Where will China Exemption go after the death of the chairman

On October 15, China Tourism Group China Exemption Co., Ltd. (hereinafter referred to as "China Exemption") issued an obituary, and Li Gang, the chairman and legal representative of the company, died of illness. However, China Exemption Group is not only facing internal worries. According to the latest financial report for the first three quarters, although the revenue and net profit increased, it was hard to hide the situation of low stock prices and lack of investment confidence. At present, the successor of Chairman of the Board of Directors of China Central Exemption Corporation has not been announced, but what is left for the new leader is how to face the diversion of the overseas tax-free market and further increase the confidence of investors.

Less than 9 months in office

On October 15, China Central Exemption Committee issued an obituary about the death of its chairman. Li Gang, the chairman and legal representative of China Central Exemption Committee, died of illness on October 14, 2023.

The announcement said that Li Gang did not hold shares in the company. After Li Gang died, the number of directors of the Company was not less than the minimum number of directors specified in the Company Law. Directors, supervisors, senior managers and all employees of the Company will continue to be committed to promoting the sustainable and healthy development of the Company. In response to the death of the chairman of the board of directors, China Central Exemption Corporation said in an interview with Beijing Business Daily that the normal business activities of the company would not be affected. For further information, please refer to the official announcement of the listed company.

The industry also deeply regrets Li Gang's death. It is reported that Li Gangnian is only 54 years old and has been in office for less than 9 months. In February this year, China Central Exemption announced that Peng Hui applied to resign as chairman and director of the fourth board of directors of the company due to retirement, and also resigned from the strategic committee and nomination committee of the fourth board of directors of the company. The Company elected Li Gang as Chairman of the 4th Board of Directors, Chairman of the Strategy Committee of the Board of Directors and member of the Nomination Committee of the Board of Directors. Li Gang, who succeeded Peng Hui, was the vice general manager of China Tourism Group. At the same time, before the change of name in China, Li Gang served as the chairman of China International Travel Service Co., Ltd. (hereinafter referred to as "CITS", the former name of "China International Travel Service") from March 2017 to August 2019.

During Li Gang's tenure, China Central Exemption Committee welcomed the adjustment of the membership system, and the rights and interests of new members were officially implemented on June 8. At the same time, according to previous media reports, Li Gang, Peng Hui and others are key figures in promoting the transformation and implementation of CITS to tax-free business. Among them, the decision made by Li Gang during his tenure as Chairman of CITS was to acquire the daily duty-free business, lay out the duty-free business of major airports, and establish a joint venture with Lagdale, a famous French tourism retailer, to invest in the tobacco and alcohol business of Hong Kong International Airport.

Behind the slight increase in performance

The chairman of the board of directors died, and the new leader is still pending. For China Zhongfang, which is in the period of performance recovery, it will undoubtedly increase the difficulty.

Not long ago, China Central Exemption Corporation issued a performance bulletin for the first three quarters of 2023. According to the financial report, China Exemption Corporation realized a total operating revenue of 50.837 billion yuan, up 29.14% year on year; The net profit attributable to shareholders of the listed company was 5.199 billion yuan, up 12.33% year on year. Among them, the operating revenue in the third quarter was 14.979 billion yuan, up 27.87% year on year, and the net profit attributable to shareholders of the listed company was 1.333 billion yuan, up 93.19% year on year. Although the revenue and net profit in the first three quarters increased, compared with the growth rate of the tourism market opened after the epidemic, its performance was hardly significant.

At the same time, the performance also affects its investment confidence in the capital market. As of October 15, the share price of China's Zhongfang A-share was only 97.18 yuan/share, with a total market value of 2011 billion yuan. In February this year, the share price of China's Zhongfang A-share exceeded 200 yuan/share, with a market value of more than 400 billion yuan. Now it seems that the share price is almost halved.

In the opinion of Wang Xingbin, a senior tourism expert, the resumption of outbound tourism has provided more channels for tourists to buy duty-free goods, which will inevitably divert the domestic duty-free market in outlying islands to a certain extent. In addition, the number of inbound tourists has not yet recovered, and the number of tourists buying duty-free goods in outlying islands will be significantly reduced.

Zhou Ting, president of VIP Research Institute and luxury goods expert, pointed out that in the past three years, the luxury goods market has soared in China, mainly due to the consumption of Chinese high-end consumers. The Chinese consumer market has undergone structural changes in the past three years, and has become two types of consumers, one is mass consumers, the other is high-end consumers. Although high-end consumers continue to consume, the growth rate of consumption is also slowing down due to various reasons, and now it has entered a period of stable growth. However, mass consumers' spending power in the luxury sector has declined significantly, or even did not consume.

Off shore tax-free pressure bearing

As for the next development of China Central Exemption, people can't help asking: Who will be the next successor? Where will the future go?

In response to an interview with the Beijing Business Daily, China Central Exemption said that the company's board of directors will strictly select relevant positions according to relevant regulations and decision-making process requirements.

Although China Central Exemption Corporation did not disclose the new chairman candidate, there are many problems facing the new chairman in the future.

With more and more players entering the duty-free market, China's duty-free share of Hainan Islands is also at risk of being squeezed. In the first half of this year, Wangfujing International Duty Free Port was officially opened in Wanning, Hainan, which also increased the number of tax-free players on outlying islands.

Wang Xingbin also pointed out that if domestic duty-free groups did not focus on domestic duty-free goods, they would have no advantage in terms of price and variety in competing with international duty-free groups. Therefore, duty-free goods produced in China in the future still need certain competitiveness.

Although the pressure is constantly piling up, China Immune Group is still striving to expand. It is understood that the second phase of CDF Sanya Phoenix Airport duty-free shop was officially opened in early September. For the next development, China Central Exemption Corporation also said that at present, the company's operation is stable and good, the gross profit rate has improved against the trend, and major projects such as Haitang Bay Phase I No. 2 Land have been steadily promoted.

key word: China Exemption China Li Gang chairman