On frontlines of Hainan Free Trade Port development

By Zhou Yajun, Wang Yunshan, People’s Daily
China’s Hainan Free Trade Port (FTP) is expected to achieve independent customs operations before the end of this year. In recent years, Hainan province has steadily improved its FTP policy and institutional framework, achieving an average annual growth of over 20 percent in both goods and services trade through high-level opening up. The actual use of foreign capital has also shown steady expansion.
“A 21% tariff exemption is a huge boost for sales,” said Zhou Shuo, managing director of gN Pearl, a Hainan-based company specialized in pearl farming, research and development, production, and sales.
One of the signature policies of the Hainan FTP is the tariff exemption for domestically sold goods that have undergone value-added processing. According to this policy, for companies in encouraged industries, products whose added value exceeds 30 percent after the domestic processing of imported intermediary products, are exempt from taxes when entering the rest of China.
As a local company specializing in pearl products, gN Pearl has already imported three batches totaling over 2,000 golden and white South Sea pearls in the first quarter of this year. The company expects to increase imports to 30,000 pearls by year-end. With a procurement cost of 12 million yuan ($1.67 million), the tariff exemption policy is estimated to save the company over 2.5 million yuan.
According to customs of Haikou, capital of Hainan province, as of the end of this March, domestic sales of value-added processing industries in Hainan had reached 7.54 billion yuan, resulting in approximately 601 million yuan in tariff exemptions. Benefiting from such policies, a number of modern processing enterprises targeting both domestic and international markets are thriving in Hainan.
Following Hainan FTP’s independent customs operations, the FTP will further ease market access and implement negative lists for cross-border services trade and foreign investment. These steