ChinaDutyFreeReportt[权威资料].doc

China Duty-Free Reportt 1. Burgeoning Global Tourism Retail According to The Fortune Character Institutes projection， the global duty-free business has created a $50 billion market， within which the top 25 players account for 75% of the total sales. In 2012， China Duty Free Group （CDFG） registered a sales record of 657，000 million Euros， and a 33.16% year on year increase placed it at number 14 on the list. This is followed closely by Sunrise Duty Free at number 15， with a sales figure of 645，000 Euro. 2. Chinese Consumers Become the Largest Consumer Body in Global Tourism Retail Each year， there are more Chinese going aboard. 2010 marked a record 50 million tourists， since then the growth rate has stabilized at 20%. In 2012， 83 million Chinese travelers crossed the borders. Awakening to the stable growth of Chinas macro-economy， more and more wealthy Chinese are in the mood for overseas travel， as a result， the number of tourists going abroad have been increasing. With regard to the numbers of passengers at each domestic airport： in 2012， 21 Chinese airports recorded an aggregated passenger volume of 500 million， Beijing Capital Airport had the largest number with 8.193 million， followed by Guangzhou Baiyun International Airport at 4.831 million， and the third and fourth place were taken by two Shanghai airports， PVG and SHA. In short， the surge of overseas and domestic travel has laid significant foundations for the development of Chinas duty-free business. In fact， Chinese consumers constituted the largest consumer group in the global travel retail market， holding up half of the European luxury market. Based on data disclosed by The Financial Times， annual spending of Chinese consumers in Britain was 300 million， equal to 2.78 billion RMB. At Heathrow Airport in London， Chinese passengers only account for 1% of total passengers， but make a 25% contribution to duty-free sales. On non-weekend days， three quarters of customers at Burberrys Hackney outlet store were Chinese. Based on UK China Visa Alliances estimate， Chinese visitors visa denial equaled a loss of about 1.2 billion retail revenue in the UK. The same is happening elsewhere. In 2012， the per capita spending of Chinese passengers at Incheon Airport was $116， trumps Japanese tourists who on average spend $70. Despite making up only 8% of total visitors， Chinese tourists generated 25% of the duty-free revenue. In the first half of 2013， the largest Korean dutyfree group， Lotto Duty-Free Group made total sales of 1.6 trillion KRW （equal to about 8.7 billion RMB）， increased by 6.67% since the previous year. Sales to Chinese passengers increased by 80% in contrast with a 30% decrease in sales to Japanese passengers. In terms of number of passengers， Chinese passengers reached 1.4 million and with 1.3 million Japanese. Clearly， Chinese tourists have become the main buyers at Lotto DutyFree shops. In Singapore， according to data from Singapore Tourism Bureau， in 2011， the per capita spending by Chinese tourist was$1，081， rising from $377 in 2002， recording an outstanding three-fold increase. At Dubai Airport， Chinese passengers on average spend $1，370 to $2，500 on wine purchase， in addition to three or more Hermes scarves. Needless to say， Chinese consumers have become the driving force of global travel retail. 3. Fortune Character Institute Project Continuing Consumption Increase of Chinese Consumers Overseas The Fortune Character Institute predicts the trend of Chinese buying overseas will continue as the number of outbound tourists continues to rise. This is because： 1） the price gaps for high-end goods remains， which have been a major cause stimulating Chinese consumers to do shopping overseas； b） the product quality concerns around certain domestic productions and insufficient supply， consumers have higher confidence in goods in the foreign markets and appreciate the shopping experience more； c） macro-economic factors， a stronger RMB gives Chinese tourists more consumption power. 1. Luxury Consumption Moved to Foreign Market Place Fortune Character Institute research reveals that in 2012， Chinese consumers broke the“1+1+1” luxury good consumption pattern as seen in 2011， and most purchase decisions were made in foreign marketplaces. Aside from Hong Kong and Macau （26%）， Europe captured 23% of the total purchasing power， followed by US at 10% and Japan with a diminishing share of 3%. In 2013， the trend goes on but the changes are： Hong Kong and Macau recorded an increased 44% Chinese customers， Europe observed a 8% decline， and US sold luxury goods to 5% more Chinese consumers. At the same time， in 2013 high net worth Chinese individuals were more inclined to “travel and buy”， especially billionaires （51%）. Much to the surprise of many， for the first time Beijing overtook Shanghai and became the most favoured luxury goods purchase destination in China. 