The Hainan Luxury Hotspot – Fad or Trend?

Over Chinese New Year this past February, the Champs-Élysées in Paris, Via Montenapoleone in Milan, and Oxford Street in London were all empty, in stark contrast with the previous year.

Meanwhile, during that same span the duty-free sales volume in Hainan surpassed 1.5 billion RMB (230 million USD), with average daily sales four times that of Beijing’s SKP, the world’s largest shopping mall in 2020.

As part of the Chinese government’s strategy to shift consumption from abroad to within its own borders, Hainan has become a major domestic destination for affluent and high-net-worth Chinese consumers who cannot go overseas due to Covid-19 travel restrictions. As a result, most top luxury brands across fashion, jewelry, watches, beauty, fragrances and wine and spirits have opened flagship stores and expanded the scale of their retail footprint on the island.

Many questions remain. Is the 2021 sales boom destined to stay or, with the gradual recovery of global tourism, will affluent Chinese once again choose to go overseas and shop in the fashion capitals of the world?


Comparing tax-free luxury spend from domestic visitors (who are almost exclusively Chinese citizens) in Hainan in 2020 with Chinese travelers’ spending in top overseas destinations in pre-Covid years, Hainan exceeded 3 of the top 5 – Dubai, London and Paris – by a magnitude of about three. It still lags behind Tokyo and is far behind Hong Kong, where, during the last few years, Chinese tourists spent nearly 10 times more than they did in Hainan in 2020. 

What is really appealing to luxury brands is the potential for growth and for the development of retail experiences outside of Sanya and Haikou International duty-free shops. According to public statistics, the total number of tourists in Hainan reached 65 million in 2020, nearly 10 times the number of shoppers visiting the duty-free shopping malls. By the end of 2023, visitors to its international duty-free shops are estimated to reach a staggering 5.6 million, with total potential consumption of USD 12.3 billion per annum, close to visits and retail purchases to Japan in 2019. Hainan could overtake Tokyo to become the second-largest luxury shopping destination for Chinese travelers after Hong Kong (assuming that Hong Kong regains its former market share following the pandemic).

Our data from the TrendLens™ 2021 study confirm Sanya’s appeal for Chinese affluents, which was the third-most visited domestic destination in the past year and is the #1 planned domestic destination in the coming year, particularly among affluent consumers under 35 years old.


While Hainan may lack the prestige factor of a trip to Tokyo, Hong Kong or Paris, which will most likely remain preferred long-term destinations for the truly wealthy, it does offer local affluent consumers plenty of advantages. New duty-free rules implemented in June 2020 more than tripled the amount a traveler can buy without paying additional duties, to 100,000 RMB (14,050 USD).
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