2018/04/16

‘China's Hawaii’ Get a Promotion From President Xi.

Chinese President Xi handed a much-awaited gift to Hainan province, measures ranging from a fund to help turn the resort island into a free trade port to prioritizing tourism to supporting the development of horse racing and sports lotteries.

The announcement coincided with the 30th anniversary of the island popularly known as "China’s Hawaii" as a special economic zone. Here are some businesses that stand to win or lose from the move.

image credit: internet

Property, Resort Developments Will Finally Pay Off

Hainan’s property tycoons have poured billions of dollars into luxury resorts, theme parks and convention space but many are far from fully utilized. With the State Council citing a movie festival and an international merchandise fair as events that Hainan should organize, developers like Antaeus Group, whose $1.6 billion Mangrove Tree resorts were specifically designed for such large-scale events, may see their investments pay off. Here are some other developers that stand to benefit.

Tourism Firms, Duty-Free Shops Set for Boom

Hainan has so far failed to become a popular international tourist destination like Macau or Bali. Of the 67 million visitors that trekked to the island last year, a little over a million were from overseas. The new policies will give a needed jolt to the $13 billion tourism industry, with domestic operators like Tuniu Corp., which is linked to Hainan’s HNA Tourism Group, getting a boost.

Duty-free shops are also likely to sprout across the island, with state-owned China Duty Free Group Co. enjoying an incumbent advantage over new rivals.

image credit: internet

Hong Kong retail sales, having rebounded from a two-year slump, may be at risk if Chinese families find it more attractive to vacation and shop in Hainan. Luxury brands such as LVMH Moet Hennessy Louis Vuitton SE and Kering SAmay need to shift strategies to tap into the duty-free market in Hainan.

“It is inevitable that Chinese shoppers will divert purchases of pricier items from Hong Kong to Hainan,” said Bloomberg Intelligence analyst Catherine Lim. “This is bound to hurt Hong Kong retail sales going forward.”

Macau Casino Operators Must Assess Risks

Any shift in China’s approach toward gambling could end up threatening the $33 billion casino industry in Macau -- the world’s largest gaming center with revenues five times that of Las Vegas -- as well as other casino hubs in the region.

Macau has been trying to attract Chinese tourists and families, while gaming operators from countries like Vietnam and Australia are building casino resorts that target Chinese. Gaming in Hainan would divert the torrent of gambling-loving Chinese away from these rival hubs, while limiting capital outflow and ensuring gaming revenue stays in the mainland economy.

While foreign operators including Las Vegas Sands Corp. and Wynn Resorts Ltd.get the bulk of gambling earnings in Macau, Hainan could favor local developers and operators to dovetail with Xi’s emphasis on a resurgent China taking a more prominent position on the world stage.

Relief for HNA Group


The plan will come as relief for HNA Group, the embattled conglomerate that grew out of Hainan and has been selling assets around the world as it faces a cash crunch. Its network of companies, ranging from airlines to logistics operators, will likely receive a boost across the board.

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