What is Hainan?
Hainan, which is the second largest island of China, has an area of 33,920 square kilometers (13,100 sq mi) and is China's southernmost province. It is famous for tropical scenery, pleasant climate, unique culture, and fresh seafood. I had lived in Haikou, which is the capital of Hainan, for more than two years, so I know this is really a terrific place for a visit.
Program Details
On April 20, 2011, a duty-free program commenced in order to increase luxury goods purchases. It permits domestic Chinese visitors to claim tax refunds on imported luxury items purchased within the province. The maximum value is set at 5,000 yuan (US$762), with lowered tax rates on purchases over 5,000 yuan. Each person can enjoy this off-shore duty-free policy twice a year, when shopping in the authorized stores. Check out this website for more information.
In October 2012, duty limits were raised to 8,000 yuan ($1,273), and became available to both domestic and international tourists.
According to the report from Xinhua News Agency, Offshore duty-free shopping in Hainan Province surged in 2013, with total sales reaching 3.3 billion yuan (540 million U.S. dollars), up 40 percent year on year.
In October 2012, duty limits were raised to 8,000 yuan ($1,273), and became available to both domestic and international tourists.
According to the report from Xinhua News Agency, Offshore duty-free shopping in Hainan Province surged in 2013, with total sales reaching 3.3 billion yuan (540 million U.S. dollars), up 40 percent year on year.
Why Hainan?
As you can see, this policy do promote tourism and local economy in Hainan. But why Hainan is the first one to eat tomato? I have summarized several reasons below, according to my understanding.
- Unique geographic position. Hainan is an island isolated form mainland of China. Thus, it is easy to conduct off-shore duty-free policy.
- National Policy Supports. China government plans to develop Hainan, China's only tropical province, into a top international tourism destination by 2020. This duty-free program is subject to the International Tourism Island plan.
- Improve Tourism Quality. Actually, Hainan is complained by visitors for its low quality of service and overcrowded scenic spots. How can we improve this situation? Maybe we need to relocate to target tourists. Duty-free program will absolutely attract people from higher socioeconomic status.
What to Do in The Future?
I have come up with several ideas for this program and its further development.
- Reducing limitations is in great need. No matter in terms of the duty-free amount (800 RMB), the number of times per year (twice a year), and types of items can not meet with the needs of people from higher socioeconomic status. If Hainan can improve on those points, it will surely win over Hong Kong, which is the No.1 shopping destination for Chinese people.
- Increase the amount of stores. Now, only Sanya and Haikou, which are two biggest cities in Hainan, have duty free stores. It is the high time for our government to build more stores in order to make this program more accessible for all the visitors. Actually, a world's largest duty-free shopping complex is scheduled to open in Haitang Bay in August 2014.
- Besides the price, what else can be provided to customers? I had once gone to the duty-free shop in Sanya. It is overcrowded as most scenic spots there. People can hardly enjoy their shopping there. Most popular products are out of stock. It surely won't be a good experience for customers. When people are no more crazy for the low price, what else can be provided to them is what business should consider.