Hong Kong and Hainan province are viewed as partners in progress, complementing each other with their distinct advantages, rather than competitors. Industry experts say the SAR’s status as a global shopping oasis is here to stay. Liu Yifan reports from Hong Kong.

Hainan — an island province off the Chinese mainland’s southern coast — may be raising its standing as a prime duty-free market, but does it threaten Hong Kong’s global reputation as a shopping paradise?

Industry watchers believe neither the special administrative region nor the tropical island, dubbed “Asia’s Hawaii”, could substitute each other but, instead, can create great synergy in tourism consumption and can each compete on the world stage in different spheres, given their distinct specialties and positions.

China aims to turn Hainan into an influential, high-level free-trade port by the middle of the century as the nation’s smallest province plans to start a round-island independent customs operation by the end of next year. With it comes a raft of measures to boost the recovery of duty-free consumption, such as simplifying purchase procedures, issuing duty-free consumption coupons, and promoting the island’s duty-free goods.  

Last year, Hainan’s total offshore duty-free sales surged 25.4 percent year-on-year to 43.76 billion yuan ($6 billion). According to the customs authorities in Haikou — Hainan’s capital city — more than 6.7 million shoppers bought 51.3 million duty-free products on the island in 2023, representing increases of 59.9 percent and 3.8 percent, respectively.

Erin Cho, dean of the School of Fashion and Textiles at the Hong Kong Polytechnic University, says Hainan’s duty-free market boom will attract a substantial number of consumers who had previously gone to Hong Kong to shop, but the SAR’s role in the global luxury market is irreplaceable.

“Despite the rise of Hainan’s duty-free market as a potential competitor, Hong Kong remains confident in its ability to maintain its role as a global leader in business and tourism, and it’s more likely that both destinations will coexist and cater to different consumer segments,” she believes.

Hainan, as the sole duty-free destination on the mainland, is primarily promoted as a tourist spot for Southeast Asian travelers, offering an enchanting cultural experience deeply rooted in its rich history and diverse ethnic communities. Along with its cultural attractions, Hainan boasts a stunning natural landscape that captivates nature enthusiasts. Visitors can immerse themselves in authentic Hainanese culture, explore traditional crafts, and acquire unique souvenirs that encapsulate the island’s essence.

Irreplaceable attraction

In contrast to Hainan’s rise as a major tourist spot, Hong Kong is long renowned as a shoppers’ paradise for Chinese and international visitors. The SAR’s appeal extends beyond shopping and encompasses various aspects of lifestyle, including art, design and fashion.

“Hong Kong’s strategic location as a gateway to the mainland and the world, coupled with its robust infrastructure and historical reputation as a major trading and business center, remains irreplaceable. It offers businesses unparalleled connectivity and access to a vast consumer market,” Cho points out.

From a global consumer perspective, Hong Kong’s well-developed city transit network and its position as a global airline hub with high English proficiency levels, set the city apart from Hainan, she says, adding that Hong Kong’s global reputation, which stems from its unique fusion of Eastern and Western cultures, provides a wide range of experiences influenced by both Chinese customs and Western trends.

“Hong Kong will continue to attract a diverse range of visitors, including those seeking luxury brands, art, design and a comprehensive lifestyle experience. On the other hand, Hainan’s unique natural offerings and duty-free shopping will appeal to travelers seeking a distinct cultural experience and a different type of shopping experience.”  

Chen Yong, an associate professor at Switzerland-based EHL Hospitality Business School, agrees. “Shopping is just one of the motivations of many tourists. Even for tourists whose primary aim is to shop, they do crave a variety of other goods and services to enrich their travel experience.”  

“In fact, unless for routine cross-border shopping, it’s unlikely that tourist consumption simply starts and ends with shopping. As two major destinations in southern China, Hainan and Hong Kong can, by no means, substitute each other as they’re in different positions in the market, and their tourist attractions are not similar either,” he explains.    

This is particularly true for business travelers, who typically have limited time to explore tourist destinations and do shopping. Hong Kong’s compact size and efficient transportation system make it a perfect place for combining business and shopping endeavors. The city’s well-established infrastructure, including its top-notch airport, extensive public transportation network, and convenient business districts, help business travelers to move around conveniently between meeting and shopping venues.

