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1、April 2025KPMG.Make the Difference.Moving forward with resilience to embrace unlimited opportunities2025 Hainan Travel RetailWhitepaper 2025 毕马威企业咨询(中国)有限公司 中国有限责任公司，是与毕马威国际有限公司(英国私营担保有限公司)相关联的独立成员所全球组织中的成员。版权所有，不得转载。在中国印刷。1ForewordHainan is the only off-shore duty-free shopping destination in China
2、,and its travel retail market is steadily gaining momentum.Despite fluctuations in 2024,the first quarter and the fourth quarter recorded 44.6%and 24.9%quarter on quarter growth respectively,reflecting a thriving market.According to the latest policy,the annual duty-free shopping quota for offshore
3、tourists in the Hainan Free Trade Port is CNY 100,000,one of the highest globally.This and the high-quality line-up of duty-free stores on the island has attracted a large number of domestic and foreign tourists and contributed to the development of Hainans thriving travel retail sector.But times ar
4、e changing and Hainan is having to evolve accordingly.Hainan has launched new tourism models such as“self-driving tours+camping”and“low altitude tourism”.It has also continued to pursue policy innovation and business integration in order to further diversify business types and service models across
5、the travel retail sector,consolidating its market leadership.However,global economic uncertainty has resulted in greater volatility across the travel retail sector,globally and in China.In particular,against the backdrop of inflationary pressure and the related erosion of spending power,the models t
6、hat Hainan has traditionally used to promote tourist spending are facing stiff challenges.Consumers increasing focus on value for money is driving the travel retail industry to constantly innovate service models and improve the quality of its offer.At the same time,the rise of emerging markets,such
7、as Southeast Asia and the Middle East,has also brought about a new competitive landscape for Hainan.In the face of these changes,Hainan needs to focus on core areassuch as tax regime innovation,operations and management,and application of AI technologyto upgrade and expand the local travel retail ma
8、rket.KPMG China and The Moodie Davitt Report launched the 2025 Hainan Travel Retail Whitepaper in the fifth year,which is provides a comprehensive overview of the duty-free and travel retail markets from a global perspective,offers insights into Hainans travel retail sector,including its current sit
9、uation and development trends,and provides a forecast for tax reforms that will take hold after a separate customs jurisdiction is put in place in Hainan.The report aims to serve as a valuable reference for decision-makers in the industry,help enterprises accurately understand sector dynamics,and pr
10、omote the high-quality development and sustainability of Hainans travel retail sector.Nicole ZhangSenior Office Partner,HainanKPMG ChinaMartin MoodieFounder&Chairman,The Moodie Davitt Report 2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a member firm of the KPM
11、G global organisation ofindependent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.2025 毕马威企业咨询(中国)有限公司 中国有限责任公司，是与毕马威国际有限公司(英国私营担保有限公司)相关联的独立成员所全球组织中的成员。版权所有，不得转载。在中国印刷。2ConclusionContents01Data-
12、driven insights into the travel retail marketfrom a global perspective02A data-based overview of the global travelretail market03Hainans travel retail market:Trends and insights04Outlook on the Hainan travel retail market after island seal-off2 2025 KPMG Advisory(China)Limited,a limited liability co
13、mpany in Chinese Mainland and a member firm of the KPMG global organisation ofindependent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.01Data-driven insights into the travel retail market from a
14、 global perspectiveData-driven insights into the travel retailmarket from a global perspectiveThe rising popularity of service-orientedconsumption is redefining the structureof consumer spending and thecompetitive landscape in the retailmarketChinese consumer sector 2024buzzwords3 2025 KPMG Advisory
15、(China)Limited,a limited liability company in Chinese Mainland and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.2025 KPMG Advisory(Ch
16、ina)Limited,a limited liability company in Chinese Mainland and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.4Data-driven insights in
17、to the travel retail market from a global perspective Integrated development of the travel retail and duty-free sectorsAs the name implies,travel retail is a combination of tourism and retail business.Merchants operating under this model provide goods and services targeting tourists in various scena
18、rios in transportation hubs or tourist destinations.Airports,cruise ports,high-speed railway stations and border ports tend to see large flows of tourists,and as a result,they are ideally suited for retail consumption.As merchants mainly operate under a rent sharing or franchise model,their operatin
19、g results are highly dependent on steady tourist flows.In case of force majeure factors,such as flight cancellations or travel restrictions,the travel retail market is often severely impacted.The duty-free industry is an important pillar of the travel retail market.The sector is unique in that it se
20、lls goods that are exempt from customs duties,value-added tax and consumption tax to eligible tourists.This not only enhances the attractiveness of the destination in the eyes of tourists,but also improves the competitiveness of the local retail market.Duty-free stores in airports,urban areas and cr
21、uises can meet the immediate needs of tourists,and international luxury brands have a significant influence in such markets.Due to tax incentives,among other factors,duty-free goods are usually cheaper than those available in the retail market,which increases consumers willingness to make purchases
22、and drives the development of the entire travel retail ecosystem.The duty-free industry sells duty-free goods specifically for eligible international tourists,such as inbound tourists.These goods usually include cosmetics,alcohol and luxury goods,and as they are tax-exempt,they are priced more compe
23、titively.According to the latest policy,the annual duty-free shopping quota for offshore tourists in the Hainan Free Trade Port is CNY 100,000(approximately USD 14,191),one of the highest quotas globally.Based on the World Airport Traffic Dataset released by Airports Council International(ACI)World
24、in July 2024,the total number of air passengers globally amounted to about 8.7 billion in 2023,an increase of 30.6%over 2022.This is 94%of the pre-pandemic level(2019).In 2023,the top 20 airports saw a 26.4%jump in passenger traffic compared with 2022,serving 1.41 billion passengers who accounted fo
25、r 16%of global passenger traffic.Hartsfield-Jackson Atlanta International Airport(ATL)topped the list in 2023,followed by Dubai International Airport(DXB)and DALLAS/FORT WORTH Airport(DFW).Notably,Guangzhou Baiyun International Airport,which had dropped to 58th place in 2022,was again among the top
26、20 in 2023,ranking 12th.Meanwhile,Tokyo International Airport(HND)rose 11 places to fifth place,returning to its 2019 level;and Incheon International Airport(ICN)also ranked among the top 20,with its passenger traffic recording the largest year on year increase at 213.8%.At the same time,the ACI Wor
27、ld Airport Traffic Forecast(WATF)2024-2053 released by ACI in February 2025 pointed out that eight of the top 20 airports in 2023 were in the United States.In line with predictions in the previous report,the United States still ranked first in 2023,followed by China and India.With international trav
28、el recovering and Chinese tourists returning,Japan jumped to fourth place(although it was predicted to be sixth).In terms of medium and long-term trends,China and the United States are expected to be on par,while India,with its expanding international airline network,is expected to continue to stren
29、gthen its position as the worlds third largest market.Over the next 30 years,emerging markets such as Southeast Asia and the Middle East are expected to rise;and in particular,Indonesia is predicted to rank fourth in 2053.The United Arab Emirates,Saudi Arabia and the Philippines are also expected to
30、 be among the top 20 markets within 30 years.According to the WATF report,global passenger traffic is expected to grow by 9%to 9.5 billion in 2024.From 2024 to 2043,global passenger traffic is expected to grow at a compound annual growth rate(CAGR)of 3.4%to 17.7 billion passengers.The number of pass
31、engers is expected to reach 18.7 billion by 2045 and rise to 22.3 billion by 2053(with an expected CAGR of 3.0%from 2024 to 2053),about twice the forecast for 2024.In 2023,Guangzhou Baiyun International Airport again ranked among the top 20 airports in terms of passenger traffic.Meanwhile,emerging m
32、arkets such as Southeast Asia and the Middle East are on the riseChapter 1丨 Data-driven insights into the travel retail market from a global perspective 2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a member firm of the KPMG global organisation of independent m
33、ember firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.5Top 20 Busiest Airports in The World in 2023Figure1202320222019Airport2023%CHANGE VS 2022%CHANGE VS 2019111ATLANTA,USA(ATL)10,46511.7-5.3254DUBAI,UAE
34、(DXB)8,69931.70.73210DALLAS/FORT WORTH,USA(DFW)8,17611.48.9487LONDON,UK(LHR)7,91828.5-2.15165TOKYO,JAPAN(HND)7,87255.1-7.96316DENVER,USA(DEN)7,78412.312.87728ISTANBUL,TURKEY(IST)7,60318.345.7863LOSANGELES,USA(LAX)7,50513.8-14.8946CHICAGO,USA(ORD)7,3898.1-12.710917NEW DELHI,INDIA(DEL)7,22121.45.41110
35、9PARIS,FRANCE(CDG)6,74217.3-11.5125811GUANGZHOU,CHINA(CAN)6,317142-13.9131120NEW YORK,USA(JFK)6,24613-0.1141312AMSTERDAM,NETHERLANDS(AMS)6,18918-13.7151522MADRID,SPAIN(MAD)6,01818.9-2.5161815FRANKFURT,GERMANY(FRA)5,93621.3-15.9173618SINGAPORE,SINGAPORE(SIN)5,87483.1-13.7181731ORLANDO,USA(MCO)5,77415
36、.114.1191230LAS VEGAS,USA(LAS)5,7679.411.6209914INCHEON,KOREA(ICN)5,624213.8-21Rank2023204320531United StatesUnited StatesChina2ChinaChinaUnited States3IndiaIndiaIndia4JapanSpainIndonesia5SpainIndonesiaSpain6United KingdomTurkeyTurkey7TurkeyUnited KingdomUnited Kingdom8BrazilJapanMexico9GermanyMexic
37、oJapan10ItalyBrazilVietnam11Russian FederationItalyThailand12MexicoRussian FederationBrazil13FranceThailandSaudi Arabia14AustraliaGermanyRussian Federation15IndonesiaSaudi ArabiaItaly16CanadaVietnamUnited Arab Emirates17KoreaFranceGermany18United Arab EmiratesUnited Arab EmiratesFrance19ThailandCana
38、daCanada20VietnamKoreaKoreaSource:ACI,KPMG AnalysisNote:2042 and 2052 rank is ACI forecastTop 20 Passenger Traffic Markets Worldwide 2023-2053Figure2Source:ACI,KPMG AnalysisChapter 1丨 Data-driven insights into the travel retail market from a global perspective 2025 KPMG Advisory(China)Limited,a limi
39、ted liability company in Chinese Mainland and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.6The 2024 Hainan Travel Retail Whitepaper
40、jointly released by KPMG China and Moodie Davitt stated that the global travel retail market grew at a CAGR of 9%to USD 86.4 billion from 2009 to 2019.Although the market is expected to gradually recover in the post-pandemic era,returning to the 2019 level will take time.This view is also corroborat
