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Shanghai’s two international airports will see new operators taking over duty-free shops, replacing the existing Sunrise Duty Free Shanghai. The new contracts are signed with the state-owned enterprise responsible for duty-free retail in China and the Shanghai branch of a Swiss-based global travel retail company.
The duty-free stores at Shanghai Pudong International Airport’s Terminal 2 and satellite hall, along with Shanghai Hongqiao International Airport’s Terminal 1, will be managed by the Chinese state enterprise. Meanwhile, the Swiss company will oversee duty-free operations at Pudong Airport’s Terminal 1 and its satellite hall. These contracts will span eight years, commencing January 1, and will expand the retail space by over 1,500 square meters. The product offerings will also diversify to include smartphones, drones, baby and mother care products, and health foods. Both parties are encouraged to incorporate traditional Chinese brands and exhibit elements of cultural heritage.
Financial arrangements include fixed monthly payments based on square footage—at approximately CNY3,141 (roughly USD445) per square meter for the Swiss company at Pudong T1, and similar rates for the Chinese state enterprise at other terminals. Commission rates on sales will vary: 8 to 24 percent at Pudong and 8 to 22 percent at Hongqiao.
The airport authority also plans to establish joint ventures with both operators, each holding a 49 percent stake, to manage the duty-free stores. Industry insiders note that this move signifies a shift in strategy, with the airport focusing on reducing commission rates to boost sales and foster more balanced partnerships.
Historically, commissions with Sunrise Duty Free, which was majority-controlled by the Chinese enterprise, reached up to 42.5 percent before the COVID-19 pandemic. Sunrise Duty Free was excluded from the recent bidding process after disagreements during a board meeting, where four directors appointed by the Chinese state enterprise voted against continuing its involvement.
Previously, the Chinese company managed offshore stores in Hainan, while Sunrise Duty Free focused on Shanghai and Beijing airports. Recently, Beijing Capital Airport launched a new bidding round for duty-free franchise rights for nearly eight years at T2 and T3, with submissions due today. Currently, the Chinese company operates at T2, and Sunrise Duty Free is responsible for T3.
Shares of Shanghai’s major airport operator rose modestly during midday trading, reflecting investor optimism, and stocks of the listed duty-free retailer experienced a significant uptick before falling slightly. The performance of the duty-free subsidiary also saw notable gains today, indicating heightened market activity surrounding the sector.
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