Analysis and Forecast of the Duty-Free Consumption Market in China and South Korea Before and After the Epidemic

Abstract

China’s outbound travel spending ranks first worldwide, with more than 50% of travel spending occurring in Asia. China’s consumption outflow exceeded RMB700 billion, with its luxury consumption outflow exceeding RMB450 billion before the epidemic. The Chinese account for half of duty-free sales to South Korea, and the proportion is increasing year by year. Dutiable shopping malls become the most beneficial channel with passive consumption repatriation after the epidemic. The duty-free market benefits as China’s government constantly introduces policies to guide consumption repatriation. China’s luxury consumption repatriation is expected to exceed RMB300 billion, according to the neutral calculation. The duty-free luxury consumption market in both China and South Korea has greatly changed since the epidemic. South Korea ranked the top worldwide in terms of duty-free luxury consumption before the epidemic. However, the situation of South Korea’s previous purchases from Daigou-Chinese purchasing agents is difficult to continue after the epidemic. It is expected that there is strong certainty and persistence that perfume and cosmetics product consumption in the future would repatriate through China’s domestic duty-free channels, especially in the situation that China Duty Free Group have stronger profitability in the future’s competition. Consumption repatriation needs to be realized by reducing the price difference. That price gap between domestic and foreign boutique goods will be reduced after they enter domestic duty-free channels in the future, but it will still take time for the top luxury brands to enter domestic duty-free channels.