2. Buying Luxury Goods At Retail Stores and Duty-Free Shops In general， domestic shopping malls， overseas retail stores and duty-free stores are the top three favourite sites for Chinese consumers. Being price sensitive， the order and its percentages are： duty-free store 33%， overseas retail store 22%， domestic shopping mall 21%. Of course， given the fast development of online retailing， 11% consumers use professional purchase agents and 8% do online shopping. Consumers with assets of RMB 10-50 million， tend to favour duty-free stores （30%）， overseas retail stores （32%） and domestic shopping malls （17%）. But for people with assets in excess of 50 million RMB， especially billionairs， 39% of buyers would make in-person visits to stores aboard， with only 26% to duty-free stores and 15% to domestic shopping malls. In addition， 13% of purchases are made at events. 3. Leather Goods， Jewellery and Watches Are Hot Commodities for Oversea Chinese Shoppers Overseas Chinese consumption concentrates on leatherware， watches and jewellery. Purchase category differs with asset size， ordinary consumers prefer perfume， leather goods and apparel， whereas the wealthy tend to purchase jewellery and watches. As would be expected with the noteable price difference， ordinary consumers like to buy branded bags and luggage in various styles， while higher net worth individuals prefer limited edition and customized products. 4. When Buying Overseas， Ordinary Consumers are more Price Sensitive and Wealthy Consumers Place Emphasis on Individualized Purchase Experience and High-quality Service Many market research agencies are under the impression that the fundamental driver for Chinese buying overseas is the price difference. Fortune Character Institute sees the outflow of consumer disposable income vary by asset classes. Ordinary consumers are naturally more price sensitive therefore follow the “buy more” mentality； on the other hand， wealthy consumers care more about personalised shopping experience and high-quality service， which is more sophisticated than a mere sales transaction. The domestic market thus far has miserably failed to meet this demand. 1. Preference for Buying Overseas will Soon Ease Chinese consumers have gone through three phases of luxury goods purchase. Phase I started with the “Reform and Open Up” era until the mid 90s， during which time 80% of luxury purchases were made overseas. The reason is simple： back then the Chinese luxury market was premature and there was not much space for international luxury brands， apart from within department stores and five-star hotels. With limited product availablity in the domestic market， Chinese consumers were forced to shop overseas as the only alternative. Phase II started in the mid 90s and has continued until now， during which time the percentage of luxury overseas consumption has dropped. The luxury market in China caught up quickly and many luxury brands entered the Chinese market. Besides opening retail stores in tier-1 cities like Beijing， Shanghai， Guangzhou and Shenzhen， the luxury brands also endeavored to tap into tier-2 and tier-3 cities to expand sales channels. Today， it is not a dream for domestic consumers to buy favoured luxury goods just around the corner. Fortune Character Institute research identified a stablized 40%-60% breakdown between buying overseas and buying at home， matching the trend of international travel. However， overseas buying is expected to drop to 20%. That is because of the progress made in logistics， informationization and integration in the global economy. Eventually， Chinese will only go on a shopping trip for products not available at domestic stores， particularly the customized， limited edition and more exclusive designer brands. 2. Tourism Consumption and Cultural Experience Consumption are Themes for the Future The surge of Chinese outbound tourists drives tourism consumption. To visit the original birth places of luxury goods and experience the culture will become a very appealing idea for Chinese consumers. 3. The Predominant Channel is Buying From the Store At present， retail stores and duty-free shops prevail in luxury consumption channels. In the future， they will be gradually replaced by direct purchase from foreign companies， since wealthy Chinese seek the satisfaction derived from high quality experiences at the place of origination. 1. The Duty-Free Market in China Expands Each Year As indicated by The Fortune Character Institute ， the retail sales of the Chinese duty-free market is about RMB 16.8 billion， making a 27% year on year growth and a compounded growth rate of 22%. In 2015， Chinas duty-free market will exceed ￥30 billion and become the worlds second largest duty-free consumption destination. 