Shanghai duty-free economy likely to boost tourism

 Saturday, September 18, 2021 

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Shanghai

The Shanghai government has decided to support companies applying for approval to sell duty-free goods. Authorities will now encourage duty-free shops to be set up at airports, hotels, malls and other commercial venues that will ultimately help to boost the tourism sector.

The municipal authorities of Shanghai recently outlined a 2021-2025 consumption plan highlighting the development of a “duty-free economy”, which will encourage spending on imported products, including heavily-taxed luxury goods.

Presently, duty-free spending in China is largely concentrated in the southern island province of Hainan, where the annual limit on individual duty-free spending was hiked to 100,000 yuan ($15,467) last year from a previous 30,000 yuan previously.

Tariffs on imported consumer goods vary in China, with taxes on some luxury items such as perfumes and watches exceeding 30%. Attracted by the substantially lower prices, millions of domestic tourists flock to Hainan’s malls each year, and the numbers have been boosted by restrictions on overseas travel resulting from the COVID-19 pandemic.

Otherwise, there are more than 300 duty-free shops across the country selling products from fragrances and cosmetics to clothing and shoes. China Tourism Group Duty Free Corp (601888.SS) is the dominant player, with nearly 200 stores. The annual duty-free spending is in the tens of billions of yuan.

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