Behind The Soaring Shares Of Wangfujing And Bailian

Recently, the concept of tax-free stocks continued to rise, especially Wangfujing, Bailian shares and Kaiser travel.

On July 9, Wangfujing fell slightly by 1.75%, and the stock closed at 72.82 yuan. Wang's market has risen by 77% before. The stock price rose sharply from 26.9 yuan to 36.9 yuan in the past. Caesar travel industry is more direct 8 limit board, the past 9 trading days rose 114%.

Why is the increase so high? The 21st century economic report learned in an interview that the three companies are not only expected to enjoy the tax-free dividend of Hainan Island, but also that there are new tax-free dividends waiting to be paid in Beijing and Shanghai. Li Xiumin, an analyst with China Merchants Securities, pointed out that in the second half of this year, the policy of duty-free shops in the city is expected to be adjusted, and the amount and categories of goods may be relaxed, and the shopping objects of outbound stores may be relaxed to Chinese people to promote the sales of duty-free products. It is estimated that the duty-free market of Li Xiumin and Shanghai will reach 20 billion yuan by 2025.

Challenges for new entrants

On the evening of July 8, Wangfujing issued an announcement to set up a wholly-owned subsidiary, Beijing Wangfujing duty-free products Operation Co., Ltd., with a registered capital of 500 million yuan, to carry out duty-free products business and other businesses. At the same time, it is clear that according to the actual business needs, the new business scope of duty-free products is proposed.

"This investment in the establishment of duty-free operating companies will facilitate the company to enter the duty-free market, combine the tax-free business with the tax-free business, and help the transformation and upgrading of the existing retail business." Wangfujing Investor Relations Department said in an interview with 21st century economic report on July 9.

However, the investment and Customs Department of Wangfujing also admitted that it will take time from the establishment of the company to the implementation of the operation. At present, the company is only working hard to set up a tax-free team, and it is not possible to realize the tax-free income within the year. A tax-free expert, who did not want to be named, told reporters that tax-free operating income may not be generated next year. The 21st century economic report learned from Beijing capital travel group, the controlling shareholder of Wangfujing, that the group is currently engaged in internal recruitment to form a tax-free team to participate in the operation of duty-free products.

"There is still a long way to go after Wangfujing set up a tax-free company." Wang mengxiang, an observer expert of Otro Oriental duty-free retail and CEO of Jessica's secret, said that the tax-free industry originated in Europe and is an emerging industry in China, including managers, operators and purchasers, which are scarce resources. At the same time, as a new tax-free enterprise, it needs to negotiate a long-term authorization and purchase agreement with international brands, connect with the customs and airline systems, and sign a contract with the airport pick-up counter. Each negotiation and docking will not be a short-term process.

However, it should be noted that Wangfujing has many years of experience in the operation of traditional shopping malls. Although there is no reserve of large number of tax-free talents at present, the operation experience of traditional shopping malls for many years is also a major advantage of the company. Therefore, when operating duty-free shops in the city, there is a certain foundation.

Similarly, Bailian shares, which announced on July 7 that the controlling shareholder applied for the operation qualification of duty-free products, had the same advantages and disadvantages as Wangfujing, which belonged to the two retail department stores giants in Beijing and Shanghai, but neither had any tax-free experience.

According to the reporter, different from the tax-free license granted in the past, the tax-free operators approved in this round are expected to obtain full tax-free licenses. They can not only operate duty-free shops in Hainan Island, but also operate duty-free shops in Beijing or Shanghai.

The tax-free market in the city is another tax-free blue ocean.

Recently, the research team of securities market in South Korea has been exploring tax-free securities market.

It is understood that in 2019, the scale of the duty-free market in South Korea will reach 21.3 billion US dollars, with a compound annual growth rate of 22% in the past 10 years, of which the national consumption of South Korea is 3.5 billion US dollars, with an average annual compound growth of 9% in the past 10 years, and the consumption of foreign tourists is 17.8 billion US dollars, with a compound annual growth of 27% in the past 10 years.

