The Hainan Consumer Products Expo, held annually in Haikou, has emerged as a premier platform for global brands to engage with China’s burgeoning consumer market. In 2025, the event took on special significance for the UK, which was named the guest country of honour for the first time. This accolade underscored the strengthening economic ties between the UK and China, with British exports to China reaching £28.5 billion in 2024. The China-Britain Business Council (CBBC) played a pivotal role in facilitating the participation of British brands, including health retailer Holland & Barrett and tea specialist Whittard of Chelsea.

The Hainan Expo, now in its fifth year, attracted over 300,000 visitors and featured 4,000 brands from 80 countries, with a focus on premium consumer goods. China’s consumer market, projected to reach US$8.2 trillion by 2030, is a magnet for international brands, driven by a growing middle class and increasing demand for high-quality imports. For British businesses, the expo offered a strategic opportunity to showcase their products, build brand awareness, and forge partnerships in a market where e-commerce and cross-border trade are thriving. The UK pavilion highlighted Britain’s reputation for innovation and heritage, with CBBC members like Holland & Barrett and Whittard leading the charge.

Holland & Barrett, a household name in the UK for health and wellness products, made a significant impact at the 2025 expo. For the company, it was their first major appearance at Hainan, following a smaller presence in Hangzhou the previous year. Sophia, representing Holland & Barrett, expressed enthusiasm about the opportunity.

“We think it’s a good opportunity to make some business here, especially as the UK is the country of honour this year”. In China, where the health supplement market is expected to grow to US$50 billion by 2027, Holland & Barrett is a relatively new player, having entered the market just seven months before the expo. This necessitated a tailored approach to meet the preferences of Chinese consumers.

Unlike its established retail model in the UK and Europe, Holland & Barrett has adapted its strategy in China to focus on products designed specifically for local tastes. Sophia explained, “We make products especially for Chinese consumers, so we consider such things as localising ingredients and how we consume them”. This localisation effort includes developing supplements with appealing flavours, as Chinese consumers often prioritise taste alongside health benefits. This focus on consumer experience, coupled with the expo’s high visibility, positioned Holland & Barrett to capture the attention of China’s health-conscious urbanites, particularly millennials and Gen Z, who drive demand for premium wellness products.

Whittard of Chelsea, a British tea brand founded in 1886, also seized the opportunity to showcase its heritage at the Hainan Expo. Participating for the first time, Whittard was selected to represent the tea, coffee, and hot chocolate category within the UK pavilion. Katherine Oon, Whittard’s International Sales Manager, expressed excitement about the event. “This is our first time participating in the Hainan Expo and we are very excited to be part of the UK pavilion,” she said. Tea holds deep cultural significance in China, but Whittard distinguished itself by introducing British tea traditions to Chinese consumers. “We want to bring the British tea lifestyle and the traditions to the Chinese customers,” says Oon. “So it’s about educating them on afternoon tea, British blends like Earl Grey, English Rose and the Britishness of tea traditions.”

Whittard’s approach respects China’s rich tea culture while highlighting its unique offerings. The company sources teas globally, including from China, but its expertise lies in blending, a hallmark of British tea culture. At the expo, Whittard’s tea-tasting sessions were a highlight. “Tea tasting is always busy. It’s our experience, it’s a tea journey that every customer enjoys,” says Oon. These interactive experiences resonated with Chinese consumers, particularly affluent urban professionals who value premium and experiential products. The expo’s focus on cultural exchange allowed Whittard to position itself as a bridge between British and Chinese tea traditions, fostering consumer curiosity and brand loyalty.

Looking ahead, both brands outlined ambitious plans for 2025, leveraging their expo participation to deepen their foothold in China. Holland & Barrett aims to expand its product range and distribution channels, building on the momentum gained at Hainan. The company’s focus on localisation aligns with China’s growing demand for health products tailored to local preferences, supported by the country’s 105 cross-border e-commerce pilot zones. Whittard, meanwhile, is set for a significant push this year.

