Whose Job Has Ali Robbed By Making Friends With The World'S Largest Duty-Free Shop

Alibaba, which is ambitious to be a global player, has made a big investment in China's tax-free market for many years.

Recently, Alibaba announced that it would set up a joint venture with dufry, a duty-free retailer in the world, and planned to hold no more than 9.99% of the shares of the latter for no more than 250 million Swiss francs (about RMB 1.856 billion).

Ali is aiming at a huge blue ocean. With the continuous increase of luxury consumption demand, the market size of China's tax-free industry has rapidly increased from 22 billion yuan in 2012 to 55 billion yuan in 2019, with the growth rate of more than 20% in 2018 and 2019. Morgan Stanley forecasts that the size of China's tax-free market is expected to more than double by 2025. McKinsey predicts that by 2025, Chinese consumers will contribute nearly 50% of the world's total tax-free consumption.

However, if you want to eat this attractive cake, China duty-free products Group Co., Ltd. (hereinafter referred to as "China immunity"), which has long been the dominant company and has occupied 90% of the domestic duty-free industry market share, is a "roadblock" that Ali can't get around.

As soon as the news of dufry's hand came out, Alibaba's share price rose for several days, while China's tax-free leader with a market value of more than 400 billion yuan suffered a heavy setback. On October 9, on the first day of opening after the festival, the A-share tax-free concept stocks weakened, and the shares of the China Securities Regulatory Commission fell 8.45% in the end of the day, and once touched the limit.

This time, Ali has entered the tax-free industry with great fanfare. Will it set off a new bloodbath in this long-term monopoly market?

The king of the city?

Alibaba's "covetous" of the tax-free industry is not difficult to see from the various layouts in the past.

In March 2019, Ali's flying pig launched a new product called "feizhugou". Outbound tourists can book and purchase overseas goods online in advance, and pick up goods from offline stores during travel. Today, "feizhugou" has been upgraded to "travel shopping". Dozens of duty-free shops, including Japan, South Korea, Hong Kong and Hainan, have settled in Feizhu and opened online tourism retail stores by booking and direct mail.

It is generally believed that Ali and dufry will join forces in the online tourism retail.

For dufry, a global tax-free giant hit by the epidemic and whose income plummeted by 62% in the first half of this year, Ali's financial strength, huge Chinese consumer group and digital capability are undoubtedly the timely support. As for Alibaba, which is eager to expand its overseas retail business, dufry, which has more than 2500 offline stores in 65 countries and has the largest sales volume in the world in the past six years, will also be a powerful boost.

In September this year, some market news said that the Ali team conducted in-depth research in Hainan to seek business development opportunities. Whether the joint venture between Ali and dufry will launch cross-border off-line e-commerce stores in Hainan or across the country, or become an integrated supplier of domestic duty-free retailers, is not known. Some people in the industry judge that, in the long run, the new joint venture will compete directly with China immunity, or concentrate on online business.

Whether or not to open duty-free stores in person, Ali's advantages are beyond doubt.

This enterprise, which occupies an important position in China's retail market, has a complete online retail platform and a full range of online and offline consumer service ecology. As of the end of June this year, the annual number of Chinese users of Alibaba and ant group has reached 1.07 billion, and the annual number of active consumers of Chinese retail business has reached 742 million; as of March 31, 2020, the total sales value of Alibaba's Chinese retail market has reached 6589 trillion yuan, and the global total sales value has reached 100 billion US dollars.

But the strength of the tax-free industry, which has been in the tax-free industry for many years, can not be underestimated.

Due to the scarcity of license plates, for a long time, China's tax-free industry with huge potential has only a few players, including the central immune system, which is basically closed. As of May this year, CMAC is a full license company with three of the eight tax-free licenses in China. In the past three years, it has successively acquired the control rights of three tax-free companies, namely, Japan Shanghai, Japan Shanghai and Hainan, and operates duty-free business in major airports, ports and border ports across the country. The advantage brought by the competition barrier allows the company to enjoy the vast market.

In 2019, China immune's market share will reach 85%. If we take into account the acquisition of 51% equity of Haimian company in May this year, the market share of CMAC will reach 91%. Wind data shows that from 2009 to 2019, the income of the central tax exemption system has increased by 20 times, and the gross profit margin is as high as 50%. In 2017, the number of duty-free operators in the world rose to the fourth place in 2017. In the first half of this year, CMAC surpassed dufry to become the first tourism retailer in the world.

It was only in the past two years that China's tax-free market, which was firmly monopolized by China's immunity, ushered in a sign of loosening and became a hot wind outlet that was being chased.

