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China bets on duty-free paradise to keep luxury spenders at home

In an effort to lift local consumption, spur domestic tourism, China have spawned a duty-free paradise on the southern island of Hainan that it hopes will satisfy a lust for luxury. Firms such as the owner of the world's biggest duty-free shopping centre, China International Travel Service (CITS), are capitalising on a relaxation of duty-free spending restrictions in February, with HNA Group. reporting a 160 per cent surge in sales.

Meanwhile, government initiatives, including 19 more duty-free shops nationwide, come as sales of the types of luxury goods that line duty-free shelves fell 2 per cent last year. Market watchers pin the blame on a campaign against demonstrations of wealth among public officials, as well as a slowdown in economic growth.

As of now, the Chinese buy close to 80 per cent of their luxury goods abroad in cities such as Paris, London and Tokyo, Bain Consultancy estimated.