Study on Integration of Tourism and Commerce Take Offshore Duty-Free Policy of Hainan for Example

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1 Study on Integration of Tourism and Commerce Take Offshore Duty-Free Policy of Hainan for Example ZHAO Xiaoyan Tourism College Beijing Union University, P. R. China, Abstract:In tourism industry there is strong comprehensive nature, high interrelatedness, long industrial chain, and in particular, featuring integration with industry. As tourism is the industry to be defined according to tourists need, tourists consumption of service of food, transportation, accommodations, sightseeing, shopping and entertainment in the travel process will naturally link with a number of industries. It can almost associate with every industry of national economy. And create a new set of demands and new markets, new products and new technologies and new services, spawned a number of new form of tourism and full of vitality. The new form of tourism based on traditional industries through the development, evolution, integration and innovation, has become new force and main force in the "big tourism". Promote the tourism industry and related industries interaction, construct a large tourism industry chain virtuous circle. In this paper, the author analyzed problems of Hainan Island offshore duty-free policy and opportunities and challenges in the integration of tourism and commerce, by comparing the domestic and foreign offshore duty-free policy and made a proposal of our current duty free policy of Hainan. This study of the organic integration of tourism and commerce has important theoretical and practical significance. Keywords: tourism industry, integration, offshore duty-free policy, tourism of Hainan 1 Introduction Offshore duty-free policy points:all visitors to Hainan Province aged 18 or up who depart the island by plane to another location on the mainland can apply for the refunds, but tourists flying to foreign destinations can not. A tourist would not need to pay taxes on items totaling no more than 5,000 yuan ($743.49) for a single tour, and enjoy the duty-free policy twice a year. Any amount exceeding 5,000 yuan will be subject to preferential taxation. The tourist pay money within duty-free shops in the island, pick up the goods at airport. Duty-free shops is eligible for duty-free policies and implement duty-free shop franchise. Offshore duty free policy is not an international practice, only a very few countries or regions to implement this policy. In Okinawa, Japan and in the Republic of Korea's Jeju island are two longer, more mature operating regions adopting offshore duty-free policy. These two regions are surrounded by the sea, relatively independent of location, environment is relatively fragile island, and Hainan Province has many similar characteristics with them. Duty-free policy in Japan, Korea applies to all objects to leave the Islands, but not leave the countries of all domestic and foreign visitors (including residents of the island). The focus is to encourage its citizens to travel the island. Running processes are basically the same, but varieties of duty-free goods, duty-free shopping and duty-free restrictions and other business entities in different parts of the policy rules are different. From the implementation experience in Japan and Korea, duty-free policy has played an active role to promote local tourism. As the two governments are the policies for specific areas of special preferential policies, and no further release in other regions. Senior researcher Xu Fengxian (2011) in Institute of Economics, Chinese Academy of Social Science states that duty free policy to promote Hainan soft environment. Although the hardware facilities of Hainan has been a great improvement, but there is much room for improvement in the service, the humanities, ethics and other soft environment.

2 The offshore duty-free policy is aimed at domestic tourists, so it is regarded as one of the major measures to attract travelers and promote the economic development of the island. During the pilot implementation of our duty free policy in the development of Hainan Island, we drew on the Okinawa, Japan, Jeju, the Republic of Korea's part of the mature experience, combined with China's actual situation appropriately adjusted. Associate Professor Zhao Quanpeng (2011)in Hainan University of tourism said that since duty free policy is mainly aimed at domestic people, sales of import goods is very attractive to domestic tourists. Policy enhances Hainan Shopping grade, improves the international competitiveness of the tourism industry in Hainan. Professor Zhao Zhongxiu (2011) in University of International Business and Economics said, duty free policy in Hainan Island that the country's only tropical island province, undoubtedly to provide strong support for the development of international tourism. Compared with foreign tourist developed areas, a simple model of development sale of natural scenery, has been unable to adapt to today from sightseeing, shopping experience to all aspects of the integration of tourism consumption demand, which is particularly important in the high-end tourism market. Therefore, the introduction of Hainan Island offshore duty free policy will lead to the entire international tourism as the leading development of modern service industry in Hainan. Hainan Institute of Tourism Yangzhe Kun (2011) think from a macro point of view, Hainan Island duty free policy is further promote international tourist island of Hainan, with a significant measure of international standards, but also an international tourist island of Hainan has taken a substantial step in the development of Hainan's tourism industry. From a micro point of view, it can effectively increase the income of Hainan tourism shopping, to attract tourists and the accumulation of the tourists quantity and quality. It should be noted that the implementation of Hainan Island duty free policy is a part of the overall development strategy that the State Council approved the construction of international tourism in Hainan Island, to fully consider the Hainan special geographical environment and industrial structure, developed under the premise of special offers policy, does not have universal application. Home and abroad scholars research more about Hainan Island offshore duty free policy, but there is a few analysis on the integration of tourism and commerce. 2 "Offshore duty-free" policy created opportunities for the integration of tourism and commerce China's tourism shopping and other industries were not well-integrated currently in meeting six elements of the tourists food, shelter, transportation, travel, entertainment, shopping. Statistics show that over 35 per cent of visitors shopping demand can not be realized, proportion of total foreign exchange income from foreign tourists shopping in China is less than 20%. This will be no doubt a constraint to improve the proportion of tourist shopping and increase tourism foreign exchange earnings. No. 44 State Council Document proposed to initially build a world-class leisure destination island in Hainan by In January, Hainan inaugurated a tax refund program to attract foreign tourists. That program made foreign tourists, as well as citizens from Hong Kong, Macao and Taiwan who have lived in the Chinese mainland for no more than 183 consecutive days, able to obtain a rebate of 11 percent of the taxes paid on certain purchases. But the policy has not produced the expected results. The new offshore duty-free policy is aimed at domestic tourists, so it is regarded as one of the major measures to attract travelers and promote the economic development of the island. The scheme, which comes into effect on April 20, covers 18 types of imported items, including jewelry, handicraft, watches, perfume and cosmetics. There are two duty-free shops in Haikou and Sanya, 98% of duty-free import of goods directly purchase to the factory, to ensure the quality of goods, brand and price. It is reported that: Sanya duty-free retail price of imported goods slightly lower than the Hong Kong brand counters. Hainan Province currently in the food, shelter, transportation, travel, shopping and entertainment in tourism, shopping expenditure only took up 20%. This figure is far lower than the proportion of 70% in developed countries. The implementation of this policy will help to promote the development of

