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

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Sanya, a top tropical holiday 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 shut its international borders in early 2020 to curb the spread of COVID-19, Hainan's duty-free industry has boomed, becoming 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 mall, shut for an undetermined period on Friday to prevent COVID-19 spreading, a post on its Weibo account said.

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This closure comes even though no cases in Hainan's current outbreak have been detected in Haitang Bay as yet. While the case numbers in China are small compared to the rest of the world, Beijing pursues a "dynamic zero" policy that sees it enact harsh curbs to stop any virus transmission.

China to shut down their duty-free shopping center to curb COVID during the latest outbreak. Pictured: Sanya International Duty-Free Shopping Complex in Sanya, Hainan province, China on Nov. 25, 2020.

Health officials in Hainan told a news briefing on Friday that from August 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 closed to help stem the spread of the virus, although hotels remain open and many contacted by Reuters said they were operating as usual.

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

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

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

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Just last week, Hainan's capital city, Haikou, hosted the second China International Consumer Products Expo, where LVMH, Kering, Richemont, Tapestry and Burberry were among the global brands exhibiting.

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

"Now in August the virus is back, it makes it very hard to do business," Dream told Reuters.