CNSC sets out high ambitions in Hainan

China National Service Corporation (CNSC) has hailed Hainan Island as the “new engine” of the Mainland China and global duty free market and set out its ambitions for its first downtown store in Sanya, which will open soon.

Addressing the offshore duty free opportunity during last week’s TFWA China Reborn virtual event, CNSC Deputy General Manager Evita Qu said: “No-one can deny that Hainan is the new engine of duty free. China is making great efforts to create a new pattern of economic development in which internal and external growth circles provoke each other.” Here, the expansion of Hainan Island and new entrants to Sanya and Haikou, including CNSC, will play their part in driving internal consumption, she said, with “the era of exclusive operation” coming to an end.

“Hainan will quickly become the destination for Chinese consumers to purchase high-end goods, replacing Hong Kong as an Asian tourist shopping centre and replacing European and American markets to a certain extent.

“With the new policy [and expanded shopping allowances now in place -Ed], Hainan Island will become a growth engine for global travel retail.”

Focusing on the CNSC International Duty Free Plaza, Ms Qu said the new store is ready to open, but awaits final approval from government for its licence. Once that occurs, “we can open quickly,” she said. “We are confident that that will become a refreshing product for the global travel retail industry”.

CNSC says that its prime location in Sanya will give it strong consumer appeal

The store benefits from three main advantages, she said. A prime location is one, close to the political, commercial and tourism heart of Sanya, strong transport links, as well as a marina that should attract 5 million high-end visitors in the next three years. Almost 100 high-end hotels and residential buildings are also nearby, as are attractive dining facilities.

Another positive, said Ms Qu, is the multi-category nature of the store. “While taking into account the traditionally dominant fragrances & cosmetics items, we also pay close attention to high-value fashion products such as bags, clothing, watches & jewellery. We also carry emerging offshore duty free products such as wines & spirits.”

Leaning on the expertise of parent group Sinopharm, CNSC will also create dedicated zones for healthcare within the new complex.

Convenience and reliability of purchase are key drivers of visits and purchase in CNSC’s downtown stores, says the retailer

“Using the advantage of Sinopharm Group in the field of healthcare, we will create a brand new experience of duty free plus health. We will also include sports appliances, which are becoming popular. We want to fully meet the needs of all family-based customers. There is a big opportunity in family and health purchases, a trend heightened by the pandemic.”

Ms Qu said that healthcare would be presented in a premium way. “We will create an environment not only to sell the products but also services and ways for our customers to try out and learn more about the products. We want them to have a relaxing, personalised experience, in which they can enhance their health awareness. We will create healthcare areas dedicated to this.”

CNSC is aiming to deliver “an exclusive retail-tainment experience, integrating meeting, residing, travelling, shopping, health and entertainment. With the interactive operation of downtown duty free, offshore duty free and port duty free, we can realise a full service from outside to inside the island.”

After Phase One is completed, in Phase Two CNSC will support a project across 200,000sq m of space to create a ‘duty free park’ anchored by its store over the next three to five years.

Boosting the healthcare category at the new Hainan store

“Our team will strive to create CNSC International Duty Free Plaza as a characteristic product in China and even in international travel retail. We welcome global partners to join us,” she said.

Commenting on the wider market, Ms Qu said: “The Chinese have now transferred their spending in duty free to the local market because they cannot go abroad. The high-end market represented by travel retail and luxury goods is recovering strongly. Sales of top luxury brands have increased against the trend during this year.

“As an important participant in China’s travel retail industry, and while we are concerned about the impact of the pandemic, the crowded stores we see at CNSC location give us great confidence. The number of shoppers remains strong and stable and 75% of consumers have even increased their shopping budget in duty free.

“In addition, the proportion of young consumers aged 18 to 35 has now exceeded 50%, which will help make the market more dynamic.

“A new change in global travel retail has come. The Chinese market is becoming the new focus of global travel retail.”