Duty-free service is one of the main businesses of CITS GROUP CORPORATION. Through its subsidiary, China Duty Free Group Corporation, operates and manages the duty-free service.

In 1979, Chinese Government approved to undertake duty-free service in China. China Duty Free Company (the predecessor of China Duty Free Group Corporation) was authorized to implement, as the monopoly company, the management policy of "unity of operation, supplies, retail prices, management regulations" for the nationwide duty-free products.

Since 1979 when the Chinese first duty-free shop was established, with over 20 years of rapid development, over 150 duty-free shops have been set up at near one hundred port cities and boundary regions in 28 Chinese provinces, cities and autonomous regions, including international airport duty-free shops, inflight duty-free shops, port passenger station duty-free shops, ocean shipping supply duty-free shops, railway station duty-free shops, duty-free shops for diplomats, boundary duty-free shops and downtown duty-free shops. CDFG is currently one of the duty-free companies with the most retail networks for duty-free commodities in the world. CDFG's annual sales volume has exceeded US$ 200 million, ranking the 20th in the world's duty-free sales.

Duty-free commodities refer to part of commodities exempted of tax when being imported into China. Currently, Chinese duty-free commodities are mainly exempted from the custom tariffs and import tax. Import, transport, storage and sales of duty-free commodities are under strict supervision and control of the customs.

The sale of duty-free commodities is to establish the duty-free shops at the entry and exit port airport, sea port, station, and train to provide the passengers having completed the boarding process for boarding on aircrafts and ships and taking the vehicle to travel to other countries and promote free-duty world commodities of characteristics from all over the world. The sale of duty-free commodities is a common business all over the world to mainly meet the needs of international travelers during their trip.

In 1947, Ireland Shannon International Airport Duty-free Shop was open for business, indicating the start of modern duty-free industry. Afterwards, duty-free shopping is popular in the world. In the 1950s and 1960s, the duty-free shopping started to enter the Pacific and Asian region. In 2003, the global duty-free sale volume reached US$ 20.5 billion.

Being influenced by economic environment and policy, the world duty-free market was in a fluctuation position. Since the 1990s, the duty-free industry in Asian-pacific Region grew at a rapid rate of 3 percentage point higher than the global duty-free industry and gradually stayed away from the influence from European and American duty-free industry, showing clearer regional features. Asian-Pacific duty-free market is now the market with the fastest growth in the world and from 2000 has gradually replaced America to become the second largest duty-free market in the world. In view of the world, the focus of the world duty-free industry is shifting the Asian-Pacific Region.

In China being in the center of the Asia-Pacific Region, the influence of duty-free industry is rapidly enhanced and the market scale is gradually expanded. As compared with the global duty-free market, since 1995, Chinese duty-free market has kept a steady growth, at an average rate of more than 8% and is expected to grow even faster, at a growth rate being much greater than the average 3% of the world.

Currently, in the Chinese duty-free market, the commodities dealt by duty-free shops have developed from the pure imported commodities in the early period to the 20 categories and over one thousand varieties with the imported commodities as the main part and domestic products as a supplementary. They have established a fine business relationship with the duty-free commodity producers and suppliers of over 100 world-known brands. Some of the domestic master pieces have also one after another entered the duty-free shops, while the sales volume of the domestic products have reached about 15% of the total duty-free commodity sales.

As compared with the world duty-free market, in the sales of Chinese duty-free commodities, cigarette and alcohol shares a higher ratio, while perfume, cosmetics and fashion show a comparatively low ratio. As per development rule of the world duty-free industry, such commodities as perfume, cosmetics and fashion and domestic products have an extremely wide space for development. It is expected that in the future, the market share for these categories of commodities will be over 50%.

The main sales channels in the world duty-free market are to operate the matured airport duty-free shops, for the sale volume of the airport duty-free shops shares about 45% of the world duty-free market. In China, the airport duty-free shops are also the main sales channels for duty-free commodities, but the annual sales volume is lower than the world level, showing a huge development potential.

China has a long border line and many neighboring countries, especially Shenzhen Special Region, into which many travelers enter from Hong Kong and Macao. Therefore, the boundary duty-free shops have become the important duty-free market in Mainland China. In recent years, the boundary duty-free shops have developed rapidly, with the annual sales volume shares the highest ratio in Chinese total duty-free market volume.

Establishment of downtown duty-free shops is a common approach in the countries with developed tourism. Currently, China has already had three downtown duty-free shops, but China has just started the pace and shows a limitless development space.

In addition to the above three channels, the Chinese duty-free market has also inflight duty-free shops, passenger transport station duty-free shops, duty-free shops for ocean shipping, railway station duty-free shops, duty-free shops for diplomats in China and other modes. CDFG is one of the duty-free companies with most sales channels.

In recent years, CDFG's travel retail business related to duty-free has also developed rapidly. In 2004, taking the advantage of its strength in the Chinese tourism retail market, CDFG has become the certified official retailer of official licensed products of Beijing 2008 Olympic Games and is the only franchise dealer responsible for Olympic items at the airport terminals and duty-free shops. The official licensed Olympic products include: garment and costumes, stationeries, case and bags, handicrafts, glass products, audio and video products, jewelry, sports apparatus, toys in 13 categories and hundreds of varieties.

In distributing duty-free commodities, CDFG is also actively developing the domestic master pieces and provide the Chinese tourism retail market with the fine-quality and well-known national master pieces with Chinese national characteristics. Now, it has two independent brands of "Chinese Veranda" and "Panda Family" for product monopoly shops. Drawing the name of an ancient commercial street in Beijing with profound cultural charm, the "Chinese Veranda" is a monopoly of general domestic products showing Chinese cultural and characteristic commodities. In the shop are especially set up characteristic special counters: such as Eight-treasure Lane for food, Silk Lane for Silk, Tea House for tea, and Thousand-treasure Lane for handicrafts and ornaments.

Commodities sold at "Panda family" all printed with the image of panda, from where you can now buy toys, costume, foods, souvenirs, shoes, bags and so on.

In order to enrich the shopping options for the customers and pursue the flexible cooperation modes with suppliers, CDFG has started to provide brand management service for well-known brands. Based on the mature duty-free channel, it is to carry out introduction, development, distribution and consignment services for brands, integrate channel resources and develop for the taxed market, to provide the suppliers with brand management service for taxed and duty-free brands. Currently, the brands we operate include ESSE, CELINE glass, GIVENCHY glass, ZIPPO lighter, KENZO silk scarf, etc.