A tie-in between alibaba, the worlds largest ecommerce platform and dufry, the biggest duty-free operator, could not have come at a better time.

The switzerland-based airport retailer has been knocked sideways by the slump in air travel. the deal with the chinese ecommerce giant offers dufry a new channel to a large segment of missing demand.

Alibaba has agreed to buy a stake of up to 10 per cent in dufry. that should increase target proceeds from a share offering from sfr500m to sfr700m ($763m). that will provide handy extra finance after dufry has bought out and delisted $311m us subsidiary hudson.

A joint venture with alibaba is the other reason dufry shares jumped 17 per cent on monday. this could help dufry reach a customer base of 720m.

Chinese travellers have been avid purchasers of duty-free goods. it is the best way of avoiding local taxes of up to 56 per cent on products deemed to be luxury goods. watches and perfumes, for example, are taxed at more than 30 per cent.

But the pandemic has curbed travel and airport shopping sprees. china, meanwhile, wants shoppers to go on spending. the retail sector accounts for more than a tenth of gross domestic product.

Helpfully, china allows foreign companies to sell goods online to chinese consumers at lower tax rates even when they are staying at home. demand has been strong since the pandemic started.

Recently, regulations in the chinese duty-free market have been relaxed at an unprecedented scale, including the tripling of purchase quotas in some provinces. the government expects the market to quadruple to $29bn in the next three years.

But online luxury goods platforms, which include alibabas tmall global and kaola, have long struggled with unreliable goods and vendors. alibaba aims to remedy that through a joint venture with dufry. access to alibabas payment services should also help dufrys physical stores, as air travel slowly recovers. this looks like a great deal for both businesses.

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