As Hainan Free Trade Port solidifies its status as a booming consumption hub, DFS Group, which is part of French multinational LVMH Group, is making a strategic push to elevate the island's luxury retail landscape, viewing it as a pivotal gateway to China's premium consumers.

"DFS will utilize LVMH's global resources to help the Hainan FTP attract more international luxury and premium retail brands, injecting new momentum into China's consumption upgrade," said Nancy Liu, president of DFS China.

Sanya has already surpassed first-tier cities like Guangzhou, Guangdong province, to rank third in China's core luxury consumption city rankings, right after Shanghai and Beijing, Liu said.

This ascent underscores Hainan's rapid transformation, fueled by robust domestic demand and its unique global connectivity, into one of the world's fastest-growing luxury markets.

However, this potential is tempered by challenges.

DFS's consumer research, surveying 2,500 visitors to Hainan, identified gaps compared to other international destinations, particularly in brand variety, pricing, service quality, retail environment, and dining/entertainment options.

Today's Hainan visitors are sophisticated and globally savvy. They pinpoint brand assortment, service standards, and the shopping environment as key drivers for future spending, the research said.

For Hainan to mature into a world-class retail and tourism center, it needs to first enhance the "supply-side" — the richness and quality of products and experiences on offer, the research added.

To bridge this gap, DFS is leveraging the resources of its parent company, LVMH. Positioning DFS as a trusted operational partner, Liu said the company aims to synergize LVMH's brand portfolio and advantages with its own retail expertise to upgrade Sanya's luxury ecosystem.

The cornerstone of this commitment is a massive joint venture project in Sanya's Yalong Bay with Shanghai-based partner Shenya Group. This mega complex will house the world's largest DFS beauty store and Yalong Bay's largest indoor children's playground. Scheduled for completion in 2026, the project is projected to attract 16-18 million visitors annually by 2030 and stimulate surrounding infrastructure and service industries.

Beyond physical expansion, DFS plans to innovate the retail experience. The company intends to employ AI for deep data analysis to enable precision marketing and enhance "retail-entertainment" — creating immersive, entertaining shopping experiences that meet the rising demands of global and domestic tourists.

Liu expressed optimism, citing resilient Chinese luxury consumers who spent $32.5 billion globally in 2024. "The Hainan FTP is a vivid microcosm of China's high-standard opening-up, providing an unparalleled platform for the international luxury industry," she said. "As a foreign enterprise, DFS deeply feels the resolve of China's opening-up and will continue to deepen our roots in the Chinese market to share in the dividends of this development."

With the island-wide special customs operations further facilitating trade and linking Hainan more tightly to the colossal domestic market, Liu views the current policy signals as a significant opportunity."DFS is firmly optimistic about the Chinese market and the future development of the Hainan FTP," she said, signaling a long-term, integrated vision for growth alongside the province's ambitious rise.

"As the world's second-largest consumption market, China has the largest middle-income group in the world, with stable growth in investment and consumption and enormous potential," said Xu Man, a researcher at the Chinese Academy of International Trade and Economic Cooperation.

The expansion of Hainan's offshore duty-free shopping policy on Nov 1 further broadened the consumer appeal, extending the duty-free list to 47 product categories ranging from mini drones and portable musical instruments to handbags and premium tea, Xu said.

Peng Jianzhen, president of the China Chain Store and Franchise Association, said: "China's foreign firms have many products that sell well in developed countries. If they make some adjustments to cope with the demand of domestic consumers and domestic standards, there is room for further growth."

Contact the writers at masi@chinadaily.com.cn