What: China's largest duty-free mall in Haikou stands eerily empty as Chinese consumers shift away from luxury goods towards experiential spending, resulting in a 16% revenue drop and 36% profit decline for China Duty Free in 2024.

Why it is important: This dramatic shift in Chinese consumer behaviour signals a fundamental transformation in global luxury retail, challenging the long-held assumption that Chinese shoppers would drive continuous growth in the luxury goods sector.

The Haikou International Duty Free City, one of the world's largest mega-malls, faces concerning vacancy levels as China's luxury retail landscape undergoes a dramatic transformation. China Duty Free (CDF), the state-owned giant behind this ambitious project, reported a stark 16% revenue decline and 36% profit drop in 2024, marking a significant departure from earlier projections. This downturn reflects broader changes in Chinese consumer behavior, with shoppers increasingly favoring experiences over designer brands. The shift has particularly impacted Hainan's duty-free zone, where holiday visitor numbers fell by 19% despite government initiatives offering annual tax-free allowances of 100,000 yuan. Local brands like Laopu have benefited from this transformation, with some reporting profit increases exceeding 200%. The trend extends beyond simple economic factors, indicating a fundamental change in consumer preferences, with Chinese shoppers spending 12% more on services and 80% more on leisure activities during recent holidays. This evolution suggests a permanent shift in China's luxury retail landscape, challenging previous predictions of market dominance.

IADS Notes: The worrying emptiness of China's mega-mall reflects broader transformations in the luxury retail landscape documented throughout 2024-25. The 18-20% decline in China's luxury market reported in January 2025 marked a fundamental shift, as Chinese consumers increasingly favored experiences over traditional luxury shopping. This trend was first identified in June 2024 with the emergence of "luxury fatigue," where consumers began preferring discreet experiences over conspicuous consumption. The transformation has led to unexpected winners and losers: while mega-malls struggle, March 2025 data shows lower-tier cities like Chengdu emerging as luxury retail powerhouses, driven by stronger purchasing power and cultural adaptation. This evolution is part of a global luxury market downturn, with January 2025 reports indicating the sector's worst performance since 2007-09, losing approximately 50 million consumers worldwide. The impact extends beyond mainland China, as evidenced by Hong Kong's 13% retail sales plunge in April 2025, despite increased visitor numbers, suggesting a fundamental restructuring of Asian luxury retail dynamics.

One of the world’s biggest mega-malls is worryingly empty