41、ed by another report.According to Travel Retails Next Chapter:Innovating Beyond Technology Key to Regaining Market Momentum released by Kearney,net sales of the travel retail market grew at a CAGR of 20.1%from 2021 to 2023.Net sales in 2023 were USD 72.1 billion,representing an increase of 18.2%year
42、 on year,equivalent to 84.2%of the 2019 level.A data-based overview of the global travel retail marketLong-term Global Air Passengers Forecast 2016-2053(100 million passengers)Figure3XSource:ACI,KPMG Analysis913646668795177223050100150200250201920202021202220232024E2025E2026E2027E2028E2029E2030E2031
43、E2032E2033E2034E2035E2036E2037E2038E2039E2040E2041E2042E2043E2044E2045E2046E2047E2048E2049E2050E2051E2052E2053E2024-2043CAGR+3.3%per year2024-2053CAGR+3.0%per yearRecovery of Tourism Retail Markets in Major Regions of The World 2021-2023(%)Figure4XSource:Kearney analysis,KPMG AnalysisNote:Based on 2
44、0192021-2023年CAGR+32.2%+49.7%+55.8%+0.2%0%20%40%60%80%100%120%202120222023Middle East and AfricaAmericasEuropeAsia PacificChapter 1丨 Data-driven insights into the travel retail market from a global perspective 2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a mem
45、ber firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.7Increased concentration seen in the global travel retail market,while ASPAC focuses on franc
46、hise-based developmentAccording to data from the Travel Retail Industry Database&Insights 2024/25 published by DFNI,significant shifts occurred in global airport franchise operations between the second quarter of 2023 and the first half of 2024.During this period,the number of franchise contract cha
47、nges or extensions rose unevenly before peaking in the second quarter of 2024.The ASPAC region played a leading part in these franchise changes,recording six change events in the second quarter of 2024.China was noteworthy in this respect,with Guangzhou Baiyun Airport and Wuxi Shuofang Airport signi
48、ng one new franchise contract each.At the same time,China(including Macao SAR)and South Korea signed three new contracts each during this period,accounting for the highest percentage of franchise change events in the ASPAC region.Europe was also relatively active in this regard in the first quarter
49、of 2024,posting a total of five contract changes or extensions.Among these,Turkey accounted for a significant share.During the first quarter of 2024,Istanbul Sabiha Gokcen International Airport and Edinburgh Airport each signed and renewed agreements with Avolta Group.In contrast,there were few fran
50、chise changes in the Americas,the Middle East and Africa.In the fourth quarter of 2023,new contracts were signed for Jeddah International Airport in Saudi Arabia and Cotonou Cadjehoun International Airport in Benin.Changes in the Americas were mainly driven by the United States,which accounted for 4
51、0%of the changes in the region.In 2025,the ASPAC market,especially China and South Korea,may continue to see the fiercest competition in the travel retail market,while Hainans adjusted duty-free policy may trigger changes in the global duty-free industry.From a regional perspective,the recovery is u
52、neven,especially in the Asia Pacific(ASPAC)region,which faces major challenges in returning net sales to the 2019 level.Apart from the ASPAC region,sales in almost all other regions have approached or reached the 2019 level.The ASPAC region recorded a CAGR of only 0.2%from 2021 to 2023,in stark cont
53、rast to Europe,which saw the strongest recovery momentum,posting a CAGR of 55.8%and a year on year growth rate of 29.3%in 2023.At the same time,the Americas have also seen a strong recovery,recording a CAGR of 49.7%and a year on year growth rate of 30.2%in 2023.The Middle East and Africa also perfor
54、med well,with a CAGR of 32.5%from 2021 to 2023 and year on year growth of 28.6%in 2023.Net Sales of Tourism Retail in Major Regions of The World in 2019,2021 and 2023(billion USD)Figure57.211.521.145.84.158.9327.211.221.632.1Source:Kearney analysis,KPMG Analysis201920212023Middle East and AfricaAmer
55、icasEuropeAsia PacificChapter 1丨 Data-driven insights into the travel retail market from a global perspective 2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG Internatio
56、nal Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.8In terms of event types,the ASPAC region was the standout in the number of new contracts,with a total of nine new contracts(accounting for 80%)and two renewals.The Chinese Mainland and Macao S
57、AR shared first place with three events,which was a testament to the strategic importance of the Greater China region in global duty-free business.Next was the European market,with five contract renewals(accounting for 60%)and three new contracts.A comparison of the two regions points to an expandin
58、g ASPAC market where enterprises are competing fiercely and being replaced by one another,and a stable European market where partnerships are being continued and deepened.Statistics regarding franchise changes in the Americas indicate that the market is relatively stable,with four new contracts sign
59、ed and one renewed.This stability may reflect the saturation of the regional market,and potentially external factors such as a sluggish tourism industry.In contrast,the Middle East and Africa region was the least active,with only one new contract signed and no contract renewals,which may be the resu
60、lt of the regional economic environment or geopolitical factors.On the whole,China,Turkey,the United States and South Korea were hubs in their regional markets,recording two to three events each,reflecting their leading position in global duty-free business and the potential of their travel retail m
61、arkets.Meanwhile,Denmark,Canada,India,Indonesia and other emerging markets each had one event that was either a new contract or renewal,indicating that they were gradually tapping into duty-free business,although the scale of their markets is small.At present,the global duty-free industry is highly
62、concentrated and unbalanced across regions,but emerging markets are providing a new source of growth for the industry.Source:DFNI,KPMG Analysis0246810Q2 2023Q3 2023Q4 2023Q1 2024Q2 2024Asia PacificAmericasEuropeMiddle East and AfricaSource:DFNI,KPMG Analysis0246810Asia PacificAmericasEuropeMiddle Ea
63、st and AfricaNew ConcessionContract renewalChapter 1丨 Data-driven insights into the travel retail market from a global perspective Key Statistics on Airport Retail Franchise Contract Amendments and Extensions,Categorised by Quarter 2023-H1 2024Figure6Key Statistics on Airport Retail Franchise Contra
64、ct Amendments and Extensions,Categorised by Type 2023-H1 2024Figure7 2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company lim
65、ited by guarantee.All rights reserved.Printed in Chinese Mainland.9According to the Top 20 Travel Retailers list released by Moodie Davitt in July 2024,Avolta,a Swiss travel retailer,returned to the top spot based on its strong performance,while China Duty Free Group fell to second place.Meanwhile,L
66、agardere Travel Retail,Lotte Duty Free and DFS Group ranked third,fourth and fifth respectively.It is worth noting that Lotte Duty Free and Shilla Duty Free,two duty-free giants in South Korea,ranked fourth and sixth respectively,while Shinsegae Duty Free and Hyundai Duty Free ranked eighth and thir
67、teenth respectively.In 2019,Lotte Duty Free and Shilla Duty Free ranked second and third respectively globally,and they both declined by one place in 2023.This shift reflects the dynamic changes occurring across the global travel retail market and also the challenges facing South Koreas duty-free in
68、dustry.Ranking of global travel retailers in 2023:Swiss-based Avolta regains first place,and South Koreas duty-free industry faces challengesSource:Moodie Davitt Report,KPMG Analysis293 503 700 709 996 1,087 1,240 1,271 1,352 1,527 1,614 1,945 2,213 2,291 3,072 3,400 3,843 5,200 8,618 9,177 Tallink
69、Duty FreeNAA RetailingJanpan Airport Terminal Co3 Sixty Duty FreeQatar Duty FreeDuty Free AmericasARIHyundai Duty FreeEver Rich Duty FreeWHSmith TravelKing Power International GroupDubai Duty FreeShinsegae Duty FreeHeinemann HeinemannThe Shilla Duty FreeDFS GroupLotte Duty FreeLagardre Travel Retail
70、China Duty Free GroupAvoltaChapter 1丨 Data-driven insights into the travel retail market from a global perspective Top Travel Retailer Rankings 2023（by turnover,million）Figure8X 2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a member firm of the KPMG global orga
71、nisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.10In the past two decades,changes in the global economy and diversifying consumer demand have profoundly transformed consumpt
72、ion patterns.Consumers are paying more attention to experience and services,which has brought unprecedented challenges for traditional retailers.Against this backdrop,online shopping platforms have made it easier for consumers to compare prices and services,forcing retailers to provide more competit
73、ive products and personalised services.Meanwhile,standardised traditional retail models are inadequate to meet consumers increasingly personalised needs.At present,online and offline models are being increasingly integrated in Chinas travel retail market,and a growing number of consumers are pursuin
74、g a better shopping experience.In the future,offline retail may further evolve and become just an extension of online platforms,and in order to succeed,industry players will also need to shift their focus from products to high-end experiences and value creation.For example,in the luxury industry in
75、recent years,international brands have opened high-end stores in China that provide customised,exclusive services for VICs(very important clients)to strengthen customer loyalty and improve the consumer experience.As the economy recovers,business owners are facing two challenges:how to stabilise thei
76、r VIC base,and how to attract mainstream consumers at the same time.Trends indicate that going forward,the ability of travel retail industry players to compete will depend not only on their products,but also on whether they can provide high-end,customised services with a human touch.2025 is expected
77、 to mark a turning point for travel retailers in Hainan and China as they generally shift from retail-based to experience-based expansion.An increasing proportion of the service industry in the economy and expanding service consumption are symbolic structural changes in economic modernisation.This t
78、rend aligns with the laws of economics,although a variety of measures are neededsuch as upgrading of demand,technological innovation and policy supportto build a positive cycle.Internationally,the service sector accounts for a consistently high proportion in highly service-oriented economies.For exa
79、mple,in the United States and Japan,the service industry as a share of their economies has remained at a high level of about 70%for a long time.Despite calls for re-industrialisation,the US service industry as a proportion of the economy remains high.The weight of the service sector in developed eco
