On January 17, 2014, the 30th National Duty Free Business Working Conference was held in Beijing. Over 200 representatives from CITS Group Corporation, CDFG and China’s duty free industry attended the conference. Mr. Peng Hui, President of CDFG, delivered a work report on the duty free business to the conference. He summed up the work of China’s duty free industry last year, analyzed the key aims for work in 2014, and lent his full support both to CDFG’s systematic transformation and upgrading via reform and innovation, and to CDFG realizing scientific, healthy and sustainable growth.
Against the backdrop of sluggish global growth in the duty free industry, China’s duty free industry boomed as a result of strengthening operations and exploiting the potential opportunities which arose in the wake of China’s steady economic development. In 2013, CDFG’s total profit had a year-on-year growth of 28.51%, nearly 3 times that of the “10%” objective set for central enterprises by the State-owned Assets Supervision and Administration Commission (SASAC). The growth rate of CDFG has far surpassed the 7.6% rate which has been seen in the global travel retail industry and the 12.9% rate of the travel retail industry within the Asia Pacific region. CDFG thus won the honorary title of “Advanced Central Enterprise”.
The Third Plenary Session of the 18th Central Committee of the Chinese Communist Party has rolled out important and deep-reaching reforms, and proposed new requirements on the reform of central enterprises. In 2013, driven by reform and innovation, CDFG achieved its phased objectives by constructing “important channels”, carrying out “important marketing” upgrades, and realizing its transformation from simple expansion to actual quality improvement, reflecting its competitiveness as a central enterprise.
As part of the construction of its “important channels”, CDFG has made substantial progress through its construction of comprehensive overseas duty free stores, such as in the 2013 Cambodia Duty Free Project. CDFG has also tried to make breakthroughs in both “airport and city center duty free channels”. In addition, after CDFG’s Macao Outer Port Duty Free Shop and the Star Cruises Duty Free Shop were put into operation in early 2014, both revenue and CDFG brand influence increased, and CDFG’s expansion overseas and internationalization process was further promoted, reflecting the implementation of the “Going Global” strategy of China’s central enterprises. Through the construction of domestic channels, by seizing new construction opportunities, and via the reorganization and expansion of domestic airports and ports, CDFG completed the establishment of 13 port duty free shops, the expansion of 9 duty free shops and the upgrading and rebuilding work of storefronts.
From a “new business channel innovation” perspective, CDFG ventures into the E-commerce business after signing a long-term cooperation agreement with the “Kuajingtong” platform, an E-commerce business pilot project in the Shanghai Free Trade Zone and establishing the only commercial tenant on this platform. This shows CDFG’s foresight in relation to E-commerce, as well as the group’s innovative management ideas and foresight.
From an “important marketing” upgrade perspective, according to market changes and consumer demand, CDFG has actively introduced various popular commodities and some other new products which have shown great market potential. In 2013, CDFG introduced 56 new brands, while ensuring that boutique products, perfume & cosmetics and food are all covered. The ability to both procure new products and appropriately structure each of the product categories was also optimized. At the same time, focusing on hot consumer products, CDFG used innovative marketing methods such as online marketing, integrated marketing and crossover marketing. While first bringing practical benefits to consumers, the integrated marketing ability of the group also improved. CDFG carried out marketing events in which it collaborated with UnionPay and Star Cruises, again contributing to a continual increase in CDFG’s brand influence. Grasping the opportunity to adjust its offshore duty free policy, CDFG Sanya Duty Free Store further utilized its marketing advantage, and saw record single day sales of 30 million Yuan in revenue during the Spring Festive last year.
2014 is the 30th anniversary of CDFG’s establishment, and in August the world’s largest duty free store, CDFG Haitang Bay International Shopping Mall, will be put into operation. 321 brands, including many top brands such as Cartier, Gucci and Burberry, will feature in the shopping mall, and several customer experience concept stores will be set up in order to bring an upgraded shopping experience for consumers. After becoming fully operational, CDFG will be the highest level, large-scale, duty free shopping mall with the most top International brands within China’s duty free industry. This will add impetus to CDFG’s offshore duty free business, and promote quality, scale and good operations within China’s duty free industry.
In 2014, CDFG will carry out its “innovative development” strategy, continue to employ its “diversified expansion” strategy, and endeavor to promote the expansion of E-commerce and new-type duty free business, all in order to realize transformation from mere expansion of retail terminals to taking a firm place in the entire industry chain. In combination with its own development goals, it will also continue scientific, healthy and sustainable growth stemming from China’s deepening reforms, and try to achieve the objective of building a leading brand in the global duty free industry.