China’s Sanya Island getaway shutting down its duty free malls amid COVID outbreak

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Sanya, a top tropical destination on China’s southern Hainan Island, began closing its duty-free malls on Friday in response to a worsening COVID-19 outbreak.

Since China closed its international borders in early 2020 to contain the spread of COVID-19, Hainan’s duty-free industry has boomed and has become a vital channel for global brands from Gucci to Coach, La Mer to L’Oreal to reach Chinese shoppers.

But Sanya International Duty Free City in Haitang Bay, run by China Duty Free Group and Hainan’s largest offshore shopping mall, will be closed indefinitely on Friday to prevent the spread of COVID-19, according to a post on its Weibo account.

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This shutdown comes even though no cases of the current Hainanese outbreak have been discovered in Haitang Bay so far. Although the number of cases in China is small compared to the rest of the world, Beijing has a “dynamic zero” policy that takes tough measures to stop the transmission of viruses.

China has closed their duty-free mall to curb COVID during the latest outbreak. Pictured: Sanya International Duty-Free Shopping Complex in Sanya, Hainan Province, China on November 25, 2020.

Health officials in Hainan told a news conference Friday that from Aug. 1 to 5, the cumulative number of local confirmed cases reported in the current outbreak was 191.

Entertainment venues, including many bars and cinemas and some tourist sites, have also been closed to contain the spread of the virus, although hotels remain open and many contacted by Reuters said they were operating normally.

This is the second time duty-free malls have been forced to close in 2022 in Hainan, and the island is also seeing closures in April after another outbreak.

“The outbreaks in March and April had a big impact on us,” said a hospitality worker at Sanya International Duty Free City, which goes by the English name Dream.

She added that the company had returned to 70 to 80% of last year’s levels prior to the latest outbreak.

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Last week, Hainan’s capital, Haikou, hosted the second China International Consumer Products Expo, where LVMH, Kering, Richemont, Tapestry and Burberry were among the global brands.

Last year, the offshore sales value of duty-free items in Hainan, buoyed by withdrawals in mainland consumer spending and policy changes, reached about 49.5 billion yuan, about $7.3 billion at the current exchange rate, up 80% year on year.

“Now in August, the virus is back, making it very difficult to do business,” Dream told Reuters.

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