80、nomies such as Canada and Germany has remained between 60%and 70%,reflecting the stability of their industrial structures.In 2013,Chinas service industry surpassed that of India for the first time in terms of its proportion in the national economy.Since then,it has continued to grow steadily,and has
81、 stabilised at more than 50%since 2015.This reflects a shift in Chinas economy from a manufacturing-oriented model to a service-oriented one and is also a result of active guidance from policymakers and effective tapping of market demand.The rising popularity of service-oriented consumption is redef
82、ining the structure of consumer spending and the competitive landscape in the retail marketPlayers in the travel retail market are competing more on experience than on productThe structure of service consumption is changing as the proportion of the service industry in national economies risesChapter
83、 1丨 The rising popularity of service-oriented consumption is redefining the structure of consumer spending and the competitive landscape in the retail market 2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a member firm of the KPMG global organisation of independ
84、ent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.11In terms of its contribution to the economy,the service industry has become an important engine for economic growth.Data shows that the added v
85、alue of Chinas service industry increased from 46.1%in 2013 to 54.6%in 2023,and the contribution of final consumption to the national economy also increased from 50.0%in 2013 to 82.5%in 2023.Technological innovation played a key role in this process.New-generation information technology,such as 5G a
86、nd AI,has not only spawned new businesses such as cross-border e-commerce and direct shipment services among offshore duty-free retailers,but also profoundly changed consumer habits and lifestyles.For instance,in respect of direct shipment services,tourists can place an order for duty-free goods onl
87、ine that can be shipped directly from bonded warehouses,making geographical constraints no longer a problem.Meanwhile,policy support has provided an institutional guarantee for the development of the service industry.The government has effectively stimulated the service market by introducing measure
88、s such as reducing taxes and fees and relaxing restrictions on market entry.For example,the presence of international luxury brands and the cultivation of talented service professionals have not only improved the quality of services available in the domestic market,but have also created favourable c
89、onditions for consumption upgrading.Going forward,as Chinas economy continues to grow,the service industry will account for an expanding proportion,and this will also improve the quality of services.In this process,the industry will hit a bottleneck if talented service professionals are in short sup
90、ply.Therefore,a pool of talented professionals with service expertise will be key to the high-quality development of the service industry.Especially in service-intensive industries such as travel retail,any player that is able to provide quality services is well-positioned for success.40455055606570
91、758020132014201520162017201820192020202120222023Chinese MainlandUSAGermanyJapanCanadaIndiaSource:World Bank Group,KPMG AnalysisNote:The World Bank Group has not disclosed the data of the USA in 2022-2023,Canada in 2021-2023 and Japan in 2023Value Added of Chinas Service Industry of Selected Countrie
92、s/Regions 20132023(%of GDP)Figure9Chapter 1丨 The rising popularity of service-oriented consumption is redefining the structure of consumer spending and the competitive landscape in the retail market 2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a member firm of
93、 the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.12Cumulative year on year growth in the consumer price index(CPI)was 0.2%in 2024,which is basically the
94、same as in 2023,indicating that inflationary pressure was under control as demand recovered.Core CPI inflation(excluding energy and food)remained low,reflecting that instead of simply absorbing price increases,consumers wanted value for money.On a monthly basis,in January 2025,core CPI rose 0.2 perc
95、entage points year on year to 0.6%,up for the fourth consecutive month,and reflecting a month on month increase of 0.5%.Despite periodic fluctuations,CPI inflation for services has remained relatively stable.From late 2019 to early 2020,restrictions on economic activity led to a sharp decline in pri
96、ces across the service industry.From 2021 to 2023,as the economy and consumption recovered,the prices of high-end vacations,hotels and catering rose as a result of pent-up demand.From late 2024 to early 2025,CPI inflation for services has ticked upward,slightly increasing by 1.1%year on year.After e
97、xcluding the impact of higher tourism and catering demand during the Spring Festival holiday,it is clear that consumers are willing to pay a premium for high-quality experiences during peak travel seasons(Spring Festival and Golden Week),further pushing up prices.However,the fact that services have
98、seen limited price increases indicates that competition remains fierce,as evidenced by the promotions and discounts offered by online travel agency(OTA)platforms.Against the backdrop of general price increases,although inflationary pressure is under control,consumer spending power is declining,which
99、 has an obvious impact on the travel retail industry.Compared to luxury goods,gold products and other inflation-proof categories,traditional tourist spending items(air tickets,hotels and catering)may suffer a greater impact.As a key component of core inflation,service prices are closely related to t
100、he recovery of the post-pandemic travel market.As the base is low,the year on year contribution of consumer spending to core CPI inflation is expected to continue to increase in the short term.In the future,how to strike a balance between price-sensitive mainstream consumers and high-end experience-
101、oriented consumers will become a key challenge for the travel retail industry.The contribution of tourist spending to core CPI is expected to continue to rise year on yeara.The impact may be temporary.As economic activity returns to normal,the impact of the low base will decrease.In addition,this tr
102、end will be affected by factors such as government policy support and changes in the global economy.Source:Wind,KPMG Analysis-2-1012345614-0115-0116-0117-0118-0119-0120-0121-0122-0123-0124-0125-01CPI YOY(%)Core CP YOY(%)Service CPI YOY(%)China consumer price index(CPI),Core CPI and Service CPI YOY g
103、rowth 2014-2025(%)Figure10Chapter 1丨 The rising popularity of service-oriented consumption is redefining the structure of consumer spending and the competitive landscape in the retail market 2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a member firm of the KPM
104、G global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.13Source:World Tourism Cities Federation,KPMG Analysis“”Demand for tourism services grew in 2023,and high-end cu
105、stomised experiences found favour with touristsIn the past,tourists went abroad to explore a different landscape.Now,with high-quality travel experiences available in the domestic market,more tourists are spending locally.As the global tourism industry is being reshaped,emerging markets are developi
106、ng rapidly,giving rise to more competition and cooperation in the region.In this context,domestic travel retailers are leveraging digital technology,AI and big data to capture consumer demand,launch customised ads,and improve the travel,entertainment and service experience(such as exclusive travel r
107、outes for VIPs,guided tours,small group tours,etc.);and this trend is driving the growth of the high-end market.Based on data from the World Tourism Cities Federation,from 2010 to 2019,the total number of global tourists(including domestic and international travellers)grew steadily at an annual aver
108、age rate of 7.3%.By 2023,the total number of global tourist arrivals reached 12.673 billion,a year on year increase of 41.6%,higher than the 2017 level and equivalent to 87.4%of the 2019 level.In terms of international travel,due to the high base and pent-up travel demand released in the previous ye
109、ar,growth slowed in 2023,although both the number of tourist arrivals and tourism sector income grew.Globally,the number of international tourists reached 1.256 billion in 2023,and total tourist sector income reached CNY 1.49 trillion,up 32.3%and 23.1%respectively year on year.The domestic tourism i
110、ndustry performed better still,with its growth rate experiencing a significant rebound in 2023 as tourists chose to travel domestically instead of going abroad.As for the reasons behind this trend,first,consumers have adopted a more rational approach to spending amid the economic downturn.Second,the
111、 domestic tourism industry has been relying on digital,personalised and high-end services to attract consumers.By integrating innovative experiences,players have been reshaping the industrial chain and business models to drive sustainable development.-80%-30%20%70%120%0204060801001201401602010201120
112、1220132014201520162017201820192020202120222023International tourists（100 million individual）Domestic tourists（100 million individual）International YOY Growth(%,in Right axis)Domestic YOY Growth(%,in Right axis)Chapter 1丨 The rising popularity of service-oriented consumption is redefining the structu
113、re of consumer spending and the competitive landscape in the retail marketMarket Size of Global Tourism in Terms of Individual Trips 2010-2023(100 million Individual,%)Figure11”2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a member firm of the KPMG global organ
114、isation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.14Source:World Tourism Cities Federation,KPMG Analysis-80%-60%-40%-20%0%20%40%60%80%012345672010201120122013201420152016201720
115、1820192020202120222023International tourism（Trillion USD）Domestic tourism（Trillion USD）International YOY Growth(%,in Right axis)Domestic YOY Growth(%,in Right axis)Chapter 1丨 The rising popularity of service-oriented consumption is redefining the structure of consumer spending and the competitive la
116、ndscape in the retail marketMarket Size of Global Tourism in Terms of Revenue 2010-2023(Trillion USD,%)Figure12 2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG Internat
117、ional Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.15Sustainable fashionGreen design,circular luxury,second-hand markets,fashion-tech innovation,zero-waste fashion,cradle-to-cradle designSource:Semi-annual Report on the Consumer&Retail Sector
118、 in China 2024H2,KPMG AnalysisChinese consumer sector 2024 buzzwordsFashion collaborationCross-industry collaboration,IP cooperation,artisanal collaboration,signature series,cultural integration,derivative art,limited edition souvenirsThe Semi-annual Report on the Consumer&Retail Sector in China 202
119、4H2 highlights that buzzwords among Chinese consumers are steadily evolving and reflect the latest expectations for the consumer goods sector.This section provides a summary of buzzwords across five sub-sectors,and the buzzwords include terms such as sustainable fashion,fashion collaboration,changea