One of the biggest characteristics of the duty-free market in South Korea is that the local stores are the main tax-free channels in South Korea, with sales accounting for more than 80%. In 2013, the South Korean government further liberalized tax-free licenses, and the number of duty-free shops in the city expanded rapidly from 10 before 2012 to 27. At present, the duty-free shops in the city account for 85% of the duty-free market in South Korea, and the corresponding market size is about 18 billion US dollars.

Compared with the airport duty-free stores, duty-free shops in the city have larger display space, longer shopping time, and more decision-making time for consumers. From 2016 to 2020, the unit price of duty-free shops in South Korea increased from $400 to $1000, and the proportion of duty-free shops in South Korea also increased to 84%, while that of airport stores was only $135.

The scale of tax-free in South Korea has improved the bargaining power of channels, and the consumers are rebate in the mode of local stores. There are two main reasons for the lowest price of duty-free products in the world. On the one hand, the low rent of the local store mode enables duty-free operators to give more rebate to channels and consumers. On the other hand, the duty-free wholesale mode of South Korea makes the duty-free scale of Korea huge. In 2018, Lotte and Silla ranked the second and third duty-free operators in the world The bargaining power of duty-free products is directly related to the tax-free scale, so the Korean tax-free operators can get the lowest cost price in the world, so they have more advantages in pricing.

With the case of South Korea, the prospect of duty-free shops in China seems quite impressive. After all, a high proportion of sales of duty-free shops in South Korea come from Chinese consumers.

Beijing Shanghai duty free new cake

Compared with South Korea, domestic duty-free shops are still in the initial stage. It is reported that there are three types of domestic shops in China, namely, duty-free shops on outlying islands, local duty-free shops for returnees and duty-free shops for outbound residents. For Chinese citizens who have (non Hong Kong and Macao) entry and exit records within 180 days, China export service and Hong Kong China travel service have duty-free licenses. The domestic duty-free shops are for outbound foreign tourists. At present, China immunity has licenses in Beijing, Shanghai, Qingdao, Dalian, Xiamen and other cities. But in addition to the island duty-free shop performance is fair, the rest of the city duty-free shop income is not big.

Therefore, on March 13, the national development and Reform Commission and other 23 departments jointly issued the implementation opinions on promoting consumption expansion and quality improvement and accelerating the formation of a strong domestic market, which mentioned further improving the tax-free policy, insisting on paying equal attention to serving overseas people and our outbound residents, improving the city's tax-free shop policy, building a number of tax-free shops with Chinese characteristics, and improving the income level of residents Consumption upgrading, timely research and adjustment of tax-free quota and tax-free varieties.

This policy sends a strong signal to the outside world. At the beginning of June, Wangfujing was granted the qualification of duty-free operation. Further implementation of the other contents of the report is yet to be implemented. Many tax-free experts interviewed by the reporter believe that the possibility of introducing a new policy for duty-free shops in the city in the second half of the year is very high.

Li Xiumin believes that the top-level design emphasizes serving both overseas people and Chinese outbound residents. At present, the shopping objects of Korean shops include domestic residents and foreign tourists, while China only includes foreign tourists. In fact, the main sales target of China immunity is Chinese people. The government has been actively guiding overseas consumption. She thinks that it is likely to go shopping in duty-free shops in the city The target will be extended to Chinese.

Moreover, according to the "opinions", it is proposed to study and adjust the tax-free limit according to the income level and consumption upgrading. Wang Meng believes that the amount of duty-free entry has not changed for ten years. With the rising of domestic per capita income and the increasing demand for duty-free goods, the tax-free quota is expected to increase.

Li Xiumin believes that with the opening of the city's tax-free shop policy, consumers will have greater convenience in purchasing duty-free goods, which is expected to have a certain substitution effect on the existing tax-free channels and further promote the scale of the duty-free market.

According to the calculation of airport shopping conversion rate method and Ping efficiency method, Li Xiumin estimates that duty-free shops in Beijing will achieve a tax-free scale of 20 billion yuan in 2025, with an estimated profit volume of 4.6 billion yuan; duty-free shops in Shanghai will achieve a duty-free scale of 30 billion yuan in 2025, with an estimated profit volume of 6.7 billion yuan. Both local state owned assets supervision and Administration Commission (SASAC) tax-free enterprises and China immune Corporation hope to participate in the competition in the local market.

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