2. Three Duty-Free Models There are three operating models in the Chinese duty-free sector. Firstly， the duty-free stores at the ports and at downtown locations， which are the most common form worldwide for duty-free business. Secondly， the off-island duty free store. In March 2011， the Chinese government announced a tax exemption policy for Hainan Island， and agreed to launch pilot programs inside the city of Sanya and at Haikou Airport. This type of duty-free is only seen in Hainan Island （China）， Okinawa Island （Japan）， Cheju Island （Korea） and Taiwan. Lastly is the duty free foreign currency shopping center， a very unique type of duty free shopping which only exists in China， the Phillipines， and a handful of other countries. Port and Downtown Duty-Free Stores： Five Companies in China There are five players in port and downtown duty-free store businesses in China， namely China Duty-Free Group， Zhuhai Special Economic Zone Duty-Free Corporation， Shenzhen Special Economic Zone Duty-Free Corporation， Hainan Duty-Free Corporation and Sunrise Duty-Free Group. China Duty-Free Group China Duty-Free Group was established in 1984， and is the only state-owned， State Council-designated franchise company to run duty-free business across China. Now it has retail locations in Beijing， Shanghai， Xiamen， Dalian and Qingdao， and covers 29 provinces， cities， and special administrative regions at over 200 duty free stores located in airports， on planes， at borders， on outbound cargo ships， at transporation hubs， inside the city， at train stations， and on international cruises. In 2012， the operating revenue of China DutyFree Group made 5.135 billion RMB， growing by 33.16% since 2011， and also had a gross profit margin of 44.08%， increased by 2.87%. Among all store locations， the store inside the city of Sanya generated operating revenue of 2.037 billion RMB and recorded a 102.66% year on year growth. Zhuhai Special Economic Zone Duty-Free Corporation Zhuhai Special Economic Zone Duty-Free Corporation was established in 1980 and is reponsbile for managing duty-free business at Zhuhai port. It owns six stores including Gongbei Port Duty-free Store， the largest individual store per square footage. Shenzhen Special Economic Zone DutyFree Corporation Shenzhen Special Economic Zone DutyFree Corporation was approved by the State Council in 1980， Shenzhen State-owned Asset Supervision and Administration Commission is the acting investor. It owns seven duty-free stores at Shenzhen border ports and airports. Hainan Duty-Free Corporation Hainan Duty-Free Corporation was approved in 2011 by the State Council. Its business operates primariy in Hainan province and the major business is managing state-approved offisland duty free goods and constructing dutyfree stores. Sunrise Duty-Free Sunrise Duty-Free was incorporated in the British Virgin Islands in 1999 and owns 10-year exclusive rights for duty-free business at Beijing and Shanghai airports. Hainan Off-Island Duty-Free Store Today， there are two off-island duty-free stores in Hainan， and one of them is in the city of Sanya， owned by China Duty-Free Group. In， 2012 the store made 2.037 billion GBP sales revenue； in the first half of 2013， it sold 1.843 million items worth ￥1.48 billion. The other store is located inside Hainan Meilan Airport， managed by Hainan Duty-Free Corporation. The sales revenue for 2012 is 0.36 billion RMB. In the first half of 2013， Hainan Meilan Airport Duty-Free store sold 504，000 items worth 286 million RMB. Two years into implementation， the off-island duty free policy had improved sales of duty-free goods in the mainland market. The first half of 2013 recorded that 2.347 million items have been sold， increasing 22.63% from the same period last year. The total sales revenue was 1.77 billion RMB， achieving a 50% increase from last year. The total number of buyers reached 589，000， with a 4.62% increase compared with 2011. Foreign Currency Duty-Free Shopping Center- China National Service Corporation for Chinese Personnel Working Abroad China National Service Corporation for Chinese Personnel Working Abroad （CNSC） is the primary operator of Foreign Currency DutyFree Shopping Centers. Different from other duty-free stores， its policy requires that it can only sell to customers who are Chinese citizens over 16 years old and who have returned to China within 180 days from an overseas trip（Hongkong and Macau not included）. A passport and valid visa is required at point of purchase， and the transaction and delivery is completed on the spot. CNSC currently operates 12 such shopping centers across China. 3. Two Major Issues Concerning Chinese Duty-Free Problem 1： Operating Problem of Duty Free Companies Selling Top-line Brands versus Fashion Brands International duty-free stores in general source top-line brands. Brand positioning also defines their sales channel. In the Chinese duty-free shops， one will often find perfume， jewellery， watches