Profiling the world’s top travel retailers

China Duty Free Group


2019 turnover

€6,065 million

2018 rank




Face of the future: Haikou International Duty Free Mall will be the largest travel retail store in the world upon completion

China Duty Free Group (CDFG) turnover jumped by more than +70% year-on-year in 2019 to RMB47.36 billion, or €6,065 million at 31 December exchange rates, according to figures provided by the company to The Moodie Davitt Report.

To put the state-owned company’s growth trajectory into perspective, that figure is close to ten times 2011 levels. Its share of the duty free market within China has also leapt from an estimated 40-45% between 2011 and 2016 to 90% by 2019 (Morgan Stanley Research).

CDFG remains firmly in fourth place in our rankings, but with COVID-19 set to dramatically alter the travel retail landscape, it could even challenge for market leadership when the 2020 list comes to be produced.

That’s largely because the offshore duty free shopping business in Hainan Island is currently the sole global hotspot for sales, amid a rebound in Chinese domestic travel, and with international travel severely curtailed. A key related factor is the government-backed surge in tourism and services investment in Hainan, in which CDFG and parent company China Tourism Group Duty Free Corp (formerly China International Travel Service) are playing lead roles.

As we reported, the Chinese authorities have introduced a range of measures designed to boost the island province’s already burgeoning duty free business, effective 1 July. These include a new annual duty free allowance of RMB100,000 (US$14,050) from RMB30,000 (US$4,215) and a widening of the products that can be sold to include spirits, watches, phones, computers and fashion. The package is one element in sweeping government plans to stimulate consumption, tourism and pave the way for the creation of the hugely ambitious Hainan Free Trade Port.

With China bucking the global sales trend, might its Hainan business lead it to become world number one?

The longer term picture for travel retail in China, with an emphasis on offshore, downtown and ecommerce sales, is also positive. Morgan Stanley Research (see our June edition) recently predicted that China’s duty free market will more than double to US$16.5 billion by 2025, with Hainan Island’s contribution to grow from 24% in 2019 to 49% in 2025.

Government initiatives to encourage spend among domestic travellers will play a big part in driving each of these growth channels. In Hainan, that also includes a scheme announced in April allowing Mainland visitors to Hainan to spend any of their unspent annual allowance online for up to 180 days once they arrive back – and have the goods couriered to their home.

It also allows for the expansion of downtown and post-arrivals duty free shopping across the country.

And while competition is set to intensify – several powerful Chinese and international online and offline retailers have signalled their intent to enter the Hainan market – CDFG is well placed to retain its market dominance.

The company began construction in 2019 on the Haikou International Duty Free Mall, which will become the largest single duty free store in the world upon its expected completion in 2022.

CDFG has also just opened two downtown duty free experience stores in Sanya, one in the Mangrove Tree Resort Hotel, and the other in the Nanshan scenic area. In partnership with the Hainan government, CDFG also plans duty free experience stores covering 1,700sq m at Sanya Phoenix International Airport (airside) and will add 7,000sq m at the Haikou downtown store. The retailer is also accelerating construction of 8,000sq m of retail space at Haikou Meilan International Airport Terminal 2.

The investment drive comes amid related news in June that CDFG’s parent has acquired a 51% stake in Hainan Duty Free, which has operations at Haikou Meilan International Airport.

In its latest research report, Morgan Stanley issued a bullish outlook report for the Chinese duty free market, and CDFG/ China Tourism Group Duty Free. The company “is a key beneficiary of China’s duty free evolution,” it said. “In fact, it is the key driver of this evolution because it has a 90% share in China’s duty free market overall and a monopoly in Hainan.

“[It] has a vision to be the world’s largest duty free operator in terms of revenue. We believe this is possible to achieve in the coming three years.”

Amid the global market shake-up that is taking place this year, CDFG’s growth in China might thrust it into the number one position even sooner than that.

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The Moodie Davitt eZine

Issue 281 | 16 July 2020

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