Hainan, the Chinese island province popular with domestic shoppers and brands from LVMH and Kering, experienced a 29.3% YoY decline in duty-free sales in 2024 as the nation’s sluggish economy led to a reduction in tourism.
Visitor numbers decreased by 15.9%, falling to 5.68 million in 2024 from 6.75 million the previous year. The weakening of foreign currencies, including the Japanese yen, along with favorable travel incentives like Malaysia’s visa-free entry policy, has driven many Chinese shoppers to seek more affordable options overseas, according to analysis shared by Reuters.
Customs data released on Thursday revealed that visitors to Hainan spent 30.94 billion yuan ($4.24 billion) on duty-free items in 2024, down from 43.76 billion yuan ($5.97 billion) in 2023.
Despite Hainan’s decline in duty-free sales as Chinese tourists pursue more competitive overseas travel options, major brands continue to invest in the resort destination.
Earlier last week, Coach launched its first two-story flagship store tailored to China’s travel retail market in Sanya, Hainan. Located in the CDF Sanya International Duty-Free Mall, the store features a range of classic Coach products, along with the sustainable “Coachtopia” collection. Additionally, the flagship includes a café serving coffee drinks, desserts, and treats inspired by Hainan’s local flavors, introducing a fresh retail concept to the area.
As previously reported, some brands have faced difficulties due to an overdependence on duty-free channels, which can erode profit margins in China. For instance, 23% of Estée Lauder’s sales in the country are generated through duty-free channels, compared to just 10% for Shiseido and L’Oréal.
China’s latest crackdowns on its “grey” daigou trade have also impacted sales in the region.