Guotai Haitong Securities Co., Ltd. has released a research report stating that China's city duty-free market is currently in an early phase, characterized by store expansion, consumer habit cultivation, and ongoing improvements in shopping convenience. Current policies have already completed a first round of key optimizations regarding sales targets, purchase quotas, and online reservation systems. Further room for deepening exists in aspects such as the shopping process, collection efficiency, product categories, and online-to-offline integration, suggesting that policy dividends may continue to be released. As brand and category offerings improve and fulfillment chains are optimized, the shopping penetration rate is expected to steadily rise from a low base, converting into substantial new sales and further amplifying the synergistic value of leading companies in areas like brand partnerships, supply chains, membership systems, and port networks.
Global Duty-Free and Travel Retail Market Recovery Post-Pandemic; South Korean Experience Validates City Duty-Free as a Mainstream Format in Mature Markets
The global duty-free and travel retail market has been recovering from its 2020 lows, reaching USD 74.1 billion in 2024, and is expected to maintain a recovery and growth trend from 2025 to 2028. South Korea is one of the most mature markets for city duty-free globally, having established a proven model of "city shopping + airport pickup," where city duty-free shops have long held a core position, accounting for over 70% of total sales. In contrast, China's city duty-free market is still in the stages of policy expansion and consumer habit cultivation. Drawing from Hainan's offshore duty-free convenience measures like "buy and pick up immediately" and "guarantee and pick up," future improvements in reservation, pickup, payment, product categories, and online-offline linkage for city duty-free could gradually increase the shopping conversion rate.
China's City Duty-Free Supply System Accelerates Expansion; Policy Convenience and Inbound Visitor Recovery Provide Foundation for Growth
Since 2024, China's city duty-free store supply has consisted of three parts: existing city stores, transformed foreign exchange commodity duty-free stores, and new city stores. New stores are being gradually established in key cities such as Guangzhou, Tianjin, Fuzhou, Chengdu, Shenzhen, Xi'an, Wuhan, and Changsha. Newly added stores generally adopt a cooperation model between duty-free operators and local commercial, real estate, cultural tourism, or airport resources, with locations typically in core business districts or mature commercial complexes. Concurrently, policies such as unilateral visa exemptions, mutual visa exemption agreements, and the 240-hour transit visa exemption are continuously expanding. In the first half of 2026, outbound trips by mainland residents reached 88.02 million, a year-on-year increase of 10.5%, and inbound foreign visits totaled 22.914 million, a year-on-year increase of 20.4%, providing a substantial pool of potential customers for city duty-free shops.
Long-Term Potential of National City Duty-Free Market Depends on Joint Realization of Outbound Passenger Flow Recovery, Store Supply Expansion, Shopping Convenience, and Average Spend Increase
The report estimates that eligible outbound passenger flow in 2025 will be approximately 47.118 million person-trips. Under assumptions of a 0.3% utilization rate of city stores and an average spend of 1,400 yuan, the corresponding national city duty-free GMV would be about 2.0 billion yuan. With the implementation of new city duty-free policies, improvement in store layouts, increased consumer awareness, and optimization of port pickup logistics, the report projects that the national city duty-free GMV could rise to approximately 15.5 billion yuan in 2026E and 102.7 billion yuan in 2030E. Sensitivity analysis indicates that, assuming unchanged eligible outbound passenger flow in 2035E, with a utilization rate ranging from 8% to 18% and an average spend between 1,500 and 3,000 yuan, the national city duty-free market potential is estimated between 93.7 billion and 421.8 billion yuan, demonstrating the industry's strong elasticity to penetration rates and average spending.
Risk Warning: Policy changes; outbound tourism falling short of expectations; weaker-than-expected consumer spending.
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