In preview – Oriental Travel Retail Observer Edition 7, your ...



Edition 7

of the acclaimed Oriental Travel Retail Observer (OTRO) has just been published, offering its usual rich and timely insights into China’s duty free sector. The publication is now available by subscription (see panel below) on a one-off basis or discounted annual fee for 12 editions via The Moodie Davitt Report special offer below.

OTRO is a research and publishing alliance between Jessica’s Secret, China Merchants Securities, and law firm Jincheng Tongda & Neal. The Moodie Davitt Report works closely with Jessica’s Secret, having developed the popular

Jessica’s Secret Index

with the fast-growing Shanghai-based company.

OTRO, launched in July 2020, is a first for China’s travel retail industry in presenting regular industry research, big data analysis, Chinese consumer surveys, and legal opinions. The first five editions were published free of charge, drawing praise from all sectors of the travel retail community.

Highlights of Edition 7

The 54-page issue 7 summarises the impact of the latest developments, regulatory and commercial, on the two key and interrelated duty free sectors of China and South Korea.

It also examines travel retail tourism data from around the world, assesses the evolving preferences of Chinese travel retail customers, and compares the popularity of leading China-focused duty free locations.

As always it compares prices between key duty free stores in Asia. And in an issue highlight, the editors gain a useful insight into Hainan’s burgeoning offshore duty free industry by interviewing daigous and consumers who paid recent visits to the island.

In 2020, Hainan Province received 54.35 million overnight tourists, a year-on-year decrease of -18.6%. Sanya led the way, with 17.55 million (-24.1%), and Haikou followed with 13.4 million (-23.3%).

Click on image to see what is on offer in edition 7

Subscribe to Oriental Travel Retail Observer

Oriental Travel Retailer Observer, published monthly and packed with critical business intelligence, is available for US$1,500 per edition, through a special offer from The Moodie Davitt Report.

A full-year subscription (12 editions) is offered for a -10% discount (US$16,200).

To subscribe or for more details please email

headed ‘OTRO subscription’

As a taster of what is on offer for the subscription package, the OTRO publishers are offering Edition 5 free of charge (see below).


Jessica’s Secret

As a taster of what is on offer for the subscription package (see panel), the OTRO publishers offer

Edition 5 free of charge here


Highlights of Edition 5

Edition 5, published in November, breaks down Hainan’s offshore duty free sales, showing that cosmetics (83.5% of units, 48.9% of total sales), watches (12.2%) , and jewellery (also 12.2%) were the dominant categories. Fragrances was the second-biggest category by unit sales (458,000), though the lower price-points meant the category was worth just 4.9% of the total mix.

Click to enlarge table of contents from Edition 5

Edition 5 also highlights the positive impact Hainan has had on sector giant China Duty Free Group (CDFG). For the first nine months of 2020, CDFG’s total operating income was RMB35.14 billion (US$5.28 billion), a year-on-year decrease of +2.81%. But Q3 revenue (post the 1 July offshore duty free policy enhancement) soared +38.97% to RMB15.83 billion (US$2.38 billion).

The net profit attributable to the parent was RMB2.23 billion (US$335.60 million), up +141.9%, thanks to the implementation of the new policy. Critically, the removal of the former RMB8,000 (US$1,240) single-purchase limit saw a rapid increase in sales of luxury luggage, watches and precious jewellery with high gross profit margins.

In total, Hainan generated offshore duty free sales of RMB8.61 billion (US$1.30 billion) in Q3, a +227.5% year-on-year increase of 227.5%.

OTRO regularly features interviews with daigou purchasing agents and Edition 5 focuses on several such individuals.

Purchasing agent Helen says that due to the pandemic, the Thai purchasing service industry might not recover. She was a full-time purchasing agent living in Thailand before the outbreak.

Helen mainly purchases local Thai products such as medical products, latex pillows and food for her customers. She usually visits the local pharmacies, and sends the goods by land transportation back to China, a process that takes over two weeks.

Click on image to download Edition 5 free of charge

Helen visits King Power stores when she travels to China from Thailand, purchasing cosmetics, skincare products and some luxury goods for her customers. Her King Power membership card gives her an overall -20%. In addition, cashback from the third-party platforms also reduces her purchase cost.

Helen revealed that her former profit margin was between 10% and 15%. Affected by the pandemic and the political environment in Thailand, she returned to China and found a job as a teacher. On the implementation of the enhanced Hainan offshore duty free policy, Helen did not find it initially reducing her orders. However, as she is now running out of inventory, and packages from Thailand hardly enter China due to the pandemic, her purchasing business cannot continue for much longer.

Ivan is a tour leader, and a part-time purchasing agent. Before the pandemic, he would take tourists to Thailand about three times a month, and purchase during his trips. Ivan formerly spent over RMB2,500,000 (US$375,000) annually purchasing for his customers in Thailand. Mostly he visited King Power where he also enjoys an overall -20% off with a membership card.

He buys cosmetics, skincare products and luxuries as his customers require and carries them back to China himself. Ivan told us that the profit margin of a common Thai purchasing agent is between 10% and 15%, but as some of his stock is sold to other purchasing agents for lower profits, his general profit margin is below 10%.

Ivan prefers King Power than duty free shops in other countries due to the company’s high reputation and the benefits of his membership card. The products preferred by Chinese consumers are also more likely to be available in King Power than in other duty free shops – due to the fact that the retailer’s traditional customers are mainly tourists rather than purchasing agents as in Korea (meaning many sold-out situations in the Seoul stores).

Due to the pandemic, the Thai tourism industry is stagnating, and Ivan’s purchasing business is thus suspended. Ivan noticed that many of his potential consumers are turning to the offshore duty free sector in Hainan, which poses a great threat to him. He believes that, once formed, the shopping habits are very difficult to change. “Even if the Thai purchasing industry recovers in the future, those who are used to shopping in Hainan would hardly turn to the purchasing agents again,” the report notes.

Earlier Editions

Vol. 1:

Vol. 2:

Vol. 3:

Vol. 4: