Liberalization of tax-free business guides the return of consumption

While overseas duty-free business complains, domestic duty-free shops stand out. According to Dufry’s announcement, Dufry’s revenue in the first half of this year was 1.587 billion Swiss francs, a decrease of 62% year-on-year. The revenue from July to August decreased by 75%-85%.

On the other hand, the domestic duty-free market has maintained sound development. Due to effective epidemic control and the relaxation of tax-free policies, domestic tax-free sales have increased substantially. From July to October 31, when Hainan implemented the new duty-free policy on outlying islands, Haikou Customs has supervised a total of 12.01 billion yuan in outlying island duty-free sales, a more than doubled year-on-year increase.

Liu Lewen, a senior senior analyst at Shenwan Hongyuan Securities, believes that the tax-free industry is the most direct way to guide consumption back. In 2019, China’s exports amounted to US$2.50 trillion, imports amounted to US$2.08 trillion, and a trade surplus of US$421 billion. Among them, the balance of goods trade accounted for 2.97% of GDP, and the balance of service trade accounted for -1.82% of GDP. China has long been in the process of a surplus in trade in goods and a deficit in trade in services. While the product positioning and consumption upgrade of the duty-free industry, its target customers are accurately positioned as the inbound and outbound population, so it has become the most direct means to guide the return of consumption.
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Fu Yifu, a senior researcher at the Consumer Finance Research Center of the Suning Institute of Finance, told the Caijing reporter that China’s consumption of luxury goods has been the highest in the world over the years, accounting for a large proportion of consumption outflow. According to the VIP Research Institute, Chinese global luxury goods sales amounted to US$152.7 billion in 2019, accounting for one-third of the total global luxury goods consumption, of which nearly 70% were consumed overseas. There is huge room for consumption return, and tax-free channels have become an attraction for overseas consumption. Effective channels.

“Everyone tends to consume overseas mainly because of the affordable price.” Chengcheng is a full-time agent who compares the prices of beauty and luxury products at home and abroad. “The price of domestic counters is 10%-20% higher. As much as 30%-40%. If you catch up with foreign discounts, you may save about 20% of your money by stacking tax rebates.” Orange Daigou purchases 90% of the products from Korean duty-free shops, because the discount is greater than the Hainan duty-free shop price The price gap with domestic counters is relatively not obvious.

Since the beginning of this year, in order to support the development of the tax-free economy, many governments have successively issued documents. Since the National Development and Reform Commission and other 23 departments jointly issued the “Implementation Opinions on Promoting Consumption Expansion and Quality and Accelerating the Formation of a Strong Domestic Market” in March, Shanghai, Guangdong, Hubei and other provinces and cities have issued documents after proposing the establishment of a tax-free system with Chinese characteristics. To support the development of the tax-free economy. In June, the “Overall Plan for the Construction of Hainan Free Trade Port” (hereinafter referred to as the “Plan”) was announced. The “Plan” clearly adjusted the duty-free policy on outlying islands, relaxed the tax-free shopping limit on outlying islands to 100,000 yuan per person per year, and expanded the types of duty-free goods. This became the largest adjustment in Hainan’s outlying islands’ duty-free policy in more than 9 years, which has driven it to a certain extent. Hainan’s upsurge of “buying in Hainan”, from the implementation of the new tax exemption policy on outlying islands in Hainan in July to October 31, Haikou Customs has supervised 12.01 billion yuan in outlying island duty-free sales, a year-on-year increase of more than twice.

Fu Yifu believes that in addition to duty-free shops on outlying islands, duty-free shops in the city should also become an important tool to promote consumption. “Compared with airport duty-free shops, the advantage of city duty-free shops is that they are closer to urban residents, saving time and space costs. The rent in the city is also lower, which can provide a more spacious exhibition area and enhance the shopping experience.”

Currently, Beijing and other cities are actively deploying duty-free shops in the city. In June of this year, Wangfujing Group obtained the qualification for tax-free operation and became the eighth company in China with a tax-free license. Fu Yifu said that the further liberalization of tax-free business is a major benefit for guiding the return of consumption in the future. “The private economy is the most dynamic factor in the entire market economy. The participation of the private economy in tax-free business will be conducive to the marketization of tax-free business.”

However, compared with other countries, the number of duty-free shops in China is still insufficient. As of December 2019, a total of 57 duty-free shops were operated in Korea, of which 22 were duty-free shops in the city, accounting for nearly 40%. “China still has a lot of room for growth in duty-free shops. Once developed, it will definitely have a positive impact on the return of overseas consumption.” Fu Yifu said.

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