Expected Collaboration between Estee Lauder Companies and the Largest Duty-free Complex in Asia

China is one of the most dynamic markets in the world, and travel retail has always been the main channel for the performance growth of Estee Lauder Companies. The president of Estee Lauder Companies expressed that he is very optimistic about the development of China and the Chinese travel retail market. It is reported that Asia's largest international duty-free commercial complex will be completed this year, and Estee Lauder Companies may establish new cooperation with it to continue to develop tourism retail business in Hainan.

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Fabrizio Freda, President and CEO, said at the Estee Lauder Companies third-quarter fiscal 2022 shareholder performance announcement communication meeting recently: "The offshore duty free business in Hainan, China, was in good condition until mid-March, but then the passenger flow dropped sharply. However, we predict from experience that the passenger flow will perform well after the rebound. Once the travel restrictions are over, people will quickly resume their travel plans in China."

Freda is very optimistic about the Chinese market. "Our confidence in the future of Hainan has not changed. Seeing the amazing development of Hainan so far, our confidence has increased." Freda stressed. "The long-term fundamentals of global high-end cosmetics in China and China's tourism retail market are still very good. I am very optimistic about this opportunity. Compared with other parts of the world, China's tourism retail, online sales, physical stores and perfume business market will rebound more. High-end perfume accounts for an increasing proportion in the overall development of the category."

China is one of the most dynamic markets in the world, and the layout of Hainan is of strategic significance for Estee Lauder Companies. Under the background of the highly developed tourism retail in Hainan and the advantages of the free trade port policy, Estee Lauder Companies has also continued to develop the tourism retail business in Hainan by establishing a series of innovative cooperation.

In July 2021, Estee Lauder, CDFG and Marriott Bonvoy Hainan Regional Hotel launched tripartite cooperation, integrating vacation, beauty and shopping, and launched a long-term cooperation project in Hainan with the theme of "Hainan Summer Beauty Pass". In January 2022, Estee Lauder started a live broadcast event in Haikou, Hainan, which revealed the limited packaging of Estee Lauder's seventh-generation Advanced Night Repair essence and eye cream for the Year of the Tiger. At the beginning of 2022, the Estee Lauder Companies fragrance brands, Frederic Malle and KILIAN, entered the Hainan Duty Free Shop in the form of opening special counters and pop-up stores...

It is worth mentioning that in February this year, Estee Lauder Companies has confirmed its participation in the "2022 China International Consumer Products Expo" held in Hainan, China. At that time, the Estee Lauder Companies will bring 13 iconic brands such as LA MER, MAC, and Clinique. In addition to these brands that have already been popular in China, the Estee Lauder Companies will also bring two future brands that are expected to be closely related to the mainland China market - Le Labo and Aveda. This is also the first time Estee Lauder Companies has appeared at the Hainan Expo as a group.

During the communication meeting, Freda also mentioned in particular the expansion of offshore duty free business in Hainan: "There are new large shopping centers under construction in Hainan, which is an extraordinary new opportunity."

It is reported that the large shopping mall under construction is Haikou International Duty Free City, which is expected to open before October 1 this year. The Haikou International Duty Free City project has a total construction land of 485 mu and a total construction area of about 930,000 square meters. Covering hotels, real estate, commerce, cultural tourism, and other formats, it will become the largest international duty-free commercial complex in Asia after completion.

Analysts said that the opening of Haikou International Duty Free City is expected to boost the overall performance of an offshore duty-free business and help Hainan achieve the goal of reaching 100 billion (about 15.01 billion US dollars) in offshore duty free business sales throughout the year.