3 Hainan's tourism shopping, drive commercial development, upgrade Hainan appeal in addition to vacation travel. But in the long run, the availability of sustainable development space in Hainan depends more on how Hainan Island creating and supporting an integrated software environment and hardware environment in duty-free policies. Only do a good job in all aspects will attract tourists. Offshore duty free policy will significantly increase the audience coverage, greater tax benefits, which are expected to drive growth 20% -25% in the number of tourists in Hainan, increase by 15% -20% for per capita consumption in Hainan, It will bring more economic and social benefit for Hainan. If the Hainan Province can seize this opportunity, it will benefit both the tourists, but also the province's tourist attractions, the duty free shops, Hainan aviation, airport and logistics, transportation, hotels, restaurants and even the yacht manufacturing industry in Hainan. Offshore duty free policy for stimulating the local tourism economy in Hainan has played a crucial role. This is also a China's tourist innovation policy. After implementation of duty-free policy in Hainan Island, is bound to be able to transfer part of the purchasing power of some countries and regions to more convenient international tourist island of Hainan. According to the Hainan Provincial Tourism Bureau statistics, in 2010 the yearly foreign visitor arrivals totals million, domestic tourists accounted for more than 95% in Hainan. In 2010, overseas Chinese shopping consumption reached 200 billion yuan. Chinese people in Japan consume 20,000 yuan, while in Hainan is only a few hundred yuan per capita. This did not match the requirements of an international tourist island of Hainan. But the other hand, it also means big potential market of offshore duty free shopping, which estimated up to 20 billion yuan per year. After the implementation of duty free policy, there is a similar policy environment in the tourist shopping in Hainan with overseas tourist destination. Shopping is one of the six elements in tourism, which is an integral part of the economic chain and one of the weak link of the Hainan tourism. Islands tax policy introduced, to a certain extent, help to improve the tourism environment, tourism service functions and the grade of shopping in Hainan, which will undoubtedly enhance the attractiveness as a tourist destination of Hainan. It also improves and expands the size of tourist shopping and promote visitor numbers and per capita consumption, driven by the tourism industry as a leader in the development of modern service industry. So, the duty-free islands policy for the mainland tourists is the key to promote the development of Hainan's tourism industry and related industries. Hainan tourism market began to enter the off-season in April to August each year, but this year was very different from previous years: there is no off-season. Hainan Provincial Tourism Committee statistics show: After implementation of duty free policy, in April, the single month of the province received million from overnight domestic and foreign tourists, an increase of 11.25%. Among them, the number of overnight foreign visitor arrivals in Haikou is 688,300, up 12.6%; in Sanya is 796,000 overnight foreign tourists, up 9.7%. Driven by duty free policy, duty-free tour of Hainan has become the new darling in the domestic tourism market, a great boost and protect the sustainability of Hainan tourism market growth, in the traditional off-season in Hainan, showing a different past, tourism consumption boom. 3 Problems in implementation of offshore duty free in Hainan 3.1 Duty-free shopping policy still in the exploratory stage As the policy of tax-free shopping is no precedent in the country, there will inevitably encounter some unforeseen difficulties and problems in exploring the practice stage, there is also a cultivation period and the development process. There is a few duty-free shops, small shopping area, combined with the duty free policy "limited quantity, limit on the number of times, limit the amount of restricted species" conditions can not fully meet the shopping needs of tourists. Of course, in terms of the mainland tourists to Hainan are required to pay the cost of time and economic cost is much lower compared to Europe, compared to the Hong Kong and Macao is also much more convenient procedure. However, the peak season tourists are too concentrated, the supply capacity of duty-free shops in Hainan is inevitable

