NEWS
CHINA DFG'S BIDS FOR DUTY FREE LICENCE IN INCHEON CAUSED CONCERN FROM S. KOREAN OPERATORS
By Susan Lewis
14-3-2023
Source: CDFG
China Duty Free Group (CDFG), the world’s biggest travel retail operator by revenue, has participated in tenders to open duty free shops in South Korea’s Incheon International Airport.
CDFG is the only foreign company having submitted bids for the tenders, other bidders include domestic giants like Lotte, Shilla, Shinsegae and Hyundai Duty Free.
South Korean media said CDFG, with its financial prowess, will highly likely get at least one licence to operate in Incheon.
A total of 20,842 square meters of shop space is available for bidding, and bidders can be awarded a maximum of two of the five licences available for a 10-year term, five years longer than normal.
All of the participating bidders have submitted multiple bids for the five licences.
Reports also said domestic travel retail operators are worried that the presence of CDFG in Incheon will pose substantial challenges to them as Chinese tourists accounted for almost half of the duty free sales in the airport before the pandemic.
“With CDFG in the airport, Chinese tourists are likely to prefer it to South Korean duty free shops in the same airport,” an industry source told Business Korea.
Before the pandemic in 2019, Incheon's duty free sales amounted to USD2.43 billion, which was the largest in the world. Of which, South Korean customers accounted for 44 percent while Chinese accounted for 42 percent.
The first round of screening will take place within this month, Korea Customs Service will announce the winning bids next month and the designated operators will open their shops at the airport from July.
According to data from UK-based media outlet Moodie Davitt Report, CDFG reported €9.37 billion of revenue in 2021, followed by Lotte Duty Free at €4.46b and Shilla Duty Free at €3.96b.
If CDFG got a spot at Incheon, it would be the second time a foreign duty free company has operated at the airport since its opening in 2001.
Hong Kong-based DFS operated at the airport from 2001 to 2008, but failed to win the bid for the next term.
(the writer can be contacted at: info@thewinechronicle.com)
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