“2025 is going to be a big year for us. We set up a team in China, I will be relocating to Shanghai, and as a brand itself we are going to have more opportunities for collaboration for partnerships and introducing the whole British afternoon tea to the Chinese consumer,” says Oon. This strategic relocation and focus on partnerships reflect Whittard’s commitment to embedding itself in China’s market.

The success of Holland & Barrett and Whittard at the Hainan Expo underscores the broader opportunities for British brands in China. The event’s emphasis on the UK as the country of honour amplified their visibility, allowing them to connect with distributors, retailers, and consumers. CBBC’s support was instrumental, however, challenges remain, including navigating China’s regulatory landscape and competing with domestic brands. The CBBC advises British firms to invest in local partnerships and cultural understanding to succeed, a strategy both companies employed effectively.

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Hainan’s location in the warm waters of the South China Sea has long made it a haven for fishing and agriculture and, in more recent years, tourism. However, over the past couple of years, a series of beneficial import and trade policies have made China’s southernmost province a consumer hotspot and put it on the radar of companies looking to grow their business in China.

Foreign and domestic travellers departing from Hainan (but not China) have an annual duty-free shopping allowance of RMB 100,000 (£11,458) – the most generous in the world. The allowance covers product categories such as cosmetics, luxury goods, alcohol and even electronics (when purchased from dedicated duty-free stores). With a saving of up to 35% on prices in the rest of China, there has been a strong incentive for consumers to make Hainan their main shopping destination.

“Consumers are entering a new era of duty-free shopping,” says Rocky Chi, head of planning at Emerging Communications, a leading Chinese marketing consultancy. “The Chinese government will continue to push for duty-free shopping, and as for consumers, they are spoiled for choice by such an easy way of shopping.” Indeed, the Chinese government plans to make the whole island duty free by 2025, not just the select malls currently offering the perk.

Certainly, the island’s appeal doesn’t seem to have waned since the lifting of Covid-era travel restrictions. During the 2024 Lunar New Year holiday, duty free spending in Hainan reached a record RMB 2.49 billion (£274.75 million) according to Haikou Customs, with shoppers spending an average of RMB 8,358 (£922) per person. “With projects around the island still being developed, there is definitely potential for Hainan to attract even more attention,” says Ran Guo, Director, Consumer Economy China, CBBC.

Hainan may be taking a greater share of travel and duty-free spending than five years ago, but Chinese consumers are still keen to travel abroad and plan to spend when they do. According to Dragon Trail Research’s recently-released Chinese Traveler Sentiment Report, 64% of survey respondents are planning to travel outside of China in 2024, and a similar proportion spend at least RMB 2,000 (£220) on shopping during a single outbound trip. During the recent Labor Day holiday from 1-5 May, Japan and Hong Kong – both popular for shopping – were among the most-visited destinations.

So, what does all of this mean for British companies? Certainly, Hainan’s continued appeal presents an opportunity for British consumer brands, especially those with an established presence in the market. “Hainan may not be a market to build brand loyalty, but it is a good place to launch new products,” says Ran Guo. The fact that people are visiting the island for leisure makes them open to trying new things or treating themselves to something they wouldn’t normally buy.

To tap into this willingness to buy, brands could consider creating an exclusive product or promotional packaging for the Hainan duty free market, especially around festivals like Lunar New Year or shopping events like Singles’ Day.

Going forward, British consumer brands will have to keep Hainan in mind when they consider their China market strategies. As KPMG and The Moodie Davitt Report’s 2024 Hainan Travel Retail Whitepaper points out, for Chinese consumers, “there are no barriers to visiting Hainan. And many incentives.”

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Hainan’s location in the warm waters of the South China Sea have long made it a haven for fishing and agriculture and, in more recent years, tourism, but in the early 2020s, a series of beneficial import and trade policies began to put it on the radar of companies looking to grow their business in China.

