Customers shop at a cosmetics store of Estee Lauder in a duty-free shop at Haitang Bay, in Sanya city, south China's Hainan province.

LONDON — China Duty Free Group, the largest duty-free operator in China, is expanding its footprint in Hainan Island’s tourist hotspot Sanya.

The Beijing-based company, which is also the owner of the Sanya International Duty Free Shopping Complex, is setting up a joint venture with Sanya Phoenix International Airport to open duty-free shops in the airport to further capture the influx of tourists. The government in June tripled the per-person duty-free shopping allowance from 30,000 renminbi to 100,000 renminbi to help boost domestic spending in the wake of the pandemic.

The new joint venture is being set up with 100 million renminbi in cash. China Duty Free Group holds 51 percent of the shares, while the airport owns the remaining 49 percent. The new company will be eligible to apply for an offshore duty-free business license.

With international travel on pause, the pandemic has led to a boom in domestic travel in the world’s largest luxury market.

By the end of August, duty-free spending on Hainan Island had jumped 221.9 percent year-on-year to 5.58 billion renminbi, or $810 million, according to China Customs.

There are six players in the Chinese duty-free market: Zhuhai Duty Free Group, China Expatriate Services Ltd., China Hong Kong and China Travel Asset Management Co. Ltd, Wangfujing Group and China Duty Free Group.

As regulations have loosened to allow more retailers to enter the duty-free business, a number of listed retailers — including Bailian Group, Wuhan Department Store Group, Dashang, Eurasian Group, Nanning Department Store, Bubugao, Zhongbai Group, Hunan Friendship & Apollo Commercial, and Guangdong Highsun Group — have said that they have applied to obtain duty-free licenses.

China’s domestic duty-free market is expected to reach 150 billion renminbi, or $21.9 billion, by 2025, according to research from CSC Financial.

Related:

Sanya Poised to Boom as China’s Summer Shopping Destination

DFS Invests in Shenzhen Duty Free, Strengthens Mainland China Presence

New Luxury Hot Spots to Know in China

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