CBD to tempt tax-free shoppers

Chaoyang district government announced the first downtown Beijing duty-free store will open in the Central Business District, but only foreign tourists will be eligible to go tax-free shopping, at least at first.　

The government signed a strategic cooperation agreement with China Duty Free Group, the State-owned operator of duty-free shops in the country, at the China Beijing International Fair for Trade in Services on Wednesday.

Foreign tourists, so long as they show a passport and an outbound flight ticket, will be able to shop in the downtown store and receive tax refunds more conveniently. It will "improve services and take the retail industry of the capital city to a higher level," according to a press release from the district government.

"We hope it will promote the consumption of high-end products within the country, and the prices will be as competitive as those in the Beijing Capital International Airport," said Hong Guangxin, vice director of Chaoyang district commission of commerce, in the press release.

The over 3,000-square-meter shop will be located in the CBD because the area has the highest concentration of foreign visitors, as well as seeing the biggest potential for luxury consumption, said Hong.

However, Cai Sujian, head of the China Luxury Institute (CLI), thinks it might end up working better as a location for purchasing agents with foreign passports to shop for local customers, rather than actually attracting foreign tourists.

"It's known that Chinese consumers prefer to spend their cash on luxury goods more than any other nationality, and I think they'll figure out ways to enjoy the tax refunds and duty exemptions," said Cai.

According to a CLI survey of six luxury goods shopping malls in Beijing, less than one percent of the products sold in them were purchased by foreign tourists last year.

"It eventually will be open to local customers, but at first, we'll trial it for foreign tourists like they did in Sanya [Hainan Province]," said Chen Jing, a media officer for Chaoyang district government.

Hainan launched a duty-free shopping policy on April 20, 2011 in the cities of Sanya and Haikou. For purchases under 5,000 yuan ($785), tourists pay at the stores in the city, and pick up the goods at the airport when they depart. The same service will be on offer in Beijing.

That January, Hainan also trialed a tax refund program to attract foreign tourists, but the result was not encouraging, as fewer than three percent of shoppers were foreigners. When the program was opened to domestic tourists three months later, the stores saw over 1.5 billion yuan in sales up to this February, reported the Xinhua News Agency on May 20.