'Be patient'

"I was told that only foreign passport holders or those with Hong Kong or Taiwan passport could buy duty-free goods here. They need to show a ticket for a flight departing from Sanya as well," said Huang. "It makes no sense to just have a browse - the majority of potential customers here are Chinese, and they are not allowed to buy."

A member of staff surnamed Ke, who works at the store's luxury watch booth, said: "We receive many daily inquiries from domestic shoppers, but the only thing we can tell them at the moment is to be patient. The chances are they will be eligible to purchase next year. We've been waiting for that moment to come as badly as they have."

With only a few foreign shoppers milling about, the 7,000-square-meter (sq m) Sanya Downtown Duty-Free Store is nothing close to a popular destination. There is a tag placed in every booth of this two-story shopping mall to remind mainlanders who is eligible to purchase.

"Our product prices are on average 15 to 35 percent lower than those in the city's major shops, depending upon in which categories they fall. They're almost equal to a similar store in Hong Kong," said Xu Lina, the marketing and overseas agent sales manager of Sanya Downtown Duty Free Store Co Ltd, which belongs to the only Stated-owned duty-free group in China - China Duty Free Group Co Ltd (CDF).

The downtown store looks no different from most of its overseas peers and sells a range of imported goods such as leather bags, accessories and watches. US dollars, Japanese yen, Hong Kong dollars and euros are accepted at the shop with spot exchange rates.

"Cosmetics and perfumes are still the mainstays, but we added men's outfits and watches in March. Big luxury names including Tiffany and Cartier also arrived this September," said Xu.

"In total, we have around 80 to 90 high-end and medium-end international fashion brands available. But it's still not the final figure - new brands are coming in."

Japanese hair-care and cosmetics producer Shiseido Co Ltd opened a counter at Sanya's downtown duty-free store this March.

The fourth-largest cosmetics company in the world by sales volume said it had faith in the potential for Hainan's duty-free zone, even though the new policy might only apply to China's domestic customers starting from next year.

No date has yet been confirmed.

"The way we worked with Hainan's CDF is exactly like what we're doing with South Korea's Jeju Island and Japan's Okinawa," said the source from Shiseido's headquarters in Japan, who preferred to remain anonymous.

"There (in Jeju and Okinawa), Japanese and Koreans are eligible to purchase duty-free products and I think domestic travelers from the mainland will enjoy the same in Hainan soon."

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Knowing that more than 96 percent of Sanya's tourists are Chinese and pinning its hopes on the upcoming duty-free policy, CDF invested in another 250,000 sq m shopping area in Haitang Bay, 30 kilometers to the east of Sanya, in addition to its downtown duty-free store.

"The concept is different over there," said Xu. "With a venue of 250,000 sq m, it's going to be an integrated project with not only duty-free shops, but also restaurants and other entertainment facilities. Farrel Yi from Taiwan spent more than two years working in Sanya. Despite the advantage given by her home province, she still found the duty-free experience to be not as convenient as she expected.

"The thing is I can't pick up what I paid for in the shop," said Yi. "I can only receive them at the boarding gate of the airport."

This will not be a problem for her from Jan 1, according to the new tax-return policy. "It will be possible to buy 21 categories of goods, including leather and cosmetics, at Sanya's Summer Mall, Haikou's Shengsheng Department Store and the No 1 Department Store at their full price for direct pick-up. Any taxes due can be claimed back when tourists leave Hainan," said local official Guo.

An executive from CDF's marketing team, who preferred to remain anonymous, said there would be two ways of tax-free shopping in China by then.

"Duty-free and tax-return," he said. "You can either purchase duty-free goods from CDF or pay the full price and reclaim the tax in these department stores."

The concept of duty-free shopping is relatively new to the Chinese and more often encountered abroad. Europeans and Americans are familiar with picking their shopping up at the airport. The Chinese are more used to cash-and-carry. "Still, they worry not only about fraud but also about the risk of their goods breaking on the way to the airport," said the executive from CDF's marketing team.