In this article, we review some of the main reasons why Hainan has become such a hotspot and why consumer companies in particular should be thinking seriously about their footprint in the province.

CBBC and our expert panelists will also discuss the Hainan opportunity in more detail during day one of CBBC’s China Consumer conference 2023 on 4 July.

Hainan in a nutshell

Hainan is the smallest and most southern province in China. Made up of many small islands in the South China Sea, the largest, Hainan Island itself, accounts for 97% of the landmass. The province has 10 major cities and 10 counties, of which Haikou and Sanya are the largest.

Hainan’s economy was traditionally dominated by primary industry, with fishing and tropical cash crops (e.g., rubber, coconuts, palm oil, and fruit) contributing significantly to provincial GDP, but the tertiary sector has developed rapidly in recent years, accounting for 61.5% of the economy in 2021. The province has a history of economic liberalisation, especially during the Deng Xiaoping era, and has been a special economic zone (SEZ) since 1988.

Incentives to invest and manufacture in Hainan abound

The Chinese government released the Overall Plan for the Construction of the Hainan Free Trade Port (FTP) in June 2020, with the aim of liberalising investment procedures, reducing tariffs across a range of products and industries and improving customs clearance procedures.

As Dezan Shira’s China Briefing explains, the goal of Hainan’s FTP policies is to set up a “first line” to overseas countries and regions and a “second line” to the Chinese mainland. In regards to the “first line”, goods, except those on List of Goods and Articles Prohibited or Restricted from Import and Export at Hainan FTP, can be freely imported and exported between overseas regions and Hainan FTP under customs’ special supervision. The “second line” will be more tightly controlled – goods entering the Chinese mainland from Hainan will go through procedures in accordance with relevant import regulations, customs duties and taxes.

Enterprises registered in the Hainan FTP can also enjoy three major corporate tax relaxations:

• Corporate income tax at a reduced tax rate of 15%
• Income from new overseas direct investment derived by enterprises in the tourism, modern services and high-tech industries may be exempted from CIT
• Eligible capital expenditures can be allowed one-off pre-tax deductions or accelerated depreciation and amortisation.

Hainan has one of the world’s most generous duty-free policies — and consumers are taking advantage of it

Foreign and domestic travellers departing from Hainan (but not China) have a duty-free shopping allowance of RMB 100,000 (£11,458) on product categories such as cosmetics, luxury goods, alcohol and even electronics (when purchased from dedicated duty-free stores). With average savings on prices in the rest of China at around 15-35%, there is a strong incentive for consumers to make Hainan their main shopping destination, even with China’s borders back open.

During the seven-day Spring Festival holiday period in early 2023, the Hainan Department of Commerce reported that online and offline duty free sales reached RMB 2.572 billion (£294.7 million), a 329% increase on pre-pandemic levels.

Hainan is also home to the world’s largest duty-free mall, which opened in Haikou, the provincial capital, on Friday, 28 October 2022. Owned by China Duty Free Group, the 3,000,000-square-foot cdf Haikou International Duty Free City is home to more than 800 international and Chinese luxury brands.

“Consumers are entering a new era of duty-free shopping,” says Rocky Chi, head of planning at leading Chinese marketing consultancy and full service agency, Emerging Communications. “The Chinese government will continue to push for duty-free shopping, and as for consumers, they are spoiled for choice by such an easy way of shopping.” Indeed, the Chinese government plans to make the whole island duty free by 2025.

For UK brands looking to the Hainan market over the next couple of years, a key consideration will be levels of market saturation, something that has already become an issue for the skincare and cosmetics segments. Brands are advised to move away from price-based competition (a strategy that drove strong sales during the pandemic) and focus on branding and differentiation by, for example, introducing new packaging styles or product lines exclusively for the Hainan market or creating co-branded campaigns with local hotels or attractions.

