As the Chinese government loses out on a massive amount of revenue thanks to Chinese consumers’ preference to buy luxury goods abroad, it is increasing the number of duty-free offerings with the hope that jet-setting shoppers will keep more of their spending on the mainland.
On Monday, the state-owned China National Service Corporation opened a two-floor, 3,300-square-meter duty-free shopping center in Shanghai’s busy commercial Jing’an district with over 100 brands available for sale. Brands include Michael Kors, Tissot, Estée Lauder, and MAC, just to name a few.
The offerings are only available to shoppers who have traveled internationally, as Chinese customers must be able to show their passport to prove that they’ve arrived in Shanghai from abroad within the past 180 days.
The limitations are likely aimed at cutting down on the impact of daigou sellers flooding the shop and clearing out shelves for their online shops.
Despite the stringent limits, demand appears to be strong: according to on-the-ground reports of the opening, massive crowds have been flocking to the new shop, with wait times of up to four hours to get in without reservations.
As Chinese consumers have been increasingly buying more luxury goods abroad to avoid high tariffs at home, the government has been enacting measures to “repatriate” luxury spending. The duty-free development is a significant part of this scheme, with plans to open 30 new duty-free stores at airports, arrival ports, and borders.
These efforts may have been paying off—a recent report by ContactLab estimates that Chinese consumers made 40% of all luxury purchases abroad in 2016, down from 43% last year.
(Source: Jing Daily)