Hainan becomes hub for China's consumption boom

(ATF) Hainan, China’s semi-tropical island province, has been steadily growing as a duty-free shopping oasis for high-end domestic tourists who would usually buy their goods in Hong Kong, Japan or South Korea.

As mainland China has a 30% luxury goods tax, creating the duty-free zone in Hainan is a magnet for the bargain-hunting rich.

On May 10, the first China International Consumer Goods Fair ended successfully at the Hainan International Convention and Exhibition Centre.

This was China’s first national exhibition with consumer products as a theme, heralding “the new future of consumption”.

China’s vast consumer market and huge consumption potential, as well as China’s great sincerity in welcoming all parties to “share the opportunities in the Chinese market”, attracted global attention.

BOUTIQUE BRANDS

The beach in Haikou in May is already scorching hot, but plenty of visitors braved the sun to visit the fair.

Although the shadow of the coronavirus pandemic still persists, the expo still attracted plenty of merchants, with a total of 1,505 companies and 2,628 consumer boutique brands from 70 countries and regions participating.

There were more than 30,000 buyers and industry visitors of various types and more than 240,000 people visited overall.

The expo saw new product launches, signing ceremonies, large order transactions and other activities. On the morning of the first day, the “Hainan Pepper Industry Integration and Upgrade Strategic Cooperation Agreement” was signed, then Eddington Wines inked a 100-million-yuan ($15.5 million) deal.

Hans Yachts sold two vessels, one for more than 5 million yuan and the other for more than 7 million yuan.

EGGS AND DIAMONDS

A Fabergé egg handcrafted with 10 kilograms of 18-karat gold attracted the attention of countless visitors. This egg, originally planned for Harrods in London, was eventually escorted from the UK to Hainan. A diamond that weighs 88 carats, has 57 faces, and is worth 250-million yuan was on show.

“As a large market with a population of 1.4 billion, China has the world’s most potential as a consumer market.” Song Houchi, director and general manager of Eddington Group China, said.

Fei Borui, L’Oréal’s North Asia president and China chief executive, said that since last year, due to the impact of the pandemic, the global economy has faced downward pressure, but the Chinese beauty consumer market has bucked the trend.

L’Oréal China achieved a year-on-year growth of 37.9%, according to its financial report for the first quarter of 2021. China has become L’Oréal’s global beauty technology centre and its core competitiveness hub.

Bernardino Regazzoni, the Swiss Ambassador to China, said in an interview, that Hainan’s planned free-trade port was “exciting”, adding: “We recognise both the development prospects of Hainan and the true vision of the Chinese government.”

Han Shengjian, director of the Hainan International Economic Development Bureau, said, adding that more than 80% of exhibitors have booked booths for next year’s expo in advance. “From the current point of view, the demand for booths at the second Consumer Expo will be in short supply,” he said.

‘UNIQUE ADVANTAGES’

Li Lei, head of Tmall International’s global investment operations, said Hainan was an entry point for overseas brands. “We hope that with the unique advantages of Hainan free-trade port and consumer fairs and the gradual improvement of infrastructure, more overseas brands can enter the Chinese market.”

Vice Minister of Commerce Wang Bingnan pointed out that during the 13th Five-Year Plan period, the scale of China’s consumer goods market increased from 28.7 trillion yuan in 2015 to 39.2 trillion yuan, an average annual growth rate of 6.5%. In 2020, final consumption expenditure will account for 54.3% of gross domestic product.

“During the 14th Five-Year Plan period, China will become the world’s largest commodity consumer market, the world’s largest service industry market, have a new service-oriented consumer market, and the world’s largest service trading country,” he added.

In 2020, Hainan’s total foreign trade imports and exports totalled 93.3 billion yuan and its foreign trade partners involved 183 countries and regions around the world.

In the first quarter of this year, Hainan accounted for 13.6 billion tax-free shopping yuan, with 1.79 million purchases and 17.75 million tax-free shopping items sold. These numbers are expected to increase.