Luxury sees gateway in Hainan
Product expo, FTP big factors in boosting trade and growth
Buoyed by the free trade port under construction and business-friendly events, Hainan has emerged as a bright spot on the global consumption map, creating a sizable market for luxury goods－and top brands are keen to exploit the opportunity to further tap into the China market, business leaders said.
Their remarks, made at the ongoing China International Consumer Products Expo in Haikou, Hainan province, were buttressed by data.
Last year, sales of personal luxury products in Hainan accounted for 13 percent of the total revenue of 470 billion yuan ($69.4 billion) nationwide. And 21 percent of global luxury sales revenue came from China.
With the emergence of more commercial circles like the Haitang Bay in Sanya, the Hainan FTP is bound to continue to play a crucial role in China's luxury goods market, according to a new report released by consultancy Bain& Company at the expo.
British luxury brand Burberry, a two-time participant of the expo, said the event provides excellent opportunities for global retailers to gather together, and the spillover effect of the expo has been prominent.
It will seize the business opportunities in Hainan, a top vacation resort and a shopping paradise, where it has attracted a large number of consumers and the company is bullish on the prospects of offshore duty-free shopping in the province.
"In the past two years, the speed of recovery in China from the COVID-19 pandemic has been impressive, and we look forward to the further recovery of the market," said Josie Zhang, president of Burberry China.
"The China market has changed significantly and Generation Z consumers have become backbone buyers. We have also started our strategy to tap young people born after 2010," she said.
Since the second half of June, sales at offshore duty-free shops in Hainan have resumed the trend of year-on-year growth, which was affected by the pandemic, according to China Tourism Group.
Sheng Qiuping, vice-minister of commerce, noted that China would continue to develop new types of consumption, promote the continued recovery of consumption, give full play to the role of consumption in driving growth and stabilizing the economy.
"More global brands are participating in the expo this year, showing that the role of the expo has become more prominent and the attractiveness of the China market has grown further," Sheng said at the expo.
In the first quarter, China's luxury market remained strong growth, but the business performance of the sector in the second quarter was affected by the resurgence of local COVID-19 cases. Nevertheless, Bain& Company said it believes the personal luxury market in China will gradually recover in the third quarter, and return to the level of 2021 by the end of this year or early next year.
"We are confident that China's luxury market will continue to grow, fueled by an increasing consumer base and further digitalized environment, and Hainan FTP will serve as a key enabler to drive consumption," said Xing Weiwei, partner of Bain & Company.
French luxury goods company LVMH Group said local COVID-19 cases that emerged in the past few months had a certain impact on the domestic retail and travel market. Therefore, it is of great significance that the expo has been organized in this context.
LVMH said it is confident of China's growth potential, and predicted Hainan will become a premium tourism market that high-end brands cannot ignore.
Zhang Tianbing, leader of consumer products and retail at Deloitte Asia-Pacific, said this year is important for the Hainan FTP, and the expo would help build Hainan as a shining example of high-level opening-up. Hainan will continue to help drive the overall consumption growth of China, he said.
