Analysis of Development Potential and Competitive Advantages of Wangfujing's Entry into the Duty-Free Market with a Registered Capital of 200 Million Yuan

According to the latest data, Wangfujing Group (600859.SS) is a well-known department store retail enterprise in China with a current market value of approximately

(equivalent to about 125 billion RMB) [0]. Its main businesses cover traditional retail formats such as department stores and shopping centers.

, Wangfujing’s stock price trend in 2024 showed a volatile downward trend, falling from 16.01 USD at the beginning of the year to 14.25 USD at the end of the year, with a cumulative decline of . The current stock price is above the 200-day moving average, but overall it is in a sideways consolidation state. Technical analysis shows that the trading range is [13.91, 15.75] USD [0].

Wangfujing’s recent financial performance is facing challenges [0]:

• Net Profit Margin
  : -0.33% (in loss)
• ROE (Return on Equity)
  : -0.18%
• P/E Ratio
  : -505.48 times (due to loss)
• Current Ratio
  :1.65 (acceptable liquidity)
• P/B Ratio
  :0.89 (below book value)

In Q3 2025, the single-quarter EPS was 0.04 USD, lower than the expected 0.05 USD; revenue was 2.35 billion USD, which was less than the expected 2.62 billion USD [0].

---

China’s duty-free market reached a size of approximately

in 2023 [1]. In 2024, the global duty-free market grew by 3% year-on-year to 74.1 billion USD, while China’s duty-free industry is facing greater pressure.

:

• China Duty-Free Group
  :78.7% market share, absolute leading position
• Hainan Development Holdings
  :7.1% market share
• Other enterprises
  :14.2% share [1]

China Duty-Free Group currently has about 200 retail stores and is the largest duty-free chain operator in China [1].

According to online searches and industry data, China’s duty-free industry is facing multiple challenges [1]:

1. Weak consumer demand
   : After the pandemic, consumers’ demand for high-value foreign goods (luxury goods, alcohol, cosmetics) has declined
2. Rise of local brands
   : Consumers are increasingly inclined to choose domestic brands, squeezing the duty-free goods market
3. Slowdown in industry growth
   :
   • China Duty-Free Group’s revenue fell by
     16%
     year-on-year to 56.5 billion RMB in 2024
   • Net profit plummeted
     36%
     to 4.32 billion RMB
   • Revenue decreased by7.34% to39.9 billion RMB in the first three quarters of2025

:

1. Hainan Free Trade Port officially established
   : Hainan officially became a free trade zone on December18,2025, injecting new momentum into duty-free shopping [1]
2. Opening up of foreign investment access
   : China has reopened the duty-free industry to foreign operators, which was basically closed to foreign investment since 2019 [1]
3. Adjustment of import tariffs
   : China will implement temporary import tariffs lower than the most-favored-nation tariff rate on 935 items of goods starting from January1,2026 [2]

:

• Duty-free resources at airports and railway hubs are basically saturated
• Strict industry supervision and high license barriers

---

Although the industry is under short-term pressure, the long-term potential of China’s duty-free market is still considerable:

• China is one of the largest duty-free markets in the world (71.6 billion RMB scale)[1]
• With the deepening of Hainan Free Trade Port policy, the market is expected to usher in new growth points
• The scale of the domestic middle class is expanding, and the trend of consumption upgrading remains unchanged

• Accelerated construction of Hainan Free Trade Port provides institutional dividends for the duty-free industry
• Beijing may introduce supporting policies to support the development of local enterprises
• Scarcity of duty-free licenses: Wangfujing’s acquisition of a license means a policy access advantage

####3.

Wangfujing as an established department store retail enterprise, has:

• Brand awareness
  : The “Wangfujing” brand has strong influence in North China
• Supply chain management
  : Decades of retail operation experience
• Channel resources
  : Offline store network and customer resources
• Talent reserve
  : Retail management team

####1.

Comparison Dimension	Wangfujing	China Duty-Free Group	Evaluation
Market Position	New Entrant	78.7% Market Share	Significant Disadvantage
Store Scale	0 Stores (Starting from Scratch)	About 200 Stores	Huge Gap
Procurement Cost	No Scale Advantage	Huge Procurement Scale	Cost Disadvantage
Operation Experience	No Duty-Free Experience	Decades of Experience	Long Learning Curve
Airport Resources	Need to Compete from Zero	Three Major Airport Hubs	Channel Disadvantage

####2.

• Registered capital is only 200 million yuan, which is obviously insufficient compared to the investment scale required by the duty-free industry
• China Duty-Free Group’s 2024 revenue was56.5 billion yuan; Wangfujing’s 200 million yuan registered capital is only
  0.35%
  of China Duty-Free Group’s revenue
• Need a lot of capital investment in store construction, commodity procurement, and channel expansion

####3.

• Currently in the trough period of China’s duty-free industry; the industry leader China Duty-Free Group has both revenue and profit declines
• Consumer preferences have shifted to domestic brands, weakening demand for imported duty-free goods
• International tourism has not fully recovered after the pandemic, leading to insufficient passenger flow at airport duty-free shops

####4.

