(Yicai Global) July 7 -- The affiliated cross-border e-retailing arm under Chinese e-commerce titan JD.Com is planning to open an offline duty-free shop or corresponding experience store in China’s southernmost province of Hainan, a tourist island often compared to Hawaii.

JD.Com will implement its cross-border retailing of imports from the outlet, Beijing Business Today reported, citing an insider.

Chinese authorities released a blueprint for a Hainan free-trade port on June 1 to enable the free flow of trade in the breezy, balmy vacation destination, which is also China's largest special economic zone, and will roll out measures that center on zero tariffs for the trade in goods, while facilitating both entry and business operations for services providers.

JD.Com’s offline store in the top tour spot is more likely to open as a bonded shop as the Beijing-based e-retailer has yet to secure a duty-free license, Wang Jian, a professor at Beijing’s prestigious University of International Business and Economics, told Beijing Business Today, adding the jump in the consumption quota granted to tourists to Hainan will spur commodity sales in the bonded store, aided by the Hainan Free-Trade Port’s policy benefits.

The model of bonded stores is closer to that of cross-border e-commerce than duty-free shops. Products in a bonded brick-and-mortar outlet are mainly for display and experience and buyers must order goods online and report their purchases to Customs if their one-time value at a time tops CNY50 (USD7.10), so that duties can be levied on items brought in by travelers or sent from abroad. Buyers can pick up items on site or request the outlet deliver them after Customs clearance.

JD.Com’s arch-rival Alibaba Group Holding opened its first offline bonded shop for its affiliated Tmall Global platform in the firm’s hometown of Hangzhou, the capital of eastern Zhejiang province, in 2018. Kaola, the cross-border e-commerce arm formerly belonging to Chinese internet firm NetEase that Alibaba acquired last year also opened its first physical store in 2018.

The Chinese government has raised the annual duty-free consumption ceiling for each tourist to the island to CNY100,000 (USD14,140) from CNY30,000 (USD4,240), and increased the categories of duty-free products to 45 from the earlier 38 to support construction of Hainan’s Free-Trade Port, per government document that appeared on June 29. The new categories include consumer electronics, as represented by iPhones, wine, tea, honey and other victuals.

Editor: Ben Armour