120、ble styles,ice-and-snow sports,scientific and technological innovation,healthy lifestyle,functional food and beverage,intestinal revitalisation,downmarket”and marketing.These buzzwords provide us with an illustration of the evolving landscape of the consumer goods sector.Luxury and fashionDigital tr
121、endsNFT and blockchain,digital assets,crypto art,quality assurance,omnichannel experience,augmented reality,digital luxury,virtual fitting rooms,personalised technology,interactive experiences,AI-powered shopping assistants,luxury content marketing,buy-now-pay-later(BNPL),shoppable posts/videosValue
122、-retaining items and low-price piecesPre-owned luxury,limited-edition pieces,timeless style,high-end jewellery,gold accessories,high-end cosmetics,high-end perfume,luxury eyewear,pop-up stores,niche collections,entry-level luxurySelf-pleasing consumptionSelf-care luxury,customisation,personalised ex
123、perience,experiential retail,luxury-related travel products,wellness aesthetics,emotional connectionHealth and beautySustainabilityClean beauty,pure beauty,transparent labels,cruelty-free,natural and organic ingredients,environmentally friendly,makeup bottle recycling,no additives,plastic-free,compo
124、stable,locally-sourcedTech innovationAI-powered skin detection,nanotechnology,personalised skincare solutions,virtual makeup try-on,household beauty instruments,intelligent health monitoring devices,personalised and customised medical products,nutritional scanners,sports trackersHealthy lifestyleNat
125、ural healing,gut microflora balance,sleep health,scalp care,health monitoring devices,health supplements,nutritional agents,mental health,Chinese regimenFunctional skincareActive ingredients,multi-functional,plant extracts,fermentation components,enzyme technology,anti-aging,skin stability,nicotinam
126、ide,sodium hyaluronate,panthenol,tocopherol,centella asiatica extract,vitamin C and its derivatives,psoralen,ceramides,puri-xylane,salicylic acidDiversified perfume preferencesNatural fragrance,customised fragrance,IP co-branding,localised limited-edition scents,Asian fragrance,mens perfume,niche pe
127、rfume,salon perfume,woody perfume,floral perfume,fresh notesChapter 1丨 Buzzwords among Chinese consumer sector in2024 2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG In
128、ternational Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.16Changeable stylesRetro trends,China-chic style,deconstruction,multi-functional clothing,unisex design,minimalism,lightweight outdoor clothing,sportswear,natural-themed outfits,ethnic
129、elements,ancient style,new Chinese styleDigitalisationDigital printing,personalised customisation,high-tech fabric,new fabric technology,virtual experience,3D technology,simulation and visualisation techniquesApparel and footwearSustainability,health and environmental protectionSustainable textile f
130、abrics,organic fibres,synthetic fur,low-impact circular synthetic filler,certified ethnic down and feather,animal wool alternatives,plant-based fibre insulation,clothing rental,clothing recycling and reconstruction,massage shoes,shock absorption and breathabilityWinter sportsDown jacket,cotton coat,
131、cashmere sweater,wool overcoat,outdoor jacket,thermal underwear,ski apparel,ski gloves,heating fabrics,snow boots,ski shoes,skating shoes,warmth-retention,windproof,waterproofFood and beverageHealth preferencesSugar-free,low-fat,gluten-free,organic,low-calorie,non-GMO,whole grain,high-protein,probio
132、tic,fruit and vegetable food,Chinese health drink,coconut water,sugar-free soda,sugar-free tea,drinking waterFunctional foods and beveragesProtein powder,electrolyte water,meal replacement powder,abdominal gummies,fat-burner drink,low-carb,instant meal replacements,energy bars,matcha powder,chicken
133、breast,beef,low-sodiumPlant-based productsPlant-based beverages,herbal teas,plum syrup,high-fibre and plant-based protein drink,plant milk,plant-based meat,plant butter,plant eggs,soy products,diverse recipesGut rejuvenationBeverages containing fruit and vegetable fibre,probiotic drinks,natural food
134、s,fermented foods,organic food,yogurt,dietary fibre,lactic acid bacteria,gut microflora balance,gastrointestinal healthSource:Semi-annual Report on the Consumer&Retail Sector in China 2024H2,KPMG AnalysisChinese consumer sector 2024 buzzwordsChapter 1丨 Buzzwords among Chinese consumer sector in2024
135、2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.17R
136、estaurantshealthy diet conceptsLight cuisine concept,light salad,high-end simple meals,sandwiches,zero-waste,eco-friendly packaging,fruit and vegetable drinks,food and medicine homologyDownmarketWestern fast food,fast-food snacks,small hot pot,reasonably-priced stir-fry,value-for-money,price reducti
137、on,brand penetration,satellite stores,mini shops,portable shops,takeout shops,chain catering brands,bubble tea price warNew dining trendsCatering enterprises going global,intelligent ordering system,unmanned restaurant,VR dining technology,Internet celebrity restaurant,social group buying,communal t
138、able,experience-based catering,local specialty dishes,prepared mealsMarketingStore exploration via live streaming,social media check-ins,catering challenges,food group buying,food live streaming,KOL cooperation,catering co-branding,catering IP,catering account operations,emotional valueChinese consu
139、mer sector 2024 buzzwordsChapter 1丨 Buzzwords among Chinese consumer sector in2024Source:Semi-annual Report on the Consumer&Retail Sector in China 2024H2,KPMG Analysis02A data-based overview of the global travel retail marketAnalysis of Hainans consumer goods and offshore duty-free marketsComparison
140、 of travel retail business models:Hainan and South Korea18 2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by gu
141、arantee.All rights reserved.Printed in Chinese Mainland.2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guara
142、ntee.All rights reserved.Printed in Chinese Mainland.19In 2024,total retail sales of consumer goods in Hainan stood at CNY 240.561 billion,a year on year decrease of 4.2%.However,the decrease was 2 percentage points lower than that in the first three quarters.With the implementation of the consumer
143、goods trade-in policy,sales of consumer goods grew 17.5%quarter on quarter in the fourth quarter,which effectively boosted market participants confidence.In the fourth quarter,the year on year growth rate of consumer goods sales was again positive at 1.2%,7.6 percentage points higher than that in th
144、e third quarter.On a monthly basis,total sales of consumer goods in December hit an annual high(excluding the value of CNY 42.228 billion for January and February that was combined for statistical purposes),rising by 10.1%despite a high base and demonstrating strong consumption momentum.On the whole
145、,from 2019 to 2024,the consumer market in Hainan remained stable,but due to the macro environment and policy changes,the market experienced significant short-term fluctuations.As policies continue to be introduced to promote consumption,they could deliver greater momentum for the market and lay the
146、foundation for future growth.In terms of product categories,cosmetics remained the top category in the travel retail market,thanks to the continued offshore duty-free policy and a low threshold for consumers(low prices and high sales volumes).At the same time,the market share of luxury products(such
147、 as high-end watches and jewellery)remained generally stable.Under Hainans duty-free policy,these expensive items can still attract high-net-worth consumers.From 2021 to 2022,as foreign travel was restricted,a large portion of domestic high-end consumer demand was satisfied in Hainan.In fact,as cons
148、umers who previously went shopping abroad turned to Hainans duty-free channels,the travel retail market thrived during those two years.However,as restrictions on outbound tourism were lifted in 2023,some high-end consumers returned to overseas markets,resulting in a decline in the consumption of lux
149、ury goods and high-end cosmetics in Hainan.Analysis of Hainans consumer goods and offshore duty-free marketsConsumer goods sales in Hainan declined at a slower pace,and the consumer market remained stable under policy supportSource:Hainan Provincial Bureau of Statistics,KPMG AnalysisNote:The Februar
150、y data in this chart represents the absolute value of the cumulative total from January to February,as published by the National Bureau of Statistics in February.-40-200204060801000100200300400500Current month value(CNY 100 million)YOY of the current month(%)Chapter 2丨 Analysis of Hainans consumer g
151、oods and offshore duty-free marketsTotal Retail Sales of Consumer Goods in Hainan YOY Growth 2019-2024 (CNY 100 million,%)Figure13 2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a member firm of the KPMG global organisation of independent member firms affiliated
152、 with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.20As mentioned previously,the growth momentum of the ASPAC travel retail market has slowed,mainly due to the fact that when global economic activity recovered in 2022,trave
153、l was still restricted in Hainan.According to data from Haikou Customs,in 2023,offshore duty-free spending in Hainan increased by 25.4%year on year,indicating the resilience of the local travel retail market as the pandemic was kept under control.Despite fluctuations in 2024,the first quarter and th
154、e fourth quarter recorded 44.6%and 24.9%quarter on quarter growth respectively,reflecting a thriving market.In 2024,which marked the last year of the 14th Five-Year Plan,sales by duty-free operators posted strong growth,and international brands set up operations in Hainan at a quick pace.In 2025,as
155、the implementation date for independent customs draws near,the government is expected to introduce additional policies to promote the sustainable development of Hainans travel retail industry.We believe that with policy support,the local travel retail market could strengthen its resilience and fully
156、 tap its potential.In 2024,Hainans offshore duty-free market remained resilient and development potential under pressure0%2%4%6%8%10%12%14%201920202021202220232024DrinksTobacco Good and WinesApparel and footwearFragrances&CosmeticsGold,silver and jewelryDaily NecessitiesSource:Hainan Provincial Bure
157、au of Statistics,KPMG AnalysisSource:Haikou Customs,KPMG Analysis-40%-20%0%20%40%60%80%100%120%0100200300400500600201920202021202220232024Amount of offshore duty-freeYoY(%,in Right axis)Proportion of Retail Sales in Tourism-Related Product Categories in Hainan 2019-2024(%)Figure14Chapter 2丨 Analysis
158、 of Hainans consumer goods and offshore duty-free marketsAmount of Offshore Duty-Free and YoY growth of Hainan 2019-2024(CNY 100 million,%）Figure15 2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a member firm of the KPMG global organisation of independent member
159、 firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.21In 2022,due to travel restrictions and fewer flights,Hainan failed to fully attract overseas consumers,resulting in a significant decrease in the number
