Why Chinese travellers are cutting back on duty-free spending overseas

Chinese tourist numbers are rising across Asia, but duty-free sales remain weak as travellers spend less, skip group tours and buy more foreign brands at home instead of overseas

Chinese tourists are travelling overseas again in large numbers, helped by easier visa rules and a firmer yuan. Airports, hotels and airlines across Asia are seeing footfalls rise close to pre-pandemic levels. Yet one key part of the travel economy is still struggling to recover: duty-free shopping, the South China Morning Post reported.

 

Before Covid-19, Chinese travellers were the backbone of duty-free sales in many Asian markets. Today, while visitor numbers are rebounding, spending inside airport shops remains weak, forcing retailers to rethink their business models.

 

South Korea: Visitors back, sales still falling

 

South Korea offers one of the clearest examples of this shift. Before the pandemic, Chinese tourists accounted for nearly 70 per cent of the country’s duty-free sales. In the first 11 months of 2025, about 5 million Chinese visitors travelled to South Korea, reaching more than 92 per cent of 2019 levels, the news report said.

 

 

However, duty-free revenue has not followed the same path. Sales between January and November 2025 dropped 12 per cent from a year earlier to $80.6 billion, falling to levels last seen a decade ago, according to the Korea Duty-Free Shops Association.

 

The slowdown has already had visible consequences. Shilla Duty Free and Shinsegae Duty Free, two major players in the market, surrendered parts of their airport retail space at Incheon International Airport in September and October. Both companies pointed to weak sales and high rental costs. These airport licences were once seen as some of the most valuable assets in travel retail, the news report said.

 

Changing travel habits reshape shopping behaviour

 

For years, shopping stops were built into Chinese group tour schedules, making visits to duty-free stores almost compulsory. That is now changing. Younger Chinese travellers are increasingly choosing independent trips instead of package tours. This gives them more freedom to explore local culture, food and niche brands, rather than spending hours inside airport shops.

 

This shift is also affecting Japan. Duty-free sales there were already slowing before diplomatic tensions between Beijing and Tokyo flared in November last year, following remarks by Japan’s Prime Minister Sanae Takaichi on a possible Taiwan Strait conflict. The dispute further discouraged Chinese travel.

 

The news report, citing data from the Japan Department Stores Association, stated that duty-free sales fell 15 per cent year-on-year to 464.5 billion yen in the first 10 months of 2025. A KPMG report published in September said the decline was largely due to lower spending per Chinese visitor.

 

Other popular destinations are seeing similar trends. Thailand and Singapore have both welcomed more Chinese tourists, but retail sales have not fully recovered, according to Catherine Lim, a senior equity analyst at Bloomberg Intelligence.

 

Economic pressures, easier access at home

 

Several broader factors are driving this change. China’s economic slowdown has made consumers more cautious, especially younger people. Many now prefer to spend on experiences or unique local items rather than global brands commonly found in duty-free stores.

 

At the same time, Chinese shoppers no longer need to travel abroad to access foreign products. Luxury goods and cosmetics are widely available through domestic e-commerce platforms and duty-free outlets within China.

 

China brings duty-free shopping home

 

Beijing has also reshaped the landscape by expanding domestic duty-free retail and cracking down on daigou traders, who once drove bulk overseas purchases. Monthly tax-refunded duty-free sales in Beijing alone now reach about 100 million yuan, according to KPMG.

 

Policy support continues. In December last year, China turned Hainan into an island-wide duty-free zone, cutting several taxes on imported goods. On January 1, Swiss retailer Avolta became the first foreign company to operate duty-free shops at Shanghai Pudong International Airport.