Korean media: "Three trillion golden eggs" duty-free shop, about to be handed over to China?
On March 3, South Korean media Newsway published an article saying that after three years, the Incheon International Airport duty-free shop with annual sales of 3 trillion won (about 15.81 billion yuan) was bidding again. However, there are also variables, and it is reported that the bid for the Incheon Airport duty-free shop by China Duty Free Group (CDFG), which has become the world's largest duty-free company, is a foregone conclusion.
Although the winning bid of China Duty Free Group has not yet been determined, South Korean duty-free companies are still nervous. Because the ranking of duty-free shops worldwide may change depending on the success of Incheon Airport's bid.
According to industry insiders on the 2nd, the four major duty-free companies in South Korea (Lotte, Silla, New World, Hyundai Department Store) and China Duty Free Group that participated in the application for the Incheon Airport duty-free business license recently submitted business proposals and price tenders. The winning bidder will be determined by the first screening at Incheon Airport within this month and the final screening by the Korea Customs Agency in April.
In the first screening, Incheon International Airport Corporation calculated the business proposal evaluation score (60 points) and price evaluation score (40 points), selected a number of high-scoring companies, and notified them to the Korea Customs Agency, which decided the winning bidders in each region. The contract period is 10 years, starting in July.
Due to the participation of China Duty Free Group in the bidding, the biggest worry of the Korean duty-free industry is "money". Because China Exempt Group is likely to rely on its huge financial strength and bid very high. Therefore, even if the Korean duty-free industry obtains this tax-free business license, it may suffer losses due to paying high rent.
Previously, when the performance of South Korea's duty-free industry stagnated due to the decrease in foreign arrivals during the new crown epidemic, China Duty Free Group took the first place in the world duty-free market based on sales with the help of China's policy to support its own duty-free shop industry.
According to the British duty-free specialist magazine Moody Report, the sales of the Chinese duty free group in 2021 were 9.369 billion euros, more than the sales of the second ranked Lotte duty-free shop (4.046 billion euros) and the third-ranked Shilla duty-free shop (3.966 billion euros) combined.
However, in this case, the Korean duty-free industry also said that it cannot abandon the Incheon Airport duty-free shop. If the Incheon Airport tender is completed, future opportunities will not appear until 10 years later. In addition to Incheon Airport, bids for duty-free shops at Korean international airports such as Gimhae, Gimpo, and Jeju have been closed.
A related person in the Korean duty-free industry said: "As a duty-free operator, Incheon International Airport is large, and only by maintaining a certain degree of sales can it have an advantage in brand negotiation and introduction. Had to get involved because of the value of future inclination and the advantage of being able to operate a duty-free business over a period of 10 years. ”
The industry believes that the possibility of China Duty Free Group winning the bid for the Incheon Airport duty-free shop is not low.
If China Duty Free Group obtains the right to operate the Incheon Airport duty-free shop, it will be tantamount to a crisis for Korean duty-free enterprises. This is because Chinese, which accounts for a significant portion of sales in South Korea's duty-free industry, is expected to use domestic duty-free shops. In particular, China has set off a "national tide" upsurge in the consumption culture of its own products.
Industry insiders explained: "China Duty Free Group is not only supported in the country, but also has strong financial strength, on the other hand, Korean duty-free shops have been in crisis and loss during the new crown epidemic. If China Duty Free Group can win the bid, it will be difficult for Korean duty-free shops to make another leap. ”
Another duty-free industry insider said: "It seems that China Duty Free Group wants to use Incheon Airport as a basis to enter the world of duty-free shops. If so, a significant portion of the duty-free industry will move to China. ”