• Main business is in loss (net profit margin -0.33%)
• It is difficult to provide sufficient cash flow support for new businesses in the short term
• Weak stock price performance limits equity financing capacity

---

1. Scarcity of License
   • The number of duty-free licenses is limited; Wangfujing’s acquisition of a license means policy barrier protection
   • May become an important holder of scarce license resources in the future

2. Regional Brand Advantage
   • Has high brand awareness in Beijing and North China
   • Can use existing store network to expand duty-free business

3. Retail Operation Experience
   • More than 60 years of retail industry experience
   • Mature membership system and customer resources

4. State-Owned Background
   • As a state-owned enterprise under Beijing Municipality, it may obtain more policy support
   • Has advantages in cooperation with local governments

1. Zero Duty-Free Operation Experience
   • Starting from scratch, lack of experience in duty-free product procurement, pricing, and inventory management
   • Need time to accumulate industry know-how

2. Insufficient Capital Scale
   • The 200 million yuan registered capital does not match the investment needs of the industry
   • Difficult to compete on price with giants like China Duty-Free Group

3. Supply Chain Disadvantages
   • No international brand procurement channels and bargaining power
   • Difficult to obtain competitive procurement prices

4. Channel Disadvantages
   • No airport duty-free store resources
   • Lack of cooperative relationships with travel retail channels

5. Industry Timing
   • Entering a market where the peak period has passed against the trend
   • Need to go through the test of the industry adjustment period

---

1. Differentiated Positioning
   • Avoid direct competition with China Duty-Free Group at airport hubs
   • Focus on duty-free stores in downtown Beijing and online duty-free business
   • Explore the “duty-free + department store” integration model

2. Step-by-Step
   • Initially focus on high-frequency categories such as cosmetics and perfumes
   • Use the existing membership system to carry out online duty-free bookings
   • Expand scale after accumulating experience

3. Seek Cooperation
   • Cooperate with international duty-free groups to introduce operation experience
   • Cooperate with tourism enterprises to expand customer sources
   • Consider introducing strategic investors

⚠️

:

1. Policy Risk
   • Fast changes in duty-free industry policies
   • Accelerated license issuance may intensify competition
2. Operational Risk
   • Operational difficulties due to insufficient industry experience
   • Tight capital chain, difficult to sustain investment
3. Market Risk
   • Sustained weak consumption
   • Accelerated substitution effect of domestic brands
4. Competitive Risk
   • Price wars with giants like China Duty-Free Group
   • Entry of foreign duty-free enterprises
5. Financial Risk
   • Difficult to make profits in the short term, dragging down overall performance
   • Affecting the company’s cash flow and financial health

---

Evaluation Dimension	Score (1-10)	Explanation
Market Potential	6	Large market but slow growth
Competitive Advantage	4	License advantage but insufficient experience and capital
Timing Selection	3	Entering during industry trough
Capital Strength	3	200 million yuan registered capital is obviously insufficient
Policy Support	7	Scarce license + Hainan Free Trade Port dividend
Comprehensive Score	4.6	Cautiously Negative

Wangfujing’s entry into the duty-free market

, but :

:

• Obtained a scarce duty-free license, protected by policy thresholds
• Provides a new direction for the transformation of traditional department store business
• Can share the dividends of China’s duty-free market in the long run

:

• The 200 million yuan registered capital is obviously insufficient to form effective competitiveness
• Lack of duty-free operation experience and supply chain resources
• Poor entry timing (industry adjustment period)
• Main business is in loss, difficult to provide cash flow support

: Wangfujing’s duty-free business , but , and . Investors are advised to remain cautious and pay attention to its subsequent capital investment, business progress, and profit improvement.

:

• Whether the registered capital is increased
• Store opening status and operation data
• Cooperation progress with international brands
• Policy support intensity and supporting measures

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[0] Gilin API Data - Wangfujing Group (600859.SS) Company Overview, Stock Price, Financial Data, Technical Analysis

[1] Yahoo Finance Hong Kong - “Bidding Infighting Drives Away Sunrider Duty-Free Shop; China Duty-Free Wins Shanghai Airport Duty-Free Shop” (Reported in December 2025)
https://hk.finance.yahoo.com/news/競投內鬥擊退日上免稅行-中免拿下上海機場免稅店-035337451.html

[2] Wall Street Journal Chinese Edition - “China to Implement Temporary Import Tariffs Lower Than MFN Rates on 935 Items Starting January 1, 2026” [2]
https://cn.wsj.com/articles/china-to-lower-import-tariffs-on-hundreds-of-products-from-2026-xinhua-reports-28c211dc

[3] Sina Finance - “Wangfujing Establishes New Duty-Free Product Operation Company” (January4,2026)
https://finance.sina.com.cn/roll/2026-01-04/doc-inhfcphr2902155.shtml

[4] Eastmoney.com - “Wangfujing Establishes New Duty-Free Product Operation Company with Registered Capital of 200 Million Yuan” (January4,2026)
https://finance.eastmoney.com/a/202601043607872241.html