China Duty Free Group (CDFG) will open two duty-free stores in Cambodia’s largest tourism hot spots as part of the retailer’s first offshore expansion, marking the first time a duty-free store has been opened outside of the country’s airports.

John Zhao, general manager of CDFG-Cambodia, said yesterday the company is planning to invest $35 million into setting up two stores, one in Siem Reap by the end of the year,and another located in Phnom Penh by the second half of 2015.

“About five million foreign tourists are expected to visit Cambodia this year. There is no international space for shopping in Cambodia. We are the first downtown duty-free shop to gain official approval to open here,” Zhao said.

According to Zhao, CDFG Cambodia is the first subsidiary of the state-owned group to be established outside of China. Cambodia was selected because of its growing tourism industry, which is increasing at about 15 per cent annually, he said.

“Around 45 million Chinese tourists visit Hong Kong every year just for the shopping. Chinese tourists like to spend money on buying luxury brands. Cambodia receives around five million tourists every year and almost 500,000 of those are Chinese,” he added.

Construction commenced on the Siem Reap store, which will have four levels and 4,500 square metres of retail space, in July and is expected to open officially in December.

The company is currently studying locations for the second Phnom Penh store, according to Zhao.

CDFG, established in 1984, is the only state-owned enterprise authorised by China’s government to operate duty free businesses in China.

Ang Kim Eang, president of the Cambodian Association of Travel Agents said he hoped CDFG’s arrival would prompt more duty free retail operators to venture into Cambodia.

“It benefits the tourism industry as it will attract more tourists who like to shop for luxury brands, and Cambodia can be another shopping destination like Malaysia,” he said.

In April, Shilla Duty Free, a Korean-based firm announced it had plans to expand to Cambodia. So far, however, the firm has not established a footing in the Kingdom.