China’s resort island of Hainan is an international fashion hub, with over 3,000 famous luxury brands, such as Burberry and Estee Lauder, operating there. The island has become popular for its duty-free shops. Analysts say the Chinese government should support this sector of the economy to stimulate consumer activity.
The luxury goods sector is currently experiencing a downturn, despite the release of new collections by the above-mentioned brands. However, many companies plan to regain lost earnings thanks to recovering demand.
Hainan Island, which is often nicknamed China’s Hawaii, is a key retail hotspot in the country. Its retail sector benefitted greatly from the pandemic, as many Chinese consumers could only buy luxury goods there due to the border shutdown.
The Chinese authorities plan to remove all import duties on the island by 2025, which would increase prices of many goods, such as cosmetics and luxury items, by about 10-40%. Currently, about 12 duty-free shopping centers are present on Hainan Island.
Such plans have prompted global luxury goods manufacturers to participate in the China International Consumer Products Expo, held annually on the island. The organizers estimate that about 3,300 brands participated this year, up from 2,800 in 2022.
LVMH, the world's largest producer of luxury goods, was a headliner participant of the expo. The company reported that its sales increased by about 17% in the first quarter of 2023. Among other participants were the Japanese company Shiseido, as well as major automakers such as Bentley, Porsche, and Ferrari.