Now is also the time to experiment with digital tools and phygital retail, something that Chinese consumers have so far proven more receptive to that Western consumers. James Herbert, managing director of Hylink UK, emphasises that “interactive digital events, gaming, social commerce and non-fungible tokens (NFTs) are evolving trends that all brands need to be aware of.”

Even with borders open, Chinese tourists are still choosing to holiday in Hainan

During the recent May Day holiday period, 3.2 million domestic tourists visited Hainan, an increase of 55% on 2019, the last year prior to Covid. Perhaps more notably, spending by visitors to Hainan was up 80% compared to 2019. 

While there can be no doubt that there is a huge appetite for international travel among Chinese consumers now that Covid restrictions have been lifted – a recent report from Gusto Luxe and Global Blue found that 92% of travellers were planning an overseas trip in 2023 – the May Day holiday numbers demonstrate that Hainan has established a strong foothold as a domestic travel destination. In addition to the aforementioned duty free policies, the islands’s popularity has been driven by the availability of increasingly good-quality hotels (Hainan is home to 94 international brand hotels and 78 well-known hotel management firms), which offer services targeted at domestic Chinese tourists, and, crucially, savvy marketing via Chinese digital platforms like Douyin and Trip.com.

For UK brands, this demonstrates the importance of adapting not just marketing strategies but service offerings to meet the needs of Chinese consumers.

China Consumer 2023

This article was produced as part of a series for China Consumer 2023.

Learn more about CBBC’s flagship consumer event of 2023 here.

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On Friday, 28 October 2022, the world’s largest duty-free shopping mall opened in Haikou, the capital of China’s Hainan Province. Owned by China Duty Free Group, the 3,000,000-square-foot cdf Haikou International Duty Free City is home to more than 800 international and Chinese luxury brands, including over 300,000 square feet allocated to beauty alone. This is not the first time that Hainan has claimed the title of the “world’s largest duty-free shopping mall” (there are already huge malls in Sanya on the south of the island and Bo’ao on the east coast) signifying the importance of the island for consumer brands in China.

Join CBBC for the first in a new China Chat series on 17 November to discuss Hainan’s role in China’s commercial layout and the blueprint for the country’s consumer market development going forward.

Click here to register

Over the past couple of years, the tropical island off the coast of southern China has recorded a rise in visitors and duty-free sales. “Visitors to Hainan have grown from 11 million in 2012 to 21.6 million in 2021, and duty-free sales have grown from £267 million in 2012 to £5.8 billion last year,” says James Hebbert, managing director of Hylink UK. The duty-free allowance for travellers departing Hainan (but not leaving China) is currently RMB 100,000 per person per year.

Since China closed its borders at the beginning of the Covid-19 pandemic, James notes that some of Hylink’s clients have seen the revenue that was previously gained in Europe from Chinese tourists replaced by domestic sales in China. Despite the occasional uncertainty caused by lockdowns and restrictions on domestic Chinese travel, money is being poured into Hainan’s duty-free malls and once the tropical resort is back in full swing, it is likely that middle-class Chinese residents will be the first to return.

“Consumers are entering a new era of duty-free shopping, and this is not going away even if the international travel restrictions [are not yet] easing,” says Rocky Chi, head of planning at leading Chinese marketing consultancy and full service agency, Emerging Communications. “The Chinese government will continue to push for duty-free shopping, and as for consumers, they are still quite spoiled for choice by such an easy way of shopping.”

“For UK brands, I think it’s time to keep options open and be open-minded and proactive in capturing opportunities, especially when the categories now are way beyond just traditional luxury goods and cosmetics,” adds Chi.

Many of the world’s leading companies have remained active in Hainan despite the setbacks caused by Covid-19. Luxury behemoths such as Richemont, L’Oreal and Estée Lauder have all continued to show their commitment by hosting large exhibitions and presenting new products. Hebbert argues that brands should use the popularity of duty-free shopping in Hainan and embrace digital tools to stay top of mind with Chinese consumers, even if regional lockdowns mean they can’t reach Hainan.

