HCMC should follow Singapore, South Korea's duty-free example to boost tourist spending: experts

By Bich Phuong   May 22, 2024 | 10:34 pm PT
HCMC should follow Singapore, South Korea's duty-free example to boost tourist spending: experts
A duty-free shopping at Terminal T2 of Changi Airport, Singapore. Photo by VnExpress/ Bich Phuong
Ho Chi Minh City could learn from major South Korean metropolises and Singapore by opening more duty-free shops in busy areas and airport terminals to boost foreign tourist spending, insiders said.

Dr. Hyejin Park, a Korean Tourism and Hotel Management lecturer at RMIT University in HCMC, said shopping is a driving force in foreign exchange earnings and can be used to rake in more tourist dollars by diversifying the nation's selection of tourist attractions.

According to the World Travel & Tourism Council, shopping tourism generated a combined total of US$178.2 billion in earnings across the globe in 2019, representing 6% of travel and tourism (T&T)'s direct contribution to world GDP.

In some countries, shopping tourism exceeded 15% of T&T’s direct contribution to national GDP.

Sout Korea is one of Asia's leading shopping tourism countries.

A study that surveyed tourists from five major markets – Japan, China, Thailand, the U.S. and the U.K. – who have been to Seoul more than twice revealed that each tourist spent an average of 2 million won (US$1,470) on air tickets and accommodation, accounting for the largest portion of their spending, while their average spending on shopping was 620,000 won, higher than their dining expenses.

Park said duty-free stores motivate tourists to shop because they can buy luxury goods, discounted branded goods and local products at reasonable prices, without spending extra on taxes.

Singapore, Thailand and Korea have all made sure that duty-free stores are regular sights in busy tourist areas.

South Korea is famous for its beauty and fashion products, which are known for their high-quality and positive brand reputations.

In Seoul, Myeongdong Street and the Coex Mall commercial center are famous with foreign tourists because they specialize in selling duty-free beauty products from both the luxury and affordable market segments.

Duty-free shopping is also a strong market in the city-state of Singapore, which is renowned globally as a shopping Mecca.

Duty-free has helped the island nation become a "global shopping and retail destination," said a representative from the Singapore Tourism Board.

Singapore has thus lined its downtown streets and terminals inside Changi International Airport with popular duty-free stores.

The airport has more than 550 dining, retail, and duty-free shops at four terminals and its ultra-modern Jewel shopping and entertainment complex.

The Singaporean government has identified shopping as one of the country's main contributors to overall tourism revenue. It estimated that tourism earnings in the January-September period last year reached S$20.1 billion (US$14.8 billion). Shopping revenues accounted for S$3.71 billion, or 18% of that total.

Following the successes of these Asian "shopping paradises," Park said that if HCMC wants to attract high-spending tourists, it needs to diversify its international brand offerings at major shopping centers.

The city can refer to Korea's Coex Mall development model, or The Landmark in Hong Kong, he said.

These iconic shopping destinations are not only home to many international brands, they also provide entertainment and other "convenient" experiences for foreign visitors.

Businesses and retailers also need to understand the different demands of each international tourist market to build appropriate shopping tourism products.

For example, tourists from Asian countries such as China, South Korea, and Japan tend to shop for cosmetics and high-end fashion items when visiting HCMC because these products are often considered more affordable than in their home countries.

European tourists often like handicrafts, handmade products and souvenirs identifiable by their showcasing of local characteristics.

Johnathan Hanh Nguyen, chairman of conglomerate Imex Pan Pacific Group, said he hoped that HCMC would develop a larger variety of shopping options for foreign tourists, including downtown duty-free shops, cheap branded outlets, and amusement parks.

He said the city had few high-end shopping options luring foreign tourists to spend money. Most popular shopping areas – including Ben Thanh and An Dong markets, and dime-a-dozen mid-range shopping centers – do not suit higher-end tourists.

"If issues regarding space made available for development are solved, HCMC could build a complete downtown duty-free store model in just six months, and this could attract tens of millions of international visitors and additional tourism revenues of US$1-2 billion per year," Hanh said.

Last year, tourism revenues in HCMC reached VND160 trillion (US$6.28 million), up 25% against the pre-pandemic levels of 2019. Of that figure, revenues from international visitor shopping contributed 9%, according to official statistics.

Currently, average international visitor spending in HCMC is about VND4.7 million (US$185) a day, higher than the 2019 figure of VND3.89 million.

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