This article originally appeared on our sister site, Jing Daily.

What happened

During China’s week-long National Day holiday, travel numbers fell 1.5 percent compared to the previous year. According to China’s Ministry of Culture and Tourism, 515 million domestic tourists traveled nationwide between October 1 and 7. And tourism revenue during the Golden Week holiday only reached $60 billion (389 billion yuan) — roughly 60 percent of what it was in 2019 and a drop of 4.7 percent compared to the same period last year.

But Hainan offered a bright spot. Sales between October 1 and 6 at nine duty-free shops on the southern island totaled $252.3 million (1.64 billion yuan), according to state media. That marked an increase of 75 percent over the same period in 2020 and more than four times more (a 359-percent jump) compared to the same period in 2019.

Why it matters

Known as “China’s Hawaii,” Hainan has become a favorite shopping destination — a substitute for the former shopping heaven of Hong Kong — for luxury consumers who couldn’t travel abroad during the pandemic. Luxury houses from fashion to hard luxury have already spotted this opportunity and accelerated their activities on the island. Recently, Ferragamo inaugurated a pop-up store that led visitors on a curated journey through the house’s silk heritage. Meanwhile, Swiss watch companies Rolex and Audemars Piguet hosted an exhibition titled Watches and Wonders in Sanya, a city in Hainan. And given the continuous opening of major luxury boutiques on the island, Hainan will likely hold an increasingly important role.

As such, brands that fail to have a presence in the duty-free destination may lose a significant share of the Chinese market — or maybe not. China’s 14th Five-Year Plan proposes extending duty-free areas to cities like Shenzhen and Shanghai. Given the current popularity of Hainan, one can foresee a similar scenario for the major cities on the list.

Nonetheless, this exotic resort presents great experimental soil for brands to find the right approach to duty-free buyers that they can apply to future local shopping heavens.