipped and a number of duty free shops were forced to close temporarily. This resulted in tourist numbers and total revenues from tourism seeing a double-digit decline from January to May 2022.
To counter this, Hainan took action by launching a series of measures to increase the number of inbound tourists and strengthen sales by introducing new commodities and improving the service capacity of the industry.
The opening of cdf Haikou International Duty Free Complex has injected new vitality into the duty free market. It outpaced other duty free malls to generate a total sales volume of more than CNY700 million (US$103 million) on opening day. This was a new single day sales volume record in Hainan, nearly twice the previous peak.
Hainan’s offshore duty free market has limitless potential for growth. A report released by China (Hainan) Development Research Institute predicts that by 2025 Hainan will become the world’s largest duty free market with a value exceeding CNY160 billion (US$23.7 billion).
After the opening of the complex, duty free sales in Hainan have stepped out of the downward trend and into rapid growth. With sales volumes set to grow over CNY100 billion (US$14.8 billion) in the next three years, the complex is a large contributor to accelerating duty free sales and other revenues on the island. It also serves as a benchmark for other competitors looking to replicate its astounding success.
What does this opening mean for CDFG and its partners?
An industry titan in its own right, CDFG is largely recognised as a leader in China’s domestic offshore duty free market. CDFG constantly strives to improve core competencies and enhance partnerships with its brands. With the cdf Haikou International Duty Free Shopping Complex further boosting customer demand, I believe that CDFG can not only facilitate the return of overseas consumption, but also give Hainan a new lease on life.
The cdf Haikou International Duty Free Shopping Complex fortifies CDFG’s dominant position in Hainan. The opportunities for CDFG are unlimited. Through the Complex, they can strengthen strategic cooperation with suppliers, maximise their competitive advantages in terms of business planning and design, increase brand investment and promotion, streamline logistics distribution, operations management, marketing and digitalisation.
It’s extremely exciting when you think about it – Hainan will be secured as a free trade port, boosted with international tourism, offering more diverse tourism and shopping experiences to consumers.
What can Chinese consumers expect when they visit a Foreo or FAQ store in Haikou?
Foreo currently has six stores in Haikou. In addition to the cdf Haikou International Duty Free Shopping Complex, these include the Haikou Mova Mall and Haikou Meilan International Airport Terminals 1 and 2 with CDFG; Haikou Mission Hills with Shenzhen Duty Free and DFS Group; and the GDF Plaza with Hainan Development Holdings. In every store, we aim to offer an immersive experience for the customer. Our brands and products should be instantly recognised by the shopper, alongside the benefits and use methods.
Our beauty advisors are well-trained to demonstrate how Foreo and FAQ promote a holistic skincare journey through our products. All our products complement each other and work in tandem to help the customer achieve better skin, regardless of their skincare concerns.
All our bestsellers are available to shoppers in Haikou, ranging from the newly launched Luna 4 range to the microcurrent device Bear, the 90-second masking miracle UFO, and the FAQ 101 and 102 devices. Using cutting edge technology at competitive price points, we are able to ensure that Foreo and FAQ consumers buy into the skincare journey with the brand, instead of a one-off purchase.
How pleased are you with your presence here and how do you assess the potential of the Haikou business?
Haikou has steadily continued to become a hub for international tourism and duty free shopping. In recent years, it has expanded the scale of offshore duty free business through three pillars: improved consumer experience, a wide variety of products and price ranges and improved supporting facilities. This has contributed immensely to the rapid growth of the duty free industry in the area, becoming a golden sign of Haikou consumption.
Customers have frequently commented on the wide range of duty free products available in Haikou, which attracts repeat customers due to the value for money and discounts available. In September, cdf Haikou Meilan Airport Duty Free Store welcomed several luxury brands – including Kering Group’s Qeelin and Richemont’s TimeVallée to name a few. Since then, the duty free store in Terminal 2 has welcomed more than ten new international luxury brands, with more coming in Q1 of 2023.
Hainan consistently holds consumer expos to strengthen its cooperation with international brands and continues to introduce high-end brands into the malls and complexes on the island. All this fares well for the growth of Hainan as a duty free hotspot.
Haikou recently introduced a more streamlined customs process to ensure that imported tax free cosmetics and food go through a quick and timely inspection. This is achieved through a conditional release supervision model and the implementation of a 24-hour appointment clearance.
Foreo takes all these as positive signs about our expansion in Haikou — as we are looking for ways to consistently improve our presence in the region and search for new outlets to attract and retain customers. Moving into 2023, we are looking at translating some of our activation success stories in Sanya across to Haikou and engaging with customers on a deeper and more personal level.
"The opening of cdf Haikou International Duty Free Complex has injected new vitality into the duty free market"
Gary Leong
At the TFWA World Exhibition in Cannes last October, The Moodie Davitt Report Founder & Chairman Martin Moodie caught up with Foreo Global Travel Retail Director Gary Leong for this film interview
Spotlight Series - February 2023