China Tourism, pending Hong Kong IPO, touts Hainan, a tax-free haven for tourist dollars in rivalry with Okinawa and Jeju

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China Tourism Group Duty Free, the world’s largest tour operator by sales, hopes to capture a share of the multibillion-dollar growing spending of Chinese consumers in the Hainan Island Duty Free Trade Zone.

China Tourism filed for listing on the Hong Kong Stock Exchange in June and was aiming to debut this quarter, people familiar with the matter said. The application is still pending approval by the listing committee of the Hong Kong Stock Exchange.

With government policies to boost Hainan’s overseas duty-free sector, China’s southernmost province is emerging as a shopping destination, with retail revenues expected to reach $ 46.5 billion. dollars by 2025. This will help Hainan compete with Okinawa in Japan and Jeju in South Korea. , the only other Asian islands with similar offshore duty-free markets, analysts said.

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Sanya International Duty Free Shopping Complex in Sanya, Hainan Province. Photo: Xinhua alt = Sanya International Duty Free Shopping Complex in Sanya, Hainan Province. Photo: Xinhua

Here are some things to know about Chinese tourism.

Has Chinese tourism benefited from the pandemic?

As international travel has yet to take off due to travel restrictions amid the Covid-19 pandemic, Chinese tourists who traditionally visit duty-free shops abroad have since turned to Hainan as an alternative, a China Tourism Group said in its file.

“We have captured the main offshore duty free sales channels in Hainan, including Haikou and Sanya airports, [and its] city ​​centers, ”the company said.

Chinese residents spent more than 700 billion yuan ($ 108.4 billion) on duty-free and duty-free goods abroad in 2019, roughly 14 times the spending in China’s duty-free market over the past year. the same year, according to research firm Frost & Sullivan.

Some of the money that was redirected home was not triggered solely by the pandemic. An overseas duty-free sector is part of the government’s plan to develop Hainan as a free-trade port, a key part of President Xi Jinping’s policy to boost domestic consumption. Sales of consumer goods in China in the first eight months of this year are up 3% from a year ago.

The Beijing-based company claims to own nearly 100% of the duty-free retail market in Hainan, where it opened its first duty-free store in downtown Sanya in 2011. This has grown to five stores today. . It is one of the six entities that have permits to operate on the island.

What do we know about the company?

Founded in 1984, China Tourism Group had a market capitalization of 507.6 billion yuan on the Shanghai Stock Exchange on Wednesday. The state-owned CTG, formerly known as China Travel Agency Hong Kong, is its majority shareholder with a 53.3% stake.

With 194 stores in China, Hong Kong, Cambodia and Macau, its first-half net profit increased fivefold year-on-year to 5.4 billion yuan year-on-year, it said in its report. Interim Report. This is due to favorable policies to promote duty-free shopping on the island since July 2020, such as extending the purchase limit per person duty-free from 30,000 yuan per year to 100,000 yuan per year. .

“Hainan’s offshore duty free allocation is the most generous in the world,” said a KPMG report titled Hainan Free Trade Port Travel Retail Market – Towards a Golden Future released in May.

How is the Hong Kong IPO market going?

A multibillion-dollar IPO by China Tourism Group could be a boost for the Hong Kong IPO market. The biggest deal of the year so far has come from short video platform Kuaishou Technology, which raised $ 5.4 billion in January.

In the third quarter, 23 IPOs raised $ 5.6 billion, down 66% from the $ 16.6 billion of 38 deals in the same period last year, according to data from Refinitiv.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice on China and Asia for over a century. For more SCMP stories, please explore the SCMP app or visit the SCMP Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2021. South China Morning Post Publishers Ltd. All rights reserved.



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