Duty-free shops on China's mainland are struggling.

　　The first such store, in Beijing, suspended operations last year and the others in Shanghai and Dalian say sales are lukewarm.

　　The beijing Downtown Duty Free Shop suspended business during the outbreak of severe acute respiratory syndrome last year after 13 years' operation.

　　China duty Free Group, a state-owned company, is the mainland's only entity authorized to operate duty-free shops.

　　"Business is lackluster because China's duty-free shops are short of product varieties and brands because the business is under strict state control," said Wang Liang, director of Shanghai Institute of Current Economic Research.

　　"Its price advantages are lessening as import tariffs keep declining after China's entry to the World Trade Organization."

　　Currently in operation are Shanghai Downtown Duty Free Shop at the Shanghai Stadium and a shop in Dalian, Liaoning Province, which opened last September.

　　Business at the 4,000-square-meter Shanghai store, the country's biggest and the city's only downtown duty-free shop, was lukewarm from its opening in November 2001.

　　It also took a hard blow from SARS last year and the bird flu early this year, an official from the store said yesterday.

　　"About 95 percent of our customers are Japanese and the SARS and bird flu apparently curbed their presence," said Wu Yun, an official of the store which sells more than 10,000 varieties of goods ranging from luxury fashion to Chinese wines.

　　Wu said the store's sales fell by half last year to US$3 million as a result of the SARS outbreak.

　　"Sales for the first quarter of this year are still slow. We will use various promotions and try to contact more tourist groups in Japan and South Korea to attract more visitors," she said.

　　The downtown duty-free store permits foreigners and Chinese living overseas or outside the mainland to buy goods.

　　Local residents who hold long-term visas for more than a year and show air tickets are also allowed to buy goods there.

　　Prices are 10 to 30 percent lower than in normal stores.

　　Customers are not allowed to take goods from the store but must pick them up at the airport departure lounge.

　　Sales of the Dalian store are about a quarter of the Shanghai shop, sources familiar with the store said.

　　"I won't visit the downtown duty-free shop because I have frequent travel opportunities and can shop at stores in Singapore or Hong Kong," said Tina Passmore, about 30, a Canadian native living in Shanghai. "Product selection is limited at China's duty free shops. I can't find attractive foodstuff and international textiles there."