In a major industry development, e-commerce giant Alibaba Group and China’s most powerful travel retailer, China Duty Free Group (CDFG), today signed a memorandum of strategic cooperation, The Moodie Davitt Report exclusively revealed.
The landmark signing took place at Alibaba Group’s Hangzhou headquarters. Underlining its importance, the ceremony was attended by Peng Hui, General Manager of CDFG parent company China International Travel Service Co. and Zhang Yong, CEO of Alibaba Group.
CDFG President Chen Guoqiang (Charles Chen) and Zhao Ying, Head of Alibaba Globalization Leadership Group signed the cooperation agreement.
The two parties said they will establish a “long-term, stable and mutually beneficial strategic partnership,” and create a duty free cooperation through resource sharing and complementary services. Together they will deliver a new model in travel retail and tourism shopping, they pledged.
Chinese travel retail giant CDFG has over 240 duty free shops, including those in major international and regional airport hubs in Beijing, Shanghai, Guangzhou and Hangzhou on the Mainland, and Hong Kong International and Macau airports elsewhere in China.
CDFG also operates the world’s largest duty free shop, the acclaimed Sanya International Duty Free Shopping Complex on Hainan Island.
Alibaba Group is one of the world’s leading internet, e-commerce and digital companies. Its businesses include its core e-commerce platform, cloud computing, digital media and entertainment, and a host of other innovation projects. It has built an ecosystem around its own platform and business spheres, covering a range of consumer and business activities.
Transforming and upgrading the tourism experience
Through strategic cooperation, CDFG and Alibaba said they aim to build “a new tourism retail ecosystem” based on their respective strengths and services and enhance the tax and duty free consumer experience.
At the signing ceremony, Peng Hui said that this strategic cooperation is not simply a commercial decision based on resource sharing and a strong alliance. It also represents a strategic choice to adapt to an evolving marketplace and seize the opportunity to transform and upgrade the tourism experience, he commented.
“The signing of the strategic agreement fully demonstrates the desire and sincerity of this mutual cooperation, and we are confident in the prospects for future partnership,” Peng said. “I hope that this will be an opportunity to further promote a deeper and higher level of cooperation with Alibaba.”
Charles Chen noted that many of Alibaba Group’s businesses are aligned with CDFG’s strategic direction. “The combination of duty free retail, an increasingly popular form of shopping in recent years, and Alibaba’s ‘new retail’ model will usher in excellent development opportunities,” he said. As a unique sector of the tourism industry, travel retail & duty free will also bring benefits to Alibaba’s ecosystem, he commented.
CDFG and Alibaba have committed to carrying out a “comprehensive and in-depth strategic cooperation” across a range of areas, including e-commerce, membership, big data, and logistics, Chen said.
“We will fully utilize the resource advantages and industry status of both parties, deepen our cooperation and promote industry progress – and work together to create a new duty free experience for consumers.”
“Technology and commerce are being combined at an unprecedented rate”
Alibaba Group CEO Zhang Yong (a former CEO of Taobao and President of Tmall) said that the emergence of a more service-oriented culture, allied to rapid technological development, has driven the travel market away from a price-led approach to one based more on intrinsic value and experiences. There is increasing demand for linkage of services across the travel chain and an upgrading of the consumer experience, Zhang noted.
“Technology and commerce are being combined at an unprecedented rate,” he continued. “With the increasing popularity of outbound travel, duty free shopping has become an ever-more popular form of shopping for tourists.”
Strategic cooperation with China’s largest duty free retailer combines Alibaba’s digital capabilities with CDFG’s industry strengths, he continued. This will allow the parties to jointly explore digital and intelligent forms of tourist retailing, and bring consumers a new model of travel shopping.
Joint online and offline promotions and collaborative marketing
Under the terms of the agreement, CDFG’s offline duty free store operation will be combined with Alibaba’s Fliggy online travel platform and the e-commerce giant’s third-party online payment service. This will jointly build a new tourism ecosystem with online and offline integration to maximize the consumer experience, the two organizations stated.
Simultaneously, the two sides will also implement wide-ranging marketing cooperation. This will involve a mutual opening up of each players’ membership systems to allow extensive joint online and offline promotions and collaborative marketing designed to bring consumers a wide range of benefits and incentives.
Alibaba Group and its cloud computing subsidiary Alibaba Cloud will provide digital cooperation in creating an omni-channel business structure and a global marketing approach. This will lead to the creation of a full-channel business center and data center.
As the only duty free retailer in China with a Customs-supervised logistics network covering the whole country, CDFG has established six major Customs-supervised centers in Dalian, Qingdao, Shanghai, Shenzhen, Sanya and Hong Kong. In order to better promote the integration and development of its international business, CDFG said it will cooperate with Alibaba’s logistics operations and actively explore supply chain cooperation opportunities both domestically and internationally.
In a concluding statement, the two organizations said: “This strategic cooperation is a strong alliance between CDFG and Alibaba Group – two industry leaders. In addition to the cooperation already mentioned, in the future the two sides will actively seek new business integration areas, through an all-round and in-depth cooperation and digital technology application.
“We will continue to explore and innovate, and create a new model of duty free and tourism shopping. We will jointly provide convenience and technology to shape a shopping experience that will further meet consumer needs for an enhanced and personalized experience.”