Hainan province expands duty-free program

South China’s Hainan province on Thursday launched an expanded version of its duty-free purchase program in order to encourage more Chinese to buy imported luxury items at home.

The new policy raises the duty-free purchase limit to 8,000 yuan (about 1,259 U.S. dollars) from 5,000 yuan, allowing customers to spend up to 8,000 yuan per visit for two visits each year.

It also adds beauty and health care products, tableware, kitchenware and toys to the list of duty-free product categories and lowers the minimum purchasing age from 18 to 16.

Liu Pingzhi, provincial chief of finance, said the new purchase limit will allow Chinese customers to purchase most of the luxury items they desire, according to market research.

The State Council gave Hainan permission to implement the duty-free program on a trial basis in April 2011 as part of efforts to promote the province as an international tourist destination.

The World Luxury Association announced in January that China has outstripped Japan to become the world’s largest luxury goods market.

Provincial customs data showed that over 1.28 million tourists have benefited from the program thus far, with sales totaling more than 2.7 billion yuan.

The province has two duty-free shops. One is located in the provincial capital of Haikou, while the other is in the resort city of Sanya.

Staff at the Haikou duty-free store said they are working to replenish their stock to prepare for larger purchases under the expanded program.

More than 200 people were lined up in front of the Sanya duty-free store before it opened at 10 a.m. Thursday.

Feng Guizhen, a tourist from northeast China’s Heilongjiang province, said she lined up at 8:30 a.m. to snap up beauty products for herself and her daughters.

“I’m glad that the purchase limit was raised. Otherwise, I would not have been able to buy enough,” she said.

Dong Xiameng, a tax-free policy consultant, said the expanded program will boost sales of more expensive high-end goods, such as beauty products, watches, bags and suitcases.

A source with the provincial bureau of commerce said Hainan is planning to build a new duty-free shopping mall in Haikou, as well as expand the Sanya shop.

Wang Keqiang, deputy director of commerce, said Hainan’s duty-free revenues will likely to hit 5 billion yuan this year, accounting for 5 percent of the province’s total retail sales.

The program has also had a direct effect in stimulating Hainan’s tourism, logistics, air transportation and catering sectors, he said.

Wang Wei, an official with the bureau’s investment department, said the duty-free purchase program has led leading luxury makers to pay more attention to Hainan, adding that the province will seize the opportunity to improve the island’s shopping environment.

Hainan, largely known for its beaches and tropical forests, has mapped out a high-end tourism development plan, with plans to bring yacht cruises, golf courses and luxury shopping centers to the island province.

The province has witnessed rapid growth in its tourism sector, with revenues hitting 32.4 billion yuan in 2011, a year-on-year rise of 25.8 percent.


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