Chinese consumption on luxury goods in 2012 (billion yuan)

Chinese consumption on luxury goods in 2018 (billion yuan)

Chinese consumption on luxury goods in 2020 E (billion yuan)

Chinese consumption on luxury goods in 2025 E (billion yuan)

Feb 22, 2020 | Beauty stories | 1 comment

Chinese Expenditure on luxury and its DFS business ambition

Beauty stories | 1 comment

  70% of Chinese luxury goods come from overseas

    In March 2019, according to the “China Luxury Market Research (2018)” published by BAIN, a global management consulting company, global consumption of luxury goods in China in 2018 was 770 billion yuan (about $ 118.1 billion). The market share increased by 20%, accounting for 33% of the global market share (1st in the world for the seventh consecutive year), and is expected to reach 40% in 2025.

    According to the UNWTO (World Tourism Organization) statistics, China’s overseas consumption in 2017 was $ 258 billion, the largest contributor to world tourism consumption (about 21%). In 2017, the average per capita expenditure in oversea of Chinese tourists was $ 1,985, of which the shopping expenditure was $ 762, far above the non-Chinese tourists ($ 486).


% of Chinese consumption on global consumption of luxury goods in 2012


% of Chinese consumption on global consumption of luxury goods in 2018


% of Chinese consumption on global consumption of luxury goods in 2020 E


% of Chinese consumption on global consumption of luxury goods in 2025 E

China to promote its local consumption through the development of duty-free industry.

With Yuker (Chinese group tourists 游客yóukè)’s overseas consumption and the resulting foreign currency outflow, the Chinese government has emerged as an important task to boost domestic consumption by returning overseas consumption to China. In the past few years, the Chinese government has been stimulating a series of measures to reduce promote consumption in mainland China such as : reduction of custom tax, offshore island duty-free policy, duty-free shops at the arrival, restrictions on Dai Gou’s activities, increase of downtown duty-free shops.


In 2011, after the Lidao tax exemption policy was implemented in Hainan Province, the Chinese government modified 4 times its Duty-Free promotion policy ; the amount of duty-free shops and the number of purchases were increased, it expanded target categories of duty-free goods as well.  In 2015, to boost domestic consumption, the State Council agreed to open duty-free shops at several airports’ arrival gates, including Guangzhou Baiyun and Shenzhen Bao’an, and to increase the Tax-Free amount limitation. Since 2019, many numbers of downtown duty-free shops are to open in various cities in China.


Constant growth in China’s duty-free market

     -Tax-free industry becomes important for domestic consumption reflux. In addition to supporting the relevant policies, China’s duty-free sales in 2018 amounted to 39.5 billion yuan, with compound annual growth of 19% in 2015-2018.

     In 2018, duty-free sales in China amounted to 39.5 billion yuan (7.6% of the world market), which is significantly lower than Korea (22% of the world market). If China’s duty-free demand continues to increase due to the support of tax-free policies and optimization of the supply chain, China’s total duty-free sales is expected to reach 81 billion yuan by 2023.

Airport shops vs Downtown shops

Existing Chinese duty-free business relies mainly on airport duty-free shops

Airports are a major distribution channel for duty-free businesses worldwide, with 56% of global duty-free sales in 2017 and 37% coming from Duty-Free shops located in cities and border stores. In Korea, 85% of Duty Free sales come from downtown stores, and only 13% from airport stores (as of May 2019). On the other hand, China’s share of airport stores’ share is roughly 70%, shops located in Hainan’s Lidao represents 23%.


  • CHINA : Share of Tax Free business generated by downtown shops 24% 24%
  • SOUTH KOREA : Share of Tax Free business generated by downtown shops 85% 85%
  • GLOBAL : Share of Tax Free business generated by downtown shops 37% 37%
  • CHINA : Share of Tax Free business generated by airport shops 70% 70%
  • SOUTH KOREA : Share of Tax Free business generated by airport shops 13% 13%
  • GLOBAL : Share of Tax Free business generated by airport shops 56% 56%

More competitive pricing 

Duty Free items are priced 30-40% lower than normal retail price.

 The cumulative total tax amount is about 46% of the CIF price when importing through the general trade way. Taxes to be paid when importing cosmetics are custom tax, import consumption tax and import value added tax.

Therefore, when comparing the duty-free prices and general sales prices (including tax), the duty-free prices are 30 to 40% lower than general sales prices.


Recent Duty Free initiatives in China

Since May 2018, downtown duty-free shops in Qingdao, Xiamen, Dalian, and Beijing opened in succession, and in August, duty-free shops in Shanghai opened in Lujiazui.


Duty free shops in Shanghai provide extended services to locals as well as foreigners : the Duty Free purchase items can be taken away from the airport before departure after purchase reservation made in advance. This is a major step that the Chinese government has recently taken to existing downtown duty-free shops and is expected to promote their sales.


On September 16, 2019, Shanghai Pudong Airport Weixing (() Duty Free Shop officially opened. It is 10,000, which is larger than the total size of duty free shops of the former terminal 1 and 2. Popular Perfume and cosmetics products are fully lined up. They aim to offer cosmetic products at the lowest price of duty-free shops in the entire Asia-Pacific region.


On November 9, 2019, Shanghai Wusongkou, a duty-free shop in China’s first cruise passenger port, opened on 1,700surface to offer Tobacco, cosmetics, children’s toys categories.

Source: BAIN, UNWTO, China’s National Tax Office ( ), China’s domestic and foreign duty-free shop sites and annual reports, Groom Network, China Gwangbo King, WIND, Huaxing Securities , Snowball Charging King, KOTRA Wuhan Trade Center, KOTRA


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