160、of duty-free shoppers.Although foreign travel was restricted,consumer demand for duty-free products was not entirely absorbed by Hainan,hindering the growth of the market.In 2023,although the travel market gradually recovered,overseas shopping did not fully recover,whichin combination with governmen
161、t-led promotions and duty-free policiesbrought about a rebound in Hainans offshore duty-free market.However,in 2024,overseas shopping saw a full recovery,and more high-end consumers went shopping abroad.In addition,the rise of Chinese brands products diverted consumers from some international brands
162、,again putting pressure on Hainans travel retail market.In terms of offshore duty-free shopping in 2024,according to data from Haikou Customs,a total of 5.683 million consumers spent CNY 30.94 billion on 33.082 million items in Hainan,reflecting a decline from 2023 and indicating that the market was
163、 under pressure amid intense competition.Hainans offshore duty-free market faces pressure as high-end consumers shop abroad050100150200250201920202021202220232024Q1Q2Q3Q4020406080100120140160180201920202021202220232024Q1Q2Q3Q4Source:Haikou Customs,KPMG AnalysisSource:Haikou Customs,KPMG AnalysisChap
164、ter 2丨 Analysis of Hainans consumer goods and offshore duty-free marketsNumber of Quarterly Offshore Duty-Free Shoppers in Hainan in 20192024(10,000 individual)Figure16Value of Quarterly Offshore Duty-Free Shopping in Hainan in 2019-2024(CNY 10,000)Figure17 2025 KPMG Advisory(China)Limited,a limited
165、 liability company in Chinese Mainland and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.22Source:Haikou Customs,KPMG AnalysisThe numb
166、er of high-end customers increased,and some purchasing groups resulted in higher spending amounts,exceeding CNY 9,000.The average consumer spending on offshore duty-free remains stable within the range of CNY 3,000 to 4,000,primarily due to government regulations.The number of purchasing groups decr
167、eased,the proportion of ordinary tourists increased,consumption became more rational,and the average consumer spending on offshore duty-free fluctuated(dropping to an average of CNY 6,000).At a low level of engagement,the high-end customer base at the end of the year shows a positive trend,but there
168、 is still a gap compared to the outbreak period of 2020-2022.Since 2019,the average consumer spend on offshore duty-free items in Hainan has fluctuated significantly along with the year on year growth rate.From 2019 to early 2020,average consumer spend grew slightly but remained generally stable in
169、the range of CNY 3,000-4,000.However,in July 2020,Hainan introduced a new duty-free policy,increasing the duty-free quota from CNY 30,000 to 100,000 and adding new duty-free categories such as electronic products.As a result,average consumer spend rose rapidly,posting year on year growth of 112.7%fo
170、r the month.This policy was also responsible for the high growth recorded from the second half of 2020 to 2022.During this time,international travel was restricted,and consumers interested in overseas shopping returned to the domestic market,resulting in a release of pent-up demand for luxury goods
171、and high-end cosmetics,pushing up average spending to CNY 9,000 in December 2021.From 2022 to 2023,average consumer spend dropped significantly and was below CNY 6,000 in some months,recording negative year on year growth.On one hand,as policies on pandemic control were adjusted and international tr
172、avel recovered,high-end consumers went back to Hong Kong SAR,Japan,Europe and other regions for shopping,diverting consumers with high spending power from Hainans offshore duty-free market.On the other hand,in 2023,the government strengthened supervision and took measures to crack down on smuggling,
173、including“purchase by proxy,”which also contributed to the decline in average consumer spend.In 2024,the Hainan government issued a series of policies to boost the duty-free industry,such as the Notice on Improving the Policies on Duty-Free Stores in Cities,which cancelled the quota for shopping in
174、urban duty-free stores.Afterwards,due to the increasing number of international tourists,average consumer spending went up.Going forward,Hainan still needs to attract more high-end consumers and drive the steady growth of the islands offshore duty-free market in the long term by continuously optimis
175、ing policies,improving the shopping experience and strengthening market players ability to compete through differentiation.-60-40-2002040608010012014001,0002,0003,0004,0005,0006,0007,0008,0009,00010,000201920202021202220232024Average consumer spend(CNY)YoY(%,in Right axis)Chapter 2丨 Analysis of Hain
176、ans consumer goods and offshore duty-free marketsAverage Consumer Spend on Offshore Duty-Free Shoppers in Hainan 2019-2024(CNY,%)Figure18 2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a member firm of the KPMG global organisation of independent member firms aff
177、iliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.23In terms of the recovery of Hainans inbound travel market,in 2019,the number of inbound foreign tourists staying overnight reached a historical high of 1.079 milli
178、on before dropping sharply during the period from 2020 to 2022.As international flights resumed,in 2023,the number of inbound tourists staying overnight on the island grew 262.4%.Although the growth rate fell to 133.8%in 2024,the number climbed to 957,000,sustaining the momentum for recovery.It is w
179、orth noting that the slowdown in 2024 was partly due to the high base,and partly due to changes in the competitive landscapefirst-tier cities such as Shanghai pursued innovative policies in order to compete for international tourists.Policy-wise,Hainan and Shanghai both benefited from the upgraded v
180、isa-free policy.Since the visa-free policy for 59 countries was implemented in Hainan in 2024,tourists from regions like Southeast Asia and Russia have been flocking to the island.According to data regarding medical-related tourism in the Boao Lecheng International Medical Tourism Pilot Zone,in the
181、first half of 2024,more than 200,000 tourists visited the pilot zone,reflecting year on year growth of 49.59%.1 Thanks to the upgraded 144-hour visa-free policy,Shanghai received more than 6.05 million inbound tourists staying overnight in 2024,including 4.8 million foreigners,representing growth of
182、 more than 100%.2 The city benefited from its position as an international aviation hub(during the year,the number of international flights at Shanghai Pudong International Airport reached 87.0%of the 2019 level)3 and its clusters of luxury retailers.However,it should be noted that Hainan remains ir
183、replaceable among certain customer groups by virtue of its offshore duty-free policy and tropical coastal resources.-150%-100%-50%0%50%100%150%200%250%300%020406080100120201920202021202220232024Number of tourists(10,000 individual trips)YoY(%,in Right axis)Source:Department of Tourism,Culture,Radio,
184、Television and Sports of Hainan Province,KPMG AnalysisSource:Shanghai Municipal Administration of Culture and Tourism,The Xinhua News Agency,KPMG Analysis-200%-100%0%100%200%300%400%500%0200400600800201920202021202220232024Number of tourists(10,000 individual trips)YoY(%,in Right axis)Chapter 2丨 Ana
185、lysis of Hainans consumer goods and offshore duty-free marketsHainans inbound Foreign Tourists Staying Overnight in 2019-2024(10,000 individual trips,%)Figure19Shanghais Inbound Overnight Tourists in 2019-2024(Including Compatriots from Hong Kong SAR,Macau SAR and Taiwan Region,10,000 individual tri
186、ps,%)Figure20 2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chines
187、e Mainland.24In addition,during the new year holidays,cities in Hainan introduced incentives targeting the offshore duty-free market,such as consumer coupons,to drive duty-free shopping.For example,since December 2024,the Haikou Municipal Bureau of Commerce has successively issued duty-free coupons
188、worth CNY 26 million.Haikou Customs data showed that during the 2025 Spring Festival holiday(28 January to 4 February),average consumer spending on offshore duty-free items was CNY 8,706,an increase of 4.1%5 compared with that in 2024(CNY 8,360).The government said that the next step would be to dee
189、pen the performing arts+tourism+consumption model,organise large-scale events linked to concerts,encourage duty-free merchants to extend business hours as appropriate to promote the development of diverse duty-free+business formats,and create new hotspots for consumption to boost the duty-free marke
190、t.6International tourists travel activities in China have become more centralised in the Yangtze River Delta urban cluster where there are considerable synergies in cultural and tourism activities(144-hour visa-free travel between Shanghai,Jiangsu and Zhejiang).This trend has diverted a large flow o
191、f tourists who are planning long tripsHainan still has weaknesses in terms of the“soft environment”for tourists,such as language and international paymentsAs a tier-1 city,Shanghai boasts comparative advantages in commercial facilities.It has the second largest cluster of global retailers in the wor
192、ld,with 98%of first-rate international brands operating there.From May 2018 to December 2023,more than 4,500 international and domestic brands launched new products globally from Shanghai,and 5,840 first stores were opened.In this regard,the city ranked first nationally in both quantity and quality.
193、4The splitting of tourist flows is mainly reflected in three areasSource:KPMG analysis0.0100.0200.0300.0400.0500.0600.0700.0800.0QingdaoShaanxiHainanHangzhouGuangxiSichuanXiamenJiangsuHunanBeijingGuangzhouShanghaiSource:Haikou Customs,KPMG AnalysisChapter 2丨 Analysis of Hainans consumer goods and of
194、fshore duty-free marketsStructural analysis of the tourist flows split across regionsFigure22Inbound Tourists in Some Visa-Free Transit Areas in 2024(Including Compatriots from Hong Kong SAR,Macau SAR and Taiwan Region,10,000 individual trips,%)Figure21 2025 KPMG Advisory(China)Limited,a limited lia
195、bility company in Chinese Mainland and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.25Comparison of travel retail business models:Hai
196、nan and South KoreaThe offshore duty-free industry in China and South Korea:Hainans market is growing with strong policy support,while the South Korean market is facing challenges,though it is well-developedAs the only free trade port for offshore duty-free shopping in China,Hainan has developed rap
197、idly in recent years with policy support,promoting the growth of tourism and retail and the economy as a whole.In contrast,as a leading travel retail market globally,South Korea boasts a mature brand and international tourist base,and it has been an industry leader for a long time.However,the global
198、 travel retail landscape has changed in recent years.Against this backdrop,the South Korean duty-free industry is facing challenges,while the expanding Hainan market is providing new momentum for growth.In the post-pandemic era,domestic tourists are the main consumer group in Hainans offshore duty-f
199、ree market.Its offshore duty-free revenue has slowed down after peaking in 2021;and in the post-pandemic era,the proportion of domestic tourists has significantly increased.In 2023,the amount of offshore tax exemption in Hainan reach CNY 43.76 billion(USD 6.51 billion),but in 2024,as foreign travel
