The growing demand for high end goods in China is also influencing travel patterns. The just ended Labour Day holiday saw an additional 20 per cent more Chinese tourists heading to Hainan’s Sanya. The reason – the opening of a new duty-free store there selling luxury items. The recently opened duty-free store in Sanya has become a must-go destination for Chinese travellers. Already, airlines are increasing flights to Hainan and travel agencies are tailoring their itinerary to meet demand. China imposes hefty taxes on luxury goods, so buying high-end items duty free can mean savings of up to 30 per cent.
“These tourists prefer to buy products related to their travel needs, such as branded sunglasses, clothes and diving equipment. They cost several hundred yuan cheaper than if they were to buy from Shanghai,” said Bian Xiang Guo, Assistant General Manager, Domestic Travel, Spring International. China is set to become the world’s largest luxury market by 2014, with a 20 per cent to 25 per cent increase in demand each year.
But while Sanya has long term potential to become a haven for tax-free shopping, analysts said it is still a long way from traditional favourites like Hong Kong. “Hong Kong is a duty-free port, which means all products are tax free. But in Hainan, it only has a duty-free shop. Whether in terms of range or volume, Hainan cannot match Hong Kong for now. We feel that in the short term, it still has its draw but it will still need long term plans and other attractions,” said Liao You Cheng, Partner, Alliance PKU Management Consultants. Shanghai may also become another destination for people seeking duty-free shopping deals.