China announces trade fair to boost Hainan’s duty-free status, show commitment to opening up

Orange Wang
·4-min read

China announced on Wednesday plans to hold a huge trade fair in Hainan as part of an effort to turn the tropical island into a duty-free destination, while sending a message that the country’s appetite for Western consumer goods was undiminished despite rising geopolitical tensions.

Beijing also hopes the event will spur consumer spending, which is recovering slowly from the coronavirus pandemic, and is at the heart of the government’s “dual-circulation” strategy that aims to reduce China’s dependence on overseas markets and technology for long-term development.

The first edition of the China International Consumer Products Expo, also known as the Hainan Expo, will take place from May 7-10 in Haikou, the capital of Hainan province, China’s Ministry and Commerce and the provincial government jointly announced. It will be the country’s first state-level exhibition focused on premium consumer goods, the organisers said.

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China unveiled plans in June last year to transform the 35,000 sq km island a free-trade port, a move widely seen as a rebuff Hong Kong – long the most popular destination with mainland tourists for duty-free shopping – following months of anti-government protests against the unpopular national security law.

“Convening the Hainan Expo … is to help make Hainan into an international tourism and shopping centre, which is of great significance to building the Hainan free-trade port,” Wang Bingnan, vice-minister of commerce, said at a press conference.

Chinese citizens can spend as much as 100,000 yuan (US$15,300) per person every year at duty-free shops on the island, up from the previous limit of 30,000 yuan, according to a special policy package for Hainan unveiled last June.

Offshore duty-free sales on Hainan island soared by 319.7 per cent from a year earlier to 8.3 billion yuan in the January-February period, after an annual rise of 103.7 per cent in 2020, according to customs data.

In contrast, Hong Kong’s retail sales fell 13.6 per cent in January amid the pandemic, plummeting for the 24th straight month. Sales of jewellery, watches, clocks and valuable gifts, which depend heavily on mainland tourists, shrank 31.7 per cent.

Some 1,165 brands sold by 630 exhibitors from 69 countries and regions enrolled for the expo, which is expected to attract more than 10,000 professional buyers and merchants, according to Shen.

Exhibitors including LVMH Group, L’Oreal Group and Galeries Lafayette from France; Burberry and Jaguar Land Rover from Britain; Hanse Yachts from Germany; US firms Johnson & Johnson, Dell and Tesla; and Blackmores from Australia. Switzerland will be the guest of honour at the first Hainan Expo.

The fair is the latest addition to a long list of government-sponsored events aimed at wooing foreign businesses. China has traditionally used expos like the Canton Fair in Guangzhou to present a friendly face to multinational companies and show it is committed to global trade.

Beijing has stepped up its charm offensive over the past year, even as Western nations have criticised it on issues ranging from alleged human rights abuses in Xinjiang, to Hong Kong and Taiwan.

In terms of exhibitors, foreign enterprises and foreign brands account for the majority, which once again shows the firm determination of the Chinese government to promote high-level opening up

Wang Bingnan

“In terms of exhibitors, foreign enterprises and foreign brands account for the majority, which once again shows the firm determination of the Chinese government to promote high-level opening up to the outside world and fully demonstrates foreign companies’ optimism about the Chinese market,” Wang said.

He added that authorities would leverage the Hainan Expo as a platform to stabilise and expand the domestic consumer demand, which has been a focus of the dual-circulation strategy.

China’s retail sales grew 3.2 per cent on an annualised basis in the January-February period, although that was weaker than the increase of 4.6 per cent in December, according to the official data.

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