China Duty Free sees HK stores as first stop on road to wider presence

China Duty Free Group, a unit of mainland's State-owned tourism giant China National Travel Service Group Corp, has added the finishing touches to its Hong Kong venture, a move that adds flesh to the bones of its global ambitions.

The company officially unveiled eight liquor and tobacco duty-free stores spanning 3,400 square meters at Hong Kong International Airport on Thursday, in a joint venture with French travel retailer Lagardere Services under a new brand of Duty Zero by CDF.

It edged out luxury conglomerate LVMH's DFS Group and South Korea's Lotte Group to win the bid to run the airport's duty-free liquor and tobacco concession zone in November last year, following the expiration of the airport's operational contract with DFS.

"Hong Kong marks the first stop on the road to beefing up our presence the world over," said Charles Chen, president of China Duty Free Group. "This is the first time that a domestic duty-free operator has won the right to run duty-free stores at a major international airport outside the Chinese mainland."

"Our overseas journey just got off to a good start. As the Chinese mainland's more than 130 million holidaymakers become a common sight across the globe, we will continue to keep pace with and gain momentum from such an outbound tourism boom," Chen added.

The newly launched duty-free liquor and tobacco concession zone boasts the widest selection of single-malt whiskies across airports in the Asia-Pacific region. It also offers the world's most comprehensive product mix of Chinese liquor and tobacco, as well as the world's first shop-in-shop offering Asian liquor.

One of the world's busiest international airports, Hong Kong International Airport connects more than 220 global destinations and handled 72.9 million passengers last year.

The State-backed travel retailer currently operates 248 duty-free stores across the Chinese mainland, Hong Kong, Macao, Taiwan and Southeast Asia. Chen said that running the duty-free business at Hong Kong International Airport would play a key role in the company's "going global" strategy, with more bold moves to follow.

In May this year, it won the five-year contract to operate the duty-free boutiques at Macao International Airport, in a joint venture with King Power Macao.

Big-spending Chinese mainland tourists have made duty-free shopping the major business for China Duty Free Group, whose better understanding of mainland holidaymakers' shopping habits and preferences gives it a significant edge over global counterparts, Chen said.

Looking ahead, duty-free business in airports and downtown areas are the two core business segments for the duty-free retailer. The company is also extending its bets on cruise-based duty-free business, in its quest for the next new growth engine, he added.