200、resumed,more consumers went shopping abroad,resulting in a year on year decrease of 33.0%in the tax exemption amount.In 2021,South Koreas revenue from the duty-free industry reached a historical high of USD 15.573 billion.It then declined in 2022 and recorded a drop of 24.0%in 2023.The scale of reve
201、nue shrank slightly in 2024,posting a year on year decrease of 1.0%.The main reasons for this contraction include the rapid development of Chinas travel retail market,the unbalanced recovery of the international travel industry,and changes in consumer demand.It is worth mentioning that,as the larges
202、t offshore duty-free operator in Hainan,China Duty Free Group experienced a decline in its business performance in 2024,although sales in its duty-free stores located in airport arrival and departure areas increased significantly.In 2024,China Duty Free Groups revenue from its duty-free stores in Be
203、ijings airports(including Capital International Airport and Daxing International Airport)increased by more than 115%year on year,while that of duty-free stores in Shanghais airports(including Pudong International Airport and Hongqiao International Airport)increased by nearly 32%year on year.7 This w
204、as mainly due to the increasing number of countries from which tourists can enter China visa-free,the continuous optimisation of Chinas visa-free transit policies and the steady growth of international passenger flights.-50%0%50%100%150%0100200300201920202021202220232024Hainan offshore duty-free sal
205、es volume(100 million USD)Korea duty-free sales volume(100 million USD)Hainans YoY(%,in Right axis)Koreas YoY(%,in Right axis)With Chinas economy and travel industry recovering at a quicker pace,in the eyes of tourists from northern and central China and those from Jiangsu,Zhejiang and Shanghai,a vi
206、sit to Japan or South Korea costs as much as one to Hainan,either in terms of time or money.However,the former two regions boast advantages in branding,quality of service,and experience and offer more attractions for tourists with shopping needs.A comparison of the number of offshore duty-free shopp
207、ers in Hainan with that in South Korea shows that,in 2022,which marked the start of the recent slowdown in the Hainan market,there were 4.22 million offshore duty-free shoppers in Hainan,down 37.0%year on year.In the same period,the South Korean travel retail market recorded a steady performance,wit
208、h 10.83 million shoppers,up 60.0%year on year;and it has continued to expand since then.In 2024,the South Korean travel retail market was still growing,although the growth rate slowed;in contrast,the number of offshore duty-free shoppers in Hainan declined to 5.683 million,a year on year decrease of
209、 16.0%.In addition to fewer tourists and tightening macroeconomic conditions,lower spending by the middle class is also an important reason for this trend,as consumers are cutting down on non-essentials.Note:The offshore duty-free sales volume in Hainan is calculated in USD based on the average exch
210、ange rate of CNY against the USD in the previous year.Chapter 2丨 Comparison of travel retail business models:Hainan and South KoreaSource:Haikou Customs,Korea Duty Free Association,KPMG AnalysisComparison of Offshore Duty-Free Amount in Hainan and South Korea 20192024(USD 100 million,%)Figure23 2025
211、 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.26-100%
212、-50%0%50%100%150%0100020003000400050006000201920202021202220232024Hainan Offshore duty-free shopping volume(10,000 individual)Korea offshore duty-free shopping volume(10,000 individual)Hainans YoY(%)Koreas YoY(%)From 2022 to 2024,average consumer spending on offshore duty-free items in Hainan tumble
213、d below USD 1,000 from the USD 1,200-1,300 range.In addition,domestic e-commerce platforms have been engaging in fierce price wars in the beauty and personal care segment,intensifying pressure on Hainans offshore duty-free market.Notably,during this period,the number of duty-free shoppers in South K
214、orea increased significantly,but average spending fell by nearly USD 900.This may be due to measures taken by the South Korean government to strengthen supervision of purchases of luxury goods by proxy,as well as the growing offshore duty-free market in China,resulting in a contraction of purchases
215、by proxy and a drop in average spending.Since 2022,a weak Japanese yen has attracted more tourists to Japan,which has diverted tourist flows from the Korean travel retail market.In general,the travel retail market in South Korea has not returned to its 2019 level,with the number of shoppers at about
216、 58.7%,and sales at just 49.0%,of their 2019 levels.At the same time,with the devaluation of the Korean won and resulting inflationary pressure,duty-free retailers are facing greater inventory pressure.Against this backdrop,Hainan needs to improve its overall shopping experience and branding to stre
217、ngthen its competitiveness.2025 may witness intensifying competition between the two travel retail markets.Source:Haikou Customs,Korea Duty Free Association,KPMG Analysis05001000150020002500201920202021202220232024HainanKoreaNote:Average consumer spending is calculated in USD based on the average ex
218、change rate of CNY against the USD in the previous year.Chapter 2丨 Comparison of travel retail business models:Hainan and South KoreaSource:Haikou Customs,Korea Duty Free Association,KPMG AnalysisComparison of Average Consumer Spend on Offshore Duty-Free Shoppers in Hainan and South Korea 20192024(U
219、SD)Figure25Comparison of the Number of Offshore Duty-Free Shoppers in Hainan and South Korea 20192024(10,000 individual,%)Figure2403Hainans travel retail market:Trends and insightsHainans integrated culture+tourism model has injected new strength into the tourism sector and raised the islands touris
220、m revenueProfile of travel retail consumers in HainanPolicy-driven intelligent and green transformation:integrating AI technology and the“dual carbon”goals in travel retailHighlights in the Hainan travel retail market27 2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland
221、 and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland an
222、d a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.28Hainans integrated culture+tourism model has injected new strength into the tourism
223、sector and raised the islands tourism revenueDevelopment of Hainans tourism industry:an important consumption destination driven by duty-free shopping and cultural tourism consumptionHainan is at the forefront of Chinas reform and opening up and is a core area for the free trade port programme,and i
224、n recent years,it has seen its tourism revenue increase year by year.From tourism and duty-free shopping to traditional retail models and new consumption scenarios,the island has gradually become a prime destination for Chinese and global consumers.Recently,Hainans tourism revenue has been moving up
225、ward,especially after the implementation of the duty-free policy.In 2020,the islands tourism revenue reached CNY 87.286 billion,accounting for 16%of the provinces GDP.In 2024,revenue further increased to CNY 204.014 billion,accounting for 26%.The travel industry is undoubtedly a pillar of the local
226、economy.According to data released by the Hainan Tourism and Culture Department,during the 2025 Spring Festival(28 January to 4 February),the island received 9.5145 million tourist arrivals and recorded CNY 15.127 billion in tourism revenue,up 48.8%and 62.7%respectively compared with the same period
227、 last year.8 Both figures represented new highs.Cultural and tourism consumption has become a new hot spot.Tours around the island,museums and local featured activities are increasingly popular.During the Spring Festival(28 January to 4 February),418,000 tourists participated in various events acros
228、s the island,driving tourist spending of CNY 990 million.90%5%10%15%20%25%30%05001,0001,5002,0002,500201920202021202220232024Total tourism revenue(CNY 100 million)Proportion(%,in Right axis)Source:Department of Tourism,Culture,Radio,Television and Sports of Hainan Province,KPMG AnalysisHainans touri
229、sm sector still depends on domestic tourists.The number of domestic tourist arrivals increased from 64.3268 million in 2020 to 96.0979 million in 2024,and the figure is still growing.In 2024,Hainans tourism revenue from domestic tourists stood at CNY 199.577 billion,up 10.8%year on year and accounti
230、ng for 98.0%of Hainans total tourism revenue.During the year,the number of international tourist arrivals was 1.11 million,an increase of about 115.6%over the previous year;and the island generated tourism revenue from international tourists amounting to USD 620 million(approximately CNY 4.37 billio
231、n),an increase of about 252.9%over the previous year(denominated in CNY).Both figures have been growing consistently over the past six years.Despite the rapid growth in the past two years,which was measured from a low base,ground-breaking progress still remains to be made,and there is still a long w
232、ay to go before the island can achieve its strategy of building itself into a hub for international tourism and consumption.To enhance its international competitiveness,Hainan still needs to take further actions to explore new possibilities and improve the quality of development.Despite strong polic
233、y advantages,Hainan needs to do more to drive spending by international touristsChapter 3丨 Hainans integrated culture+tourism model has injected new strength into the tourism sector and raised the islands tourism revenueHainans Total Tourism Revenue and Its Proportion in Provincial GDP 2019-2024(CNY
234、 100 million,%)Figure26 2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed
235、 in Chinese Mainland.29-150%-100%-50%0%50%100%150%200%250%300%201920202021202220232024Domestic YOY(%)International YoY(%)Source:Department of Tourism,Culture,Radio,Television and Sports of Hainan Province,KPMG AnalysisSource:Department of Tourism,Culture,Radio,Television and Sports of Hainan Provinc
236、e,KPMG Analysis-150%-100%-50%0%50%100%150%200%250%300%201920202021202220232024Domestic YOY(%)International YoY(%)YOY Growth of Hainan Tourists Consumption in International and Domestic 2019-2024(%)Figure27Chapter 3丨 Hainans integrated culture+tourism model has injected new strength into the tourism
237、sector and raised the islands tourism revenueYOY Growth of Total Tourism Revenue in International and Domestic 2019-2024(%)Figure28 2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a member firm of the KPMG global organisation of independent member firms affiliate
238、d with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.30-40%-20%0%20%40%60%80%01,0002,0003,0004,0005,000201920202021202220232024International per capita consumption amount(CNY)Domestic per capita consumption amount(CNY)Intern
239、ational YoY(%,in Right axis)Domestic YOY(%,in Right axis)In terms of average tourist spending,international tourists spent more in Hainan in 2019,with per capita spending of approximately CNY 4,481(USD 677.2),an increase of 8.8%year on year(denominated in CNY),which was a high level in recent years.
240、In 2024,as international tourism recovered,due to factors including increased supply of high-end travel services and Renminbi weakness vis-vis the US dollar,per capita spending by international tourists in Hainan amounted to CNY 3,941(USD 559.3),up 63.7%year on year(denominated in CNY)and equivalent
241、 to more than 80%of the 2019 level.The growth rate of per capita consumption by domestic tourists dropped slightly to 3.2%in 2024,but in terms of the amount,it was still the highest level in the last six years.These figures show that per capita consumption by international tourists has been recoveri
242、ng,while that by domestic tourists has been growing at a relatively flat rate.Top level policies help the construction of international consumption centers,optimise the inbound tourism environment,and improve the policy system of duty-free shops and departure tax rebatesIn March 2025,the State Counc
243、il issued Several Measures to Support the Cultivation and Construction of International Consumption Centre Cities,which proposed promoting the concentration of global consumption resources,optimising the consumption environment for inbound tourists,and further improving policies for duty-free stores
244、 and tax rebates at departure.This issuance provides strong policy support for the construction of international consumption centres in key provinces and municipalities such as Beijing,Tianjin,Shanghai,Guangdong and Chongqing,and also lays out the direction for improving the overall level of interna
245、tional consumption in China.It is worth noting that although the policy is mainly aimed at relevant local governments and national ministries,it has sent a signal that will have a wide demonstration effect.In particular,as the central government is committed to building Hainan into an international
246、tourism and consumption centre,the island can expect to benefit from opportunities brought by the policy.From a practical perspective,Hainan has continued to deepen its duty-free shopping policies in recent years.Since 2024,the province has successively introduced a number of innovative measures,inc
247、luding increasing the duty-free quota,covering more commodity categories and optimising the tax rebate process,which have significantly raised the islands attractiveness in the eyes of international tourists.In addition,Hainan has also made positive progress in facilitating inbound travel.In July 20
248、24,the 144-hour visa-free policy for tourist groups from Hong Kong SAR and Macao SAR was officially implemented,delivering new momentum for the inbound tourism market.In December 2024,to follow up on the existing visa-free policy,the National Immigration Administration announced that Hainan would im
249、plement a visa-free policy for inbound tourists from 59 countries,a visa-free transit policy for international cruise ships,and a policy allowing foreign tourists to stay up to 240 hours without a transit visa.By taking these actions,Hainan is gradually strengthening its position as an international
250、 destination for tourists and consumers.By attracting tourists with high spending power,Hainan will not only improve the quality of tourism services,but also take its travel retail market to new heights.With continuous policy support,Hainan is expected to become a benchmark for the development of in
251、ternational consumption centres in China in 2025 and beyond.Note:Per capita consumption by international tourists is calculated in CNY at the average exchange rate of USD against the CNY in the previous year.Chapter 3丨 Hainans integrated culture+tourism model has injected new strength into the touri
252、sm sector and raised the islands tourism revenueHainans Per Capita Tourism Consumption in International and Domestic 2019-2024(CNY,%)Figure29Source:Department of Tourism,Culture,Radio,Television and Sports of Hainan Province,KPMG Analysis 2025 KPMG Advisory(China)Limited,a limited liability company
253、in Chinese Mainland and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.31Profile of travel retail consumers in HainanProfile of the nex
254、t generation of consumers:analysis of preferences,demands and purchase motivationsAccording to the Overall Plan for the Construction of Hainan Free Trade Port,independent customs operations will soon be implemented across the island of Hainan.Afterwards,the duty-free policy for consumers departing t
255、he island will take effect to help boost the development of Hainans travel and cultural sectors and other related industries and attract more consumers.However,the province will continue facing challenges from duty-free stores expanding in other parts of the Chinese Mainland and neighbouring markets
256、.Despite the current complex and volatile market environment,duty-free sales in Hainan have remained stable.In 2024,5.683 million buyers generated total sales of over CNY 30 billion for the island.Based consumption purposes and preferences,this section divides travel retail consumers in Hainan into
257、four categoriesyoung consumers,middle and high-income consumers,short-term travellers,and foreign touristsin order to help readers better understand market demands and optimise service strategies.Young consumersMiddle and high-income consumersShort-term travellersForeign touristsYoung consumers spen
258、d time in Hainan for leisure and vacation,large cultural performances,and sports events,or they travel to Hainan for shopping and tourism.They spend time in Hainan for leisure and vacation,business meetings or business visits as there are many high-end resorts and hotels in the province.Short-term t
259、ravellers spend time in Hainan to enjoy a warmer winter(in particular people over 60 years old from northern China),or attend large cultural performances and sports events(particularly young people).They take advantage of the visa-free policy to attend large international exhibitions,sports events a
260、nd cultural performances in the province.Consumer preferencesThey like to purchase fashionable and trendy products such as cosmetics,skincare products,luxury goods,and electronic products.Consumer preferencesThey pay close attention to brands and quality and prefer high-end luxury goods,watches,jewe
261、llery,alcohol and other products.Consumer preferencesElderly consumers tend to purchase quality health care products,food,and other products with high cost performance,while young travellers prefer goods that satisfy their need for social connection.Consumer preferencesThey like to buy unique Hainan
262、 or Chinese souvenirs or gifts for relatives and friends.Chapter 3丨 Profile of travel retail consumers in HainanProfiles of four typical types of consumers in Hainan ProvinceFigure30Source:KPMG analysis 2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a member fir
263、m of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.32Young consumers:Hainans rich tourism resources and abundant shopping destinations meet their needs
264、Young consumers are the core consumer group for Hainans travel retail market.According to data from Tongcheng Travel,in the first three quarters of 2024,post-90s and post-00s consumers accounted for more than half of all tourists in the province,demonstrating the importance of young consumers to the
265、 market.Hainans rich tourism resources attract large numbers of young people.First,the island boasts unique natural resources,including high-quality marine tourism resources,natural tropical rainforests,and unique historical and cultural attractions that cannot be seen in other tourist cities in Chi
266、na.Second,in May 2024,the Department of Finance of Hainan Province jointly released the Measures of Hainan Province on Further Promoting the Linkage of Culture,Sports,Travel and Business Exhibitions to Expand Consumption with other departments,with the aim of encouraging the organisation of internat
267、ional and domestic concerts,music festivals,and theatrical performances in the province by providing incentives of up to CNY 3 million.10 This policy has resulted multiple popular international events being held in Hainan,including the Vultures Listening Experience World Tour Listening Party-Haikou
268、Station,the first concert of Charlie Puths Asia tour,and the Philadelphia Orchestra Concert,which have attracted many young fans and music enthusiasts and benefited the provinces travel retail industry.For example,42,000 tickets were sold for Kanye Wests concert,with 96.2%of tickets purchased by tra
269、vellers,generating tourism revenue of CNY 370 million for Haikou city.Moreover,concert audiences are entitled to a 10-15%purchase discount and other concessions in Haikou International Duty-Free City,which helped drive CNY 56 million in duty-free sales.11Hainan is also actively creating more attract
270、ions for younger travellers.The province opened its highway loop in December 2023 and the Hainan Tropical Rainforest National Park Scenic Road in December 2024,improving the accessibility of its tourism resources and creating a self-driving tours+camping trend among younger generations travelling in
271、 Hainan.According to statistics from the Department of Tourism,Culture,Radio,Television and Sports of Hainan Province,during the Spring Festival holiday,Hainans highway loop saw 2.356 million passengers,and the scenic road received 246,000 passengers,with large numbers of tourists visiting various s
272、cenic spots and rural tourism sites along these roads.12Hainans enriched tourism offerings are drawing an increasing number of young people to the island,and these young people are active consumers with diversified needs.They are keen to purchase fashionable and trendy products,with preferences incl
273、uding cosmetics and skincare products,luxury goods,electronic products,and the like,which should be an important focus for the development of Hainans travel retail industry.5.67%10.71%26.97%34.05%22.60%Before-70sgenerationPost-70sgenerationPost-80sgenerationPost-90sgenerationPost-00sgenerationSource
274、:Tongcheng Travel Holdings Limited,KPMG AnalysisChapter 3丨 Profile of travel retail consumers in HainanAge Distribution of Core Customers group in Hainan Travel Retail Market Q1-Q3 2024(%)Figure31 2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a member firm of t
275、he KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.33Middle and high-income consumers:Numerous exhibitions and high-end vacation resources are drawing people
276、 with high consumption power to HainanHainan province attaches great importance to the cultivation and development of the exhibition economy,having issued a series of policies to attract and develop high-quality exhibitions.According to Hainan provinces convention and exhibition schedule for 2024,it
277、 hosted 30 provincial exhibitions during the year,including five exhibitions and 25 conferences that covered 15 areas,such as the digital economy,artificial intelligence,biomedicine,e-commerce and jewellery.13Large exhibitions not only draw a large number of travellers to the province,but also stimu
278、late its duty-free retail market.During exhibitions,duty-free shopping malls in Hainan should seize opportunities by actively offering promotional benefits and innovative consumption scenarios.For example,during the China International Consumer Products Expo in March 2024,some duty-free malls develo
279、ped innovative consumption scenarios based on the features of the expo,launched special promotional activities for expo visitors,and optimised precision marketing strategies,significantly increasing their traffic and contributing to the high-quality development of the duty-free retail sector.Source:
280、KPMG analysisNotably,most exhibition participants are from high-income groups,including corporate executives,professionals,investors and financial practitioners.These travellers boast high purchasing power and tend to spend on high-end products.By offering premium vacation resources that closely ali
281、gn with their needs,Hainan is able to retain these individuals for a longer time on the island,further promoting the development of the local travel retail industry.The consumer behaviours of high consumption groups suggest that they pay more attention to brands and quality and prefer high-end luxur
282、y goods such as watches,jewellery,and alcohol.As important consumers in Hainans travel retail market,high consumption groups provide strong momentum for the growth of duty-free retail in the province.International convention and exhibition centre in the regionTo buildFavourable policiesFinancial sup
283、portIndustrial integrationNew exhibition and tourism destination in APACNew hub for consumption and service trade in ChinaFour key areas for the development of the exhibition industrySanya hosts high-end professional trade fairs with the goal of transforming into an international business exhibition
284、 centre.Haikou is leveraging the China International Consumer Products Expo to boost consumer goods-related exhibitions,with a view to developing into a centre for international consumer goods exhibitions.HaikouSanyaTaking advantage of the Boao Forum for Asia,Qionghai aims to seize more opportunitie
285、s to host diplomatic and foreign affairs activities as well as international institutional conferences,so as to create a platform for high-level political and business dialogue.It also capitalises on the favourable policies related to the Hainan Boao Lecheng International Medical Tourism Pilot Zone
286、to develop featured medical exhibitions and promote medical tourism and health tourism.Danzhou relies on the Haihua Island International Convention and Exhibition Centre to develop exhibition tourism and more strongly connect conventions and exhibitions with key industries.In this way,the city aims