Hebbert adds: “Interactive digital events, gaming, social commerce and non-fungible tokens (NFTs) are evolving trends that all brands need to be aware of. To illustrate this point, the number of Chinese NFT platforms grew from 100 to 500 from February to June 2022; Morgan Stanley predicts that, by 2024, the metaverse industry will be worth £6.7 trillion in China; metaverse, gaming and NFTs could represent 10% of the luxury goods market by 2030.”

Call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out how CBBC’s market research and analysis services can provide you with the information you need to succeed in China.

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While China’s regulatory crackdown and the focus on ‘Common Prosperity’ dominated this summer’s headlines, a smaller but nonetheless significant development took place on the island province of Hainan. On 26 August 2021, China’s first negative list for trade in services took effect for the Hainan Free Trade Port (FTP), a new free trade zone that aims to stimulate trade in new services such as tourism, e-commerce and logistics. A negative list governs industry sectors in which foreign investment is prohibited or where possible restrictions may apply.

Overall, Hainan’s Negative List for Services seems surprisingly long, including 70 items; 31 of which are outright bans. Yet the detailed information on restricted cross-border services also presents a first attempt at offering a clear picture of existing non-trade barriers, which previous negative lists often left out. As such, the list constitutes an important benchmark for further reform and liberalisation.

Background

China has long had negative lists for trade in goods and foreign investment in China. After being tested in several provinces since 2016, the first nationwide negative list was published in 2018. Prior to this, foreign investment and ownership was only permitted in so-called ‘encouraged’ sectors and industries. Beyond this, there was either an outright ban or considerable administrative hurdles.

Negative lists reversed that system, stating that in any sector not figuring on the list, foreign investment and full-ownership was – in principle – allowed. The new Foreign Investment Law of 2020 further institutionalised the idea that foreign businesses should be treated in the same way as domestic Chinese firms unless they are operating in restricted sectors or are prohibited outright from investing. By 2020, there were 12 restricted and 21 prohibited sectors remaining.

Unlike manufacturing, the service sector was largely ignored by China’s foreign investment regime. While not outright prohibited, the lack of regulatory clarity created uncertainty for many foreign service providers.

But with services now the biggest employer in China – in 2020, services employed 358 million people, over 14 million more than manufacturing – Beijing’s approach towards services changed. Last year, President Xi Jinping announced that China would publish its first negative list for services. Xi also announced the creation of several pilot zones for cross-border trade in services, including in the Jing-Jin-Ji capital region (combining Beijing, Tianjin, and Hebei) and on Hainan.

Hainan’s Negative List is now the first indicator of how China intends to manage foreign cross-border service providers.

What is on the Hainan Negative List for Cross-Border Services?

With 70 items divided into the usual 11 sections, the Hainan FTP Negative List for Cross-Border Services is relatively long compared to the 33-items-long national version for non-services. In total, the list contains 38 restrictions and 31 bans. Unusual for a negative list, it also contains a legal requirement for joint salvage operations.

The Hainan Negative List now includes 17 new items for the financial industry – the highest number of all industries covered

At first glance, the high number of new restrictions and bans seems at odds with the national trend of reducing the overall number of limitations. This is particularly obvious in the financial services section, which – in the 2020 National Negative List – was removed entirely. By contrast, the Hainan Negative List now includes 17 new items for the financial industry – the highest number of all industries covered (Dezan Shira & Associates’s China Briefing has a detailed breakdown of all the items). 

Yet a closer look offers some interesting details. First, many restrictions and bans are far more detailed and therefore offer a far more accurate picture of the existing non-tariff barriers than previous negative lists. Another important caveat is that the list covers primarily cross-border services. Therefore, foreign businesses registered in China servicing local customers might not be subject to the same rules as those providers who are offering either services from abroad or are servicing overseas clients. Finally, the list leaves open the possibility of international and bilateral trade agreements offering more liberal arrangements for foreign service providers.

