Can Hainan Island threaten Hong Kong's status?
Hong Kong's status as a shopping paradise also comes down to the full range of products and services it offers, as well as its festivals and culture, said a spokeswoman for the Hong Kong Tourism Board.
Hainan has several department stores, but some of the island's most distinctive retail offerings are like that of a banana republic. There are lots of local handicrafts, such as coconut shell carvings, seawater pearls and crystals, as well as Li ethnic textiles. Tropical fruit and nut stores are also scattered along Haixiu Avenue, the most bustling commercial street in Haikou.
Comparing the two islands, Hong Kong looks more than strong enough to fight off a rival less than an hour's flight away. Liao Wei, general manager of China Travel Service Group in Chongqing, disagrees.
"It'll be much more convenient to purchase luxurious goods in Hainan than Hong Kong because flight tickets and hotels are cheaper," he told Chongqing Business News. "Mainlanders also don't need to apply for an exit permit in advance or choose international flights."
Hainan will attract 20 to 30 percent more tourists year on year if the duty-free and gaming zone plans are coupled with other measures, such as relaxed visa requirements for foreigners, added Liao.
One shopper in Hong Kong who said she could be swayed to switch to Hainan in the future was Zhong Ru, a 33-year-old CEO from the mainland, who plans her holidays around the end-of-season sales.
"Hong Kong already has a great selection of the world's best brands, all within walking distance of each other," said Zhong, who was clutching bags full of cosmetics from SaSa and Bonjour stores. "On the other hand, it will be much easier for some of my mainland friends to go to Hainan because it does not have the visa requirements to enter Hong Kong. That could be a huge advantage."
Stella Lam Pui-king, a retired real estate agent who has visited more than 55 destinations, said duty-free stores that focus on distinctive local wares and good customer service always keep the customers coming.
"Aside from the obvious tax savings, duty-free stores offer remarkable opportunities for marketing, as displayed in Israel where they market their own cosmetic products containing minerals from the Dead Sea. Their representatives give out generous samples," she said, adding that she visits the store every time she flies into Ben Gurion International Airport in Tel Aviv.
However, Hainan's duty-free sector has a long way to go before it can rival Hong Kong's shopping status, said tourism experts.
"One of Hong Kong's most marketable characteristics is the level of consumer confidence people enjoy here. Mainlanders come to buy everything from property to baby powder. We have a reputation that takes years to cultivate," said Maggi Leung, assistant professor for the University of Hong Kong's geography department.
While the development of shopping would bring Hainan up to par with other tourist destinations, Hong Kong and Hainan are fundamentally very different places, she said. "Hainan has lots of natural beauty while people who come to Hong Kong are drawn by amusement parks, high-end dining and its overall character.
"It's common for Europeans coming into the area to spend one or two days in Hong Kong and another five in Bali. They are coming for some of the high-tech sights of Hong Kong and spending the rest of the week at a tropical getaway," said Leung, adding that Hong Kong already promoted multi-destination packages with other Southeast Asian countries. "On the other hand, when people travel to Europe the usually visit more than one major city or country. So it makes sense for visitors coming into the region to want to cover more than one activity."
One sector that will definitely lose out due to the plan to open duty-free stores in Hainan is Internet stores that sell goods to the mainland, said Roger Chan Yiu-kwong, chairman of the Hong Kong Internet Retail Association.
More choice for the consumer means more competition for the Web store, he said.