Since the full resumption of cross-border travel between the SAR and the world in the aftermath of the COVID-19 pandemic, Hong Kong has stepped up efforts to boost its tourist consumption by promoting its “mega-events” economy.

Secretary for Culture, Sports and Tourism Kevin Yeung Yun-hung said earlier this year the SAR government is committed to showcasing the city’s unique charms and encouraging high-end travelers to stay longer by nurturing tourism projects with local and international characteristics while promoting various events.

The SAR is hosting more than 80 grand events in the first half of this year, including the recent Hong Kong Sevens and the pop culture festival, ComplexCon.

The Hong Kong Tourism Board has successfully bid for or sponsored about 600 international conventions and exhibitions that are expected to attract 370,000 visitors, Yeung says.  

Keeping pace with the times

To complement the government’s drive to strengthen the city’s tourism and shopping allure, national legislators and political advisers from Hong Kong are calling for an increase in duty-free allowances and an expansion of multiple-entry permits for mainland visitors.

During this year’s two sessions, Stanley Ng Chau-pei — a Hong Kong deputy to the National People’s Congress, the country’s top legislature — said the duty-free shopping limit for mainland tourists visiting Hong Kong should be raised to 30,000 yuan from the current 5,000 yuan, while Hainan offers tax-free shopping spending of up to 100,000 yuan for visitors from the mainland annually.

Starry Lee Wai-king, a Hong Kong member of the Standing Committee of the NPC, described Hong Kong’s duty-free limit of 5,000 yuan as a “far cry” from meeting the needs of mainland tourists, and said it could weaken the city’s competitiveness.

Henry Tang Ying-yen, a member of the Standing Committee of the National Committee of the Chinese People’s Political Consultative Conference — the nation’s top political advisory body — has called for reinstating the multiple-entry permit program for Shenzhen residents and extending it to other cities in the Guangdong-Hong Kong-Macao Greater Bay Area.

In order to take the SAR to new heights in tourism and shopping, industry experts say deeper collaboration between Hong Kong and Hainan is needed, and that the challenges in competing with Southeast Asian countries for tourists are more serious than with Hainan. Tourist destinations in the region have been promoting tourism by leveraging their unique cultural heritage, natural attractions, and favorable policies to drive economic recovery and lure international brands.

A telling example is designer brand Coach’s decision to set up its first cafe in Jakarta in a strategic move to tap into the burgeoning tourism market there and capitalize on the Indonesian capital city’s prospective status as a desirable destination.

“We can promote Hainan and Hong Kong jointly by leveraging each other’s free trade zone status and developing a combined air and sea connection that benefits both destinations and contributes to the overall development of the region,” Cho says.

Collaboration between Hainan and Hong Kong can also be extended to areas like cross-cultural events, education, research and innovation. “While differences in language, customs and business practices may pose challenges, they can be addressed with efforts to improve communication, foster cross-cultural understanding, and adapt to each other’s business norms,” she says.

In Cho’s view, closer ties among Hong Kong, Hainan and neighboring regions offer vast opportunities, creating a cultural extravaganza in the South China region as this aligns with travel trends that focus more on experiential tourism.

“By combining the unique offerings of each place, such as Hainan’s tropical paradise, Shenzhen’s array of original brands, Macao’s renowned casinos and the Grand Prix, as well as Hong Kong’s vibrant lifestyle and East-meets-West culture, the region can attract visitors seeking a comprehensive cultural experience within a relatively short travel time of two to three hours,” Cho adds.

Chen agrees that Hainan and Hong Kong are complementary to each other in many aspects. Tourists could travel to and stay in both destinations during a single trip to enrich their travel experience, provided there are good and efficient connections between them in transportation and customs formalities.

But the challenges are mainly about the dearth of more effective transportation connections, such as how to restructure and increase flights between the two places, enabling tourists to travel faster, freely and conveniently.  

Moreover, Chinese and international tourists face customs formalities when traveling between Hong Kong and Hainan. “Both governments should coordinate and focus on simplifying customs procedures to reduce unnecessary obstacles and make travel between the two places as easy and seamless as possible,” urges Chen. This would not only boost connectivity between the two destinations, but also save tourists a lot of time, which is crucial for them in getting a more satisfactory travel experience.

Contact the writer at evanliu@chinadailyhk.com