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Japan's Kintetsu plots duty-free expansion to the 'Hawaii of China'

Duty-free shop in Hainan part of department store operator's overseas growth

A duty-free shopping complex in Sanya: Hainan has been nicknamed the Hawaii of China and is a popular tourist destination.   © Reuters

OSAKA -- Kintetsu Department Store will open its first duty-free shop overseas on the tropical Chinese island of Hainan, President Takuji Akita told Nikkei, bringing the Japanese shopping experience straight to Chinese consumers' doors with an eye on post-pandemic growth.

Japanese retailers relied heavily on inbound tourists to drive earnings until COVID-19 struck. But "bakugai in Japan won't recover to where it was before," Akita said, using a buzzword meaning "explosive buying" that is often associated with foreign visitors.

"Instead, we want to provide Japanese value to our Chinese customers in Hainan," he said.

Kintetsu will open a location at a duty-free mall in the southern Hainanese city of Sanya as early as September, followed by one in the northern city of Haikou. It will offer Japanese cosmetics and local specialties popular with Chinese consumers and aim for annual sales of 200 million to 300 million yen ($1.8 million to $2.7 million).

Unable to travel abroad due to the pandemic, wealthy Chinese have flocked to Hainan -- often dubbed the "Hawaii of China." Duty-free sales there more than doubled on the year to 27.5 billion yuan ($4.24 billion) in 2020, according to Kintetsu.

To further promote tourism on the island, the annual cap on duty-free purchases there was raised last July to 100,000 yuan per traveler from 30,000 yuan.

Akita also signaled a growing interest in Southeast Asia. "We want to bolster outreach to customers in Southeast Asia after the coronavirus," he said.

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