In June 2019, the Ministry of Finance and other five ministries and commissions jointly issued the Interim Measures for the administration of exit duty-free shops at ports to gradually relax the policy and encourage the breaking of monopoly and orderly competition. The long closed tax-free market has begun to loosen up, allowing latecomers to see business opportunities. In the first half of this year, a large number of tax-free demand backflow caused by the epidemic situation and the preferential policy guidance to activate the internal circulation of the economy accelerated the process.

On June 9, this year, Wangfujing group became the eighth enterprise with tax-free license in China, and the non-public capital entered the tax-free business. Many listed companies, such as Bailian, Lingnan holding and Hubei Wushang a, have also started to apply for tax-free business qualification.

In the long run, it is an inevitable trend for China's tax-free market to absorb more "players" to make a bigger cake together. However, compared with the giant CMV, which has been firmly occupying the leading position since its listing for 11 years, they are just challengers trying to take a share of the market, and can not shake the foundation of CMV.

The collapse of China immune shares means that the strong into the board of Ali has released the first wave of "murderous". Will it become the strong enemy of China immunity and even the subversion of the whole tax-free industry?

Rebuilding Taobao overseas

In the face of the fierce Challenger Alibaba, investors with keen sense of smell reacted quickly and voted with real gold and silver. The concept stocks of duty-free shops including China immunity Insurance Corporation (CMMC) plummeted one after another.

The market generally believes that Alibaba's large customer base, online and offline consumption scenarios and digital business ecology have the possibility to connect with the supply chain of dufry duty-free goods, and its late development advantage cannot be underestimated.

Everbright Securities pointed out in the research report that Ali, with the help of dufry's advantageous resources, entered the duty-free track with good prospects, and this cooperation can be called a win-win situation. With its own advantages, Ali may promote the digital transformation of the whole tax-free industry and accelerate the reshuffle of the whole industry pattern.

But Minsheng Securities believes that even if Ali and dufry join hands, it is difficult to directly gnaw into the hard bone of China's tax-free market.

On the one hand, there are still very high license barriers for domestic duty-free business. The establishment of a joint venture between Ali and dufry does not mean that it can quickly cut into the sales of duty-free products and break the basic pattern of the existing tax-free market. In addition to several pilot companies operating tax-free business in 1999, there is no precedent in China that foreign-funded or joint-venture companies hold state-owned tax-free retail license companies.

On the other hand, although the cake in the domestic duty-free market is attractive enough, Ali is not necessarily willing to "snatch food from the mouth of the tiger" with the central immune system. In fact, as early as 2018, Ali has signed a strategic cooperation agreement with China immunity group, and both sides have carried out cooperation in many aspects. The off Island duty-free shopping mall has been launched on tmall. It is obviously not in line with Ali's core interests if it is eager to rush into the tax-free industry to compete for market share and depart from the Central Committee of the Communist Party of China.

What's more, even if more market players will enter China's tax-free market in the future, it will also expand the plate of the whole market while sharing the existing market share. Take the development of tax-free industry in South Korea as an example. Although the number of competitors has increased significantly, Silla and Rakuten did not expect to suffer a large-scale impact as expected. Instead, they gained more sales because of the expansion of cake.

This means that, although Ali's entry into the board has brought certain psychological impact to investors, in the long run, even if Ali does something in this market in the future, the position of the boss of China immunity will not be easily shaken.

Similarly, the drunkard's ambition is not to open a duty-free shop, but to a broader overseas market.

In recent years, Alibaba has been expanding its overseas retail business, and the tax-free retailers that have taken a stake in the global * * can be regarded as a kind of help. The general view of the industry is that Alibaba's investment in dufry is more focused on the latter's global supply chain and data resources.

At present, dufry has thousands of international brand suppliers, whose advantages in product supply, channel and brand are beyond doubt. If Ali can use it in the process of entering international retail, it will not only save a lot of time and economic costs, but also hope to further enhance the competitiveness of tmall global.

In addition, dufry accounts for nearly 20% of the International Airport tourism retail market share, and the number of potential customers is about 2.5 billion. Europe, Africa and North America are its main markets. In contrast, in fiscal year 2020, lazada, express express and Alibaba's other international retail businesses had annual active consumers of over 180 million.

With the further development of Alibaba's massive shopping system, dufry will have more opportunities to cooperate with overseas consumers.

In the face of fierce competition from pinduoduo and meituan, as well as the impact of live broadcast platforms such as shuoyin express, it is difficult for Alibaba to break through the ceiling in the domestic e-commerce industry, aiming at new opportunities for overseas retail and cross-border tourism.

This cooperation with dufry may enable Ali's business empire to continue to expand its territory, and even have the opportunity to create another "Taobao" overseas.