In recent years, China’s economy has been on a downward trend, leading to a downgrade in consumer spending among its citizens, especially impacting non-essential items like luxury goods and travel. China Duty Free Group recently released its performance report for the first half of this year, showing a decrease in both revenue and net profit, with a significant 20.81% drop in net profit and key economic indicators declining for six consecutive quarters.
On August 26, China Tourism Group China Duty Free Group Co., Ltd. (referred to as “China Duty Free”) released its 2025 half-year report. In the first half, China Duty Free achieved operating income of 28.151 billion yuan, a year-on-year decrease of 9.96%. The net profit attributable to shareholders of the listed company was 2.599 billion yuan, a decrease of 20.81% compared to the same period in 2021, leading to a shrinkage of over 51%.
On August 27, China Duty Free’s A-shares fell by 3.81%, closing at 68.69 yuan per share with a total market value of 142.1 billion yuan.
Of note is the continuous decline in several major financial indicators of China Duty Free for the past six quarters, such as revenue, gross profit, and net profit all showing negative growth trends, particularly with a significant decrease in net profit.
As a core business pillar of the Duty Free Group, the duty-free business on Hainan Island is facing challenges. According to data from Haikou Customs, the amount spent on duty-free shopping on the island was 16.76 billion yuan, a 9.2% year-on-year decrease. The number of duty-free shoppers was 2.482 million, marking a 26.2% decrease compared to the same period last year.
Statistics from the Hainan Provincial Bureau of Statistics show that in the first half of the year, the passenger throughput at Hainan’s ports and airports was 35.1952 million, a 1.4% decrease year-on-year, with outbound passengers dropping by 1.6%. This reflects a significant impact on China Duty Free’s business due to overall weak market demand.
Further financial data reveals that China Duty Free’s net profit in the second quarter alone decreased by 32.21% year-on-year, indicating increased operational pressures within the quarter. The net cash flows generated from operating activities also decreased by 39.5% year-on-year, with China Duty Free explaining that the main reason was a reduction in cash inflows due to decreased sales revenue.
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China’s economy continues to decline, leading to the withdrawal of multinational corporations, closure of private enterprises, pay cuts, and unemployment becoming real issues for many Chinese citizens. Coupled with years of continuous property price drops, shrinking wealth, and no sign of hitting the bottom yet. Additionally, facing the three major challenges of healthcare, education, and retirement, Chinese people lack confidence in the future, resulting in downgraded consumption habits, avoiding unnecessary spending, opting to save on travel expenses, with “poor travel” becoming more popular. Given the close relationship between Duty Free’s core business and the struggling tourism industry, the performance of Duty Free is expected to remain lackluster.
According to an article by “21st Century Business Herald,” China Duty Free liquidated twelve joint venture subsidiaries in various locations in the first half of this year, such as Duty Free Group Mudanjiang Airport Duty-Free Products Co., Ltd., Hefei Airport Duty-Free Products Co., Ltd., Luobei Duty-Free Products Co., Ltd., Pingtan Duty-Free Products Co., Ltd., Xiamen Duty-Free Products Co., Ltd., and more.
China Duty Free is a state-owned enterprise authorized by the State Council of the CCP and supervised by the State-owned Assets Supervision and Administration Commission. It is the only company authorized to conduct duty-free business nationwide. The business includes wholesale and retail of duty-free goods such as tobacco, alcohol, perfume, luxury items, clothing, electronic products targeting both domestic tourists with imported duty-free products and inbound tourists with domestically produced duty-free goods.
Of particular interest, on December 18, 2025, Hainan will officially begin its island-wide closure operation. After the closure, the scope of “zero tariff” goods will expand from the current 1900 categories to about 6600 categories, accounting for approximately 74% of all tariff items, an increase of nearly 53 percentage points. While procurement costs are expected to decrease, ordinary retailers will also enjoy similar policy benefits, weakening the price advantage of Duty Free shops.