287、to develop into a hub for conventions and exhibitions in western Hainan.QionghaiDanzhouFinancial support for the exhibition industryIn August 2020,Hainan issued the Measures for Funds Supporting the Development of the Convention and Exhibition Industry in Hainan Province in order to provide financia
288、l support for existing professional exhibitions and conferences,dedicated exhibitions,and special high-end international conferences included in the target list of the provincial government.In May 2024,Hainan released the Measures of Hainan Province on Further Promoting the Linkage of Culture,Sports
289、,Travel and Business Exhibitions to Expand Consumption in order to attract and develop exhibitions.According to this policy,organisers of existing professional exhibitions included in the provincial governments target list will receive incentives of up to CNY 5 million.Integration of the exhibition
290、industry and the tourism industryIn November 2021,Hainan issued the 14th Five-Year Plan of Hainan Province on the Development of the Convention and Exhibition Industry to promote the co-development of its convention and exhibition industry and tourism industry and turn the province into an internati
291、onal tourism and consumption centre.Convention and exhibition activities can produce a 1:9 crowding-in effect,drawing enormous purchasing power to Hainans travel retail industry.Chapter 3丨 Profile of travel retail consumers in HainanExhibition Economy plan of Hainan ProvinceFigure32 2025 KPMG Adviso
292、ry(China)Limited,a limited liability company in Chinese Mainland and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.34On a quarterly ba
293、sis,the first quarter always sees the peak of tourist season,reliably exceeding the other quarters.Generally,it draws about 3-4 million tourists each year,and it saw a record high in 2024.The fourth quarter draws the second highest number.After a slump in 2022,the number of returning tourists quickl
294、y bounced back in 2023,with year on year growth amounting to 41.7%.The fourth quarter of 2024 saw 1.57 million tourists,around 79.0%of the total in the same quarter in 2019,indicating that the scale of returning tourists with high purchasing power has been expanding,benefiting the winter vacation ma
295、rket.For Hainan,the second and third quarters are the slow season,drawing fewer tourists.In summer,domestic tourists tend to prefer other tourist destinations such as Yunnan and Guizhou where they can avoid the heat.Short-term travellers:With its warm climate,Hainan attracts both young and old peopl
296、e who dislike cold wintersAccording to data from the Department of Tourism,Culture,Radio,Television and Sports of Hainan Province,the island received more than 1 million winter visitors from January to March 2024,indicating that the Spring Festival holiday and cold weather brought large numbers of t
297、ourists to the province.From April to October,the tourism industry experiences its slow season,with the number of tourists falling to the lowest level in August and September.However,the year on year growth rate in these two months still trended upward.In November,the number of tourists began to ris
298、e again and reached 805,500 in December,making it the fourth highest month during the year,and showing that winter tourists were returning to Hainan.It is worth noting that in 2024 the number of such tourists grew year on year in each month,indicating that Hainan is attracting an increasing number o
299、f returning tourists.0%5%10%15%20%25%30%35%40%020406080100120140160Migratory birds visitors(10,000 people)YoY(%,in Right axis)Chapter 3丨 Profile of travel retail consumers in HainanMonthly Winter Visitors Numbers and YOY Growth in Hainan in 2024(10,000 people,%)Figure33Source:Department of Tourism,C
300、ulture,Radio,Television and Sports of Hainan Province,KPMG Analysis 2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limi
301、ted by guarantee.All rights reserved.Printed in Chinese Mainland.350501001502002503003504002021202220232024Q1Q2Q3Q4Source:Department of Tourism,Culture,Radio,Television and Sports of Hainan Province,KPMG AnalysisWith its superior geographical location offering a warm climate,Hainan has become an ide
302、al shelter in winter for a large number of elderly people.According to data from Ctrip,in the week following Chinas National Day holiday in 2024,winter tourism orders from silver-haired people(aged 50 or above)increased 2.86 times compared with orders received during the National Day holiday,with Ha
303、ikou and Sanya receiving 36%and 27%more orders respectively.14 This indicates that Hainan has become one of the most popular destinations among elderly tourists from northern China.The Study on the Basic Characteristics of Elderly Winter Tourists in Hainan Province and Their Health Care Needs releas
304、ed in July 2024 analysed 119,000 elderly winter tourists aged 65 or above who were highlighted by the Statistical Information Centre of the Hainan Provincial Health Commission.The study pointed out that elderly winter tourists from the three northeasternmost provinces of ChinaHeilongjiang,Jilin and
305、Liaoningoutnumbered those from other provinces and accounted for about 36.3%of the total.The study also found that 27.6%of the highlighted tourists suffered from one key disease,and 9.9%suffered from two or more key diseases at the same time.Therefore,they need a certain level of medical and health
306、services and products when staying in Hainan.Source:Chinese Journal of Health Policy,Television and Sports,KPMG AnalysisHeilongjiang 19.6%Beijing 7.3%Jilin 10.9%Sichuan 6.7%Hebei 5.9%Liaoning 5.8%Henan 4.8%Chongqing 3.7%Guizhou 3.6%Shanxi 3.5%Other provincess 28.2%Chapter 3丨 Profile of travel retail
307、 consumers in HainanQuarterly Winter Visitors Numbers in Hainan 2021-2024(10,000 individual Trips)Figure34Distribution of Elderly Winter Visitors in Hainan(%)Figure35Central of China13.4%West of China27.8%East of China22.4%Northeast of China 36.3%2025 KPMG Advisory(China)Limited,a limited liability
308、company in Chinese Mainland and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.36Considering the changes in the market environment and
309、the growing consumption demands of elderly tourists,Hainan is also actively exploring healthcare service offerings and new forms of business.To promote and support the development of the healthcare industry,Hainan has issued the Implementation Opinions on Strengthening Elderly Care in the New Era in
310、 2022,the Three-Year Action Plan of Hainan Province for the Development of Elderly Undertakings and the Elderly Care Service System(2023-2025)in 2022,the Ordinance of Hainan Province on Elderly Care Services in 2023,and the Three-Year Action Plan of Hainan Province for Promoting the Development of t
311、he Healthcare Industry(2025-2027)in 2025.These policies aim to encourage the industry to launch unique local products and products that meet international standards,steadily increase supporting facilities for the elderly,and pursue integrated industry development,so as to turn the province into a pi
312、votal healthcare tourism destination in China.Source:KPMG analysisConsumption patterns suggest that elderly consumers tend to purchase quality healthcare products,food,and household products with high cost performance,while young travellers prefer fashionable and trendy products that satisfy their n
313、eeds for social connection.At the same time,similar to elderly tourists from northern China,more and more young people are travelling to Hainan in winter to escape the cold weather.Data from Qunar shows that from November 2024 to the end of January 2025,hotel room orders from customers aged 25-36 fo
314、r stays of one month or longer increased 2.5 times compared with the same period in 2019.Moreover,Hainans cultural performances and sports events have also attracted many young people to live or spend their holidays on the island.For example,the Tour of Hainan 2024 cycling racewhich included five st
315、ops in Ledong Li autonomous county,Sanya city,Wanning city,Wenchang city and Haikou citydrew over 4,200 contestants,of whom 20.0%were from outside the island and 3%were from abroad.Moreover,the 5-stop event attracted more than 200,000 tourists,directly contributing tourism income of more than CNY 10
316、.455 million,and indirectly generating economic benefits of CNY 15.682 million.15 During the event,travel retail achieved significant growth.Favourable policies Promoting the World Longevity Island”brand Building the“Hainan Boao Lecheng International Medical Tourism Pilot Zone,”Chinas only special m
317、edical zone Supporting the development of the healthcare industry by helping it access favourable policies,land,tax preferences,professionals and technological innovationSilver-haired tourism products Healthcare products(traditional Chinese medicine(TCM)healthcare tourism)Unique local products(healt
318、hcare products related to the climate,forests,hot springs,and tropical and coastal areas)Products that comply with international standards(encouraging foreign investors to invest in Hainan or large foreign groups with high-end healthcare brands to provide healthcare services that meet international
319、standards in Hainan)Supporting facilities Setting up more facilities for the elderly,more evenly allocating cultural and sports facilities across communities,and promoting the centralised construction and sharing of service facilities Optimising the living environment to improve accessibility for th
320、e elderly and upgrading public service facilities accordinglyIndustrial integration with healthcare Exploring multiple business models,such as“healthcare+tourism,“healthcare+rural living experience,”and“healthcare+winter shelter,”to accelerate integration and clustering in the healthcare industrySil
321、ver-haired Tourism in HainanHealthcare tourism is gaining traction in Hainan,and demands for related services are increasing significantly across the provinceChapter 3丨 Profile of travel retail consumers in HainanDevelopment of the Silver-Haired Economy in HainanFigure36 2025 KPMG Advisory(China)Lim
322、ited,a limited liability company in Chinese Mainland and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.37Foreign tourists:Since the vi
323、sa-free policy was extended from 144 hours to 240 hours and various important activities were organised,foreign tourism to China has been surgingIn 2024,the National Immigration Administration continued to optimise its visa-free policy,which has helped encourage more foreigners to come to Hainan to
324、travel,conduct business,attend sports competitions and exhibitions,and participate in other activities.The specific measures include:In February,the National Immigration Administration extended the visa-free policy to cover 59 countries,allowing their citizens to enter Hainan more easily;In July,the
325、 National Immigration Administration announced the 144-hour visa free policy for group tourists from Hong Kong and Macao to Hainan;In December,the National Immigration Administration further extended the visa-free policy to 240 hours,and included Hainan in the list of visa-free policy provinces,allo
326、wing foreigners to enjoy visa-free transit in all parts of the island.According to statistics from the Department of Tourism,Culture,Radio,Television and Sports of Hainan Province,1.11 million tourists entered Hainan in 2024,representing year on year growth of 130.9%.Hainans foreign tourists mainly
327、came from neighbouring countries(such as Russia,South Korea,Kazakhstan and Mongolia)and Southeast Asian countries(such as Malaysia,Singapore,Thailand and Vietnam).In 2024,the number of tourists from Russia increased 1,007%year on year to 178,400,ranking Russia first in terms of number of tourists to
328、 Hainan.Meanwhile,tourists from Vietnam increased at the highest pace.0%200%400%600%800%1000%1200%1400%1600%02468101214161820Reception(10,000 individual trips)Cumulative YoY(%,in Right axis)Source:Department of Tourism,Culture,Radio,Television and Sports of Hainan Province,KPMG AnalysisChapter 3丨 Pr
329、ofile of travel retail consumers in HainanHainans Reception of Overseas Tourists in 2024(10,000 individual trips,%)Figure37 2025 KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland and a member firm of the KPMG global organisation of independent member firms affiliated with K
330、PMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.38Changes in consumer demands around price,experience and emotional value,and pursuit of business diversification and service innovationEnterprises in Hainan understand that price
331、 competition alone will not boost travel retail,and therefore they are focusing on experience and emotional valueIn 2024,sales of perfume and cosmetic products in Hainans duty-free market suffered a decline.A Japanese cosmetics group pointed out in its financial report for the first three quarters o
332、f 2024 that its travel retail revenue fell by 21%year on year to JPY 85.8 billion(about CNY 4.12 billion).The group wrote,“The sales volume was relatively low in Hainan and South Korea due to a significant reduction in consumption by Chinese tourists.“16 In its annual report,it also mentioned,“Our b
333、usiness in China was shifting from growth driven by large-scale promotions to sustainable growth driven by consumer demand-focused brands,merchandise and value.Additionally,an international cosmetics brand pointed out in its third quarter financial report,“Although the travel retail industry trended upward in the third quarter,it still faced pressure,particularly in Hainan.”17At present,outbound t
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