Ultimately, the Hainan FTP Negative List for Cross-Border Trade in Services remains a local document applying primarily to businesses wanting to register in the new free trade port. It is highly likely that similar documents for the Jing-Jin-Ji region, Shanghai, or the Greater Bay Area (GBA) might look quite different and provide a far wider scope for foreign businesses.

The CBBC View

Given the lack of uniform regulations for foreign service providers, the Hainan FTP Negative List constitutes a welcome first step in providing foreign businesses with a clear legal framework of market access regulations.

Although the surprisingly high number of restrictions and bans might appear like a step backwards, the unprecedented enumeration of previously hidden non-tariff barriers can offer an important basis for further reform and opening-up. It also provides legal clarity for foreign investors, who otherwise might have invested in sectors only to run into administrative roadblocks later.

Most importantly, the list will serve as the first benchmark for other pilot zones in China, which are also vying for foreign service companies. It’s likely that authorities in Beijing, Shanghai, or the GBA are paying close attention to Hainan’s policies and will present their own lists in the coming months. In the end, this could set in motion a healthy competition between local governments to provide the most open environment to foreign service providers.

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Hainan is an island located off the south coast of Mainland China. The province is known as the Hawaii of China due to its sandy beaches, lush forests and tropical climate. Over 67 million tourists visit Hainan last year, with several hundred thousand coming from abroad, helping its tourist industry to grow to US $13 billion. Traditionally, Hainan’s economy has been dominated by agricultural and tourism but it is now rapidly growing into a healthcare hub.  Deng Xiaoping made Hainan a Special Trade Zone (STZ) back in 1988 and, in 2013, the State Council approved the ‘Hainan Boao Lecheng International Medical Tourism Pilot Zone.’

The Pilot Zone aims to boost medical tourism with a focus on franchised medical care, health management, rehabilitation care, medical beauty and anti-ageing services. The Zone covers 20 square kilometres and will be built on a low-carbon, low-emission model. Located along the Wanquan River near Qionghai City the Zone will be near Boao – the area that holds the Asia Boao Economic Forum, known as the Davos of the East.

As well as providing medical tourism, the zone aims to become a leading national medical science research base. The Pilot Zone includes a number of preferential policies, including faster import registration of medical products and medicines, a special import tariff for foreign medicines, a three-year practising period for foreign physicians and it will allow foreign investors to invest in medical institutions. The Boao Lecheng Pilot Zone is a demonstration project for the nation’s healthcare reform that might be rolled out across other cities in the future.

The province will develop into a pilot Free Trade Zone, and a Free Trade Port would be established

Last month one of the first major hospitals opened in the Pilot Zone. The Boao Super Hospital will offer high-end medical services to the public. The private hospital is one of 27 projects that have opened or are under construction in the Zone that are expected to be complete in five years.

At the end of April, President Xi Jinping said, at an event to mark the 30^th anniversary of the establishment of Hainan’s Special Economic Zone, that the province would develop into a pilot Free Trade Zone, and a Free Trade Port would be established. The news caused shares in many Hainan based companies to rise significantly. State news agency Xinhua said the pilot will focus on sectors including agriculture, medical care, sports, telecommunication and finance. It is expected that the Free Trade Port will be up and running by 2025 and fully established by 2035.

The Free Trade Port will also allow duty-free shopping, which is expected to further boost tourism. The pilot Free Trade Zone will also allow horse racing and sports lotteries. While Beijing bans all forms of gambling, horse racing is not illegal and China runs two types of lotteries.

Fact box

Size: 35,000 sq km (13,500 square miles)

Population: 9.3 million

Capital: Haikou

Tourist numbers: 67 million

Key industries

Tourism

Agriculture

Healthcare

Finance

Sports

For more information on Hainan contact: sally.zhang@cbbc.org.cn

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