There Is A Story Behind The Competition For The License Plate

The continuous soaring tax-free market may encounter a turning point.

On July 10, Hainan Provincial Department of finance, Department of Commerce, and market supervision bureau announced that they would adopt market-oriented competition such as bidding to select and determine the newly added business entities of tax-free shopping in Hainan outlying islands.

This means that even if you have the qualification of duty-free operation, if you want to open a new duty-free shop in Hainan, you have to report to the Ministry for approval. Wang mengxiang, an observer expert of Otro Oriental duty-free retail and CEO of Jessica's secret, said to the reporter of 21st century economic report that now too many duty-free operators want to enter Hainan, they need national regulation and control. "If it's a bit chaotic, tighten it up a bit," Xie Xiangxiang, vice president of Hainan University's School of tourism, thinks that the new announcement is ready to reduce the industry's false fire.

A person close to the Hainan provincial government disclosed to the 21st century economic reporter that the Hainan government intends to set up a new tax-free company locally, cooperate with foreign investors, participate in the competition in the tax-free market of Hainan Islands, and release "living water" to drive the construction of tax-free market in Hainan Island. However, this idea has not been supported by relevant national ministries and commissions. Local governments and state departments have their own ideas for the new tax-free shopping subjects in outlying islands.

To open a shop, invite tenders first

Since the "general plan for the construction of Hainan free trade port" was officially announced on June 1, the huge temptation of tax-free has attracted enterprises from all walks of life to try to join the tax-free market in Hainan Islands.

On July 3, Zhuhai duty free group set up a new company in Hainan, Zhuhai free group (Hainan) duty-free products Co., Ltd. With a registered capital of 500 million yuan, the company's business scope includes the operation of duty-free goods on outlying islands approved by the state, and the operation of duty-free imported goods consumed by island residents. Prior to that, Kaiser tourism established a tax-free business platform in Hainan at the end of 2019. Hainan Tongsheng Shijia tax-free group was recently invested by Shanghai Licheng to increase its capital by 100 million yuan, which shows that the market is generally optimistic about the potential of Hainan tax-free market.

In addition to these two companies, those who have tax-free licenses, such as shenmian, zhongchufu and Wangfujing, seem to be interested in entering the market through various channels. At present, as long as listed companies that are close to tax-free, they are wildly sought after in the capital market. Bailian shares only announced that the controlling shareholders in the application for tax-free business qualification, in recent days, it has harvested seven limit boards. There is no tax-free license, but through the subsidiary holding 49% of the shares of Haimian Meilan Airport duty-free shop and 50% of the equity of HNA China duty-free products company, it actively releases the signals of participating in duty-free business in the interactive platform with investors, and the share price has risen by 44.9% in the past seven trading days.

These companies are betting on the degree of openness of Hainan Island tax-free market, because the new version of the tax-free policy announced on June 29 mentions that moderate competition is encouraged, and business entities with Tax-free Commodity operation qualification can participate in the duty-free operation of Hainan Island on an equal basis. This once led many companies to think that in order to become the most open tax-free market in the world, as long as qualified companies can join the competition.

However, a licensed store must be approved before it can be operated.

According to the announcement of the three departments in Hainan, according to the principle of synchronous operation of brands, varieties, prices and international markets, the newly added tax-free shopping operators in Hainan Islands will be selected and determined by means of market-oriented competition such as bidding. The application for the establishment of duty-free shops shall be submitted to the General Administration of Taxation and the Ministry of Commerce for examination and approval in accordance with the procedures of the General Administration of Taxation and the Ministry of Commerce.

The three ministries and commissions also warned that without the approval of the relevant state departments and Hainan Province, no enterprise should release relevant information about setting up duty-free shopping shops in Hainan Island to carry out duty-free goods business. In case of violation, the relevant departments of Hainan Province will investigate the responsibility according to the law.

Admission of controversial "wolf"

How to understand the new announcement of Hainan three departments?

Yang Jinsong, director of the International Research Institute of China Tourism Research Institute, explained to reporters that the announcement of Hainan's three departments is aimed at regulating the market. After all, only China's Central Committee is qualified to operate tax-free shopping on outlying islands, and the licenses of other companies are not. It is necessary to participate in the bidding according to the regulations to obtain the quota of business entities for duty-free shopping on outlying islands. At that time, it was also pointed out in the tax-free policy of the new islands that the business entities with the qualification of tax-free distribution could participate in the duty-free operation of Hainan Island according to the regulations. Now, the announcement of the three departments is actually a detailed explanation of "participation according to regulations". "Hainan's intention is very clear, that is to actively cultivate competitive advantages, encourage orderly competition and standardize development," Yang Jinsong said.

Wang Meng also believes that Hainan hopes to correctly guide market expectations. At present, the concept of tax-free in the capital market is hyped too much. In fact, in addition to China's China tax exemption, other companies have to operate tax-free in Hainan, and it is still a long time to realize the revenue.

Some people close to Hainan provincial government have disclosed to the 21st century economic report that Hainan Province has high expectations for the construction of the duty-free market of the free trade port. They hope that the duty-free shops operating in Hainan can achieve international synchronization in terms of brand, variety and price, and choose new duty-free shopping operators in Hainan Islands with high standards.

The above-mentioned sources disclosed to reporters that in fact, Shanghai Southern provincial government intends to set up a local company and cooperate with a well-known foreign tax-free operator to jointly participate in the tax-free market of Hainan Islands after obtaining the qualification of duty-free operation. Or assist foreign duty-free operators to obtain domestic tax-free operation qualification, lead "wolf" into the market, and activate the tax-free market.

Wang Meng explained to reporters that the tax-free industry is similar to the traditional industry. The purchase scale, shipment scale and number of consumers determine the cost of commodity procurement and the bargaining power with suppliers. In this regard, China immunity group is currently ranked fourth in the world, and dufry, Lotte and Silla of South Korea are ranked ahead of China immunity. For consumers, price is undoubtedly the first choice of interference factors, who can reduce procurement costs, reduce operating costs, to provide consumers with the highest cost-effective purchase price, is the key to success.

Is this wolf the world's No. 1 tax-free group, dufry? The company could not be contacted to confirm. However, it is reported that on the first day after the general plan for the construction of Hainan free trade port was announced, Liu Cigui, Secretary of Hainan provincial Party committee, made a video link with dufry executives to promote practical cooperation in related fields.

However, people close to the Ministry of Finance believe that the state should introduce appropriate competition in the tax-free market of Hainan Island and give priority to cultivating local tax-free companies. When their capabilities grow to a certain extent, they will join international competitors to make the tax-free cake bigger and develop together. "This would be the ideal path." The person said that the construction of Hainan free trade port will speed up in the near future, and the possibility of foreign capital participating in the competition for Hainan's tax-free operation qualification is not ruled out.

Even if there is no "wolf" in a short period of time, the intensified competition in the tax-free market of Hainan Islands is still an imaginable prospect. "If there are duty-free shops all over the street, no one can make money." Wang Meng believes that it is necessary for the state to regulate and control the tax-free shop layout. Some tax-free enterprises agree with the government's regulation and control, pointing out that everyone hopes to open duty-free shops in Haikou, Sanya. However, too many duty-free shops will lead to disordered competition and eventually need to return to an orderly market.

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