4 bottlenecks. 3.2 Supporting software and hardware environment must be improved There is still a considerable gap both in the comprehensive management of social and commerce level, or infrastructure construction compared to Japan and South Korea Islands in the implementation of duty free policy. Deeper reason is that there are some shortcomings in soft and hard environment in tourism development in Hainan. It includes that related service industry lags behind, the relevant measures did not match, the quality of services, supply organization, services facilities, logistics and distribution needs to be improved, such as high-end products is still very lacking. To build international tourism island of Hainan is not only a duty free issue, but also have a direct relationship with the shopping environment, quality of service and infrastructure. Generally speaking, these problems are comprehensive development level problems, to solve these problems require overall planning, policy support; which need to give full play to the role of markets and accelerate the pace of reform and development. 3.3 Services and supervision need to be improved With the implementation of the tax-free policy, poor forecasting and supervision occurred sometimes. During May Day holiday, tourists flock to Hainan, but shopping guide service, supply reserves are difficult to meet the needs of tourists, making some tourists quite dissatisfied. In addition, some individual duty-free shops sold expired goods. This reflects the loopholes on supervision of duty-free shop. Hainan duty-free shops as a new thing, should focus on building a scientific and comprehensive supervision system, and resolutely put an end to any bad business practices, establish a good reputation, which is a vital part of sustainable development of duty free shop in Hainan. 4 Hainan Island's future offshore duty free policy measures 4.1 To learn from advanced foreign experience and enhance the level of tourism development in Hainan Hainan duty free policy is no precedent in China, Hainan should emancipate the mind, explore in practice, review and gain experiences for the problems, and actively learn from advanced foreign experience. High-end foreign goods enter Hainan need to order, delivery and inspection. The store must choose good commodities to ensure the supply of goods. Hainan's commerce sector need to strengthen supervision in the supply, quality of service and goods, to effectively change the service concept, and actively introduce international rules to enhance the level of development of tourism in Hainan. And gradually to build Hainan into an international shopping center. 4.2 Comprehensively improve the level of service Although the hardware facilities of Hainan have been a great improvement, there is much room for improvement in the service and other soft environment. Shopping is an important part of tourism, A mature tourism market is a regulated market first. Duty-free shops should be enhanced the level of management and organizational capacity as soon as possible. To predict and analysis the daily operations of duty-free shops, to prevent the recurrence of harm to consumers. Given the relative lack of experience in Customs control, we can consider to introduce some Hong Kong, Macao, Taiwan people, experience and technology into the Hainan in order to quickly improve the Hainan Customs supervision and service capabilities. Based on the duty-free shopping policy, we need to improve soft environment. 4.3 To strengthen relevant departments supervision To create a more favorable shopping soft environment, in addition to industry, business self-regulation, and more rely on strong government supervision of the relevant functional departments, and the subsequent flow of complaints handling mechanism. To do good job on the Customs supervision

5 systems, supply quality guarantee and delivery mode, sum up experiences, improve the regulatory measures, provide efficient and convenient software environment for tourists shopping and best meet the needs of the guests. Government, businessmen and consumer behavior are required by law, and need for good regulatory capacity and effective monitoring mechanisms. In addition to the company to strengthen its internal control capabilities, government departments need to look carefully and guide a more effective implementation of policy. 4.4 Further opening-up policy Apply a positive introduction to Hong Kong, Macao and Taiwan of large duty-free shopping groups, large retail to Hainan, form a fully competitive market environment, improve overall level of service in the retail and service industry in Hainan, In addition, Hainan province should make great efforts to develop a complete and efficient international marketing planning, while encouraging Hainan's overseas tourism promotion agency to promote Hainan's goods and services. 4 Conclusion In short, implementation of the offshore duty free policy will not only help to expand the scale of tourists shopping, to improve per capita consumption, more importantly, to improve the tourism environment of Hainan, to drive the number of visitors, to promote tourism industry s transformation and upgrading and institutional innovation, to promote organic integration of tourism and commerce. This supports the sustainable development of Hainan, promote Hainan tourism elements internationalization and enhance the international competitiveness of the tourism industry in Hainan. References [1]. Xinhai. Hainan Island pilot duty free policy [J]. River Week (Focus) 2011,04 (in Chinese) [2]. Liu Qiang. Offshore duty-free-shoppers Gospel [J]. Financial Expo (wealth) 2011,05 (in Chinese) [3]. Liu Jia. Offshore duty -free - Hainan shopping experience [J]. Glory 2011,05 (in Chinese) [4]. Linzi Hai. First trial on Hainan Island, the city's duty-free policy strategic planning thinking. National strategies and international tourism island - Hainan Province to celebrate the sixtieth anniversary of founding of new China Theory Symposium Author in brief Author name (1) Zhao Xiaoyan(1959-), F, Professor, MBA Research Interest: Tourism Marketing, Tourism Destination Marketing Tourism Management Department, Institute of Tourism, Beijing Union University Contact information: / zhaoxiaoyan0421@sina.com