Alibaba’s Cainiao boosts shoppers’ haven Hainan with luxury freight routes

Alibaba’s subsidiary logistics network Cainiao is launching direct cargo flights to increase the supply of luxury goods in China. The flights will initially run between Singapore and Hainan’s Sanya seven times a week. However, Cainiao is seeking to expand the number of routes by the end of the year, including to Japan, South Korea, Australia and New Zealand.

The new service aims to meet Chinese consumers’ growing demand for luxury goods, especially in the face of international travel restrictions which have prevented shoppers from going abroad for their luxury purchases. Consultancy firm Bain & Co predicts that China will account for 46% of all luxury sales by 2025, and the country is taking steps to make shopping domestically more attractive.

Cainiao global supply chain general manager Zhao Jian told Bloomberg that the first flight will take place on May 2 and will deliver duty-free cosmetics. Zhao predicts that Cainiao’s freight volume through Hainan will increase more than tenfold in three years.

Hainan is becoming a top location for Chinese shoppers due to a series of attractive duty-free policies. With international travel unlikely to return soon, the freight routes will help promote Hainan as a luxury destination and provide global brands with more opportunity to sell to Chinese consumers.

However, until the price of luxury goods in China drops, there will still be a demand for shopping overseas, when permitted. Daigou (代购), people who travel overseas to buy items at a cheaper price and resell them at home, are still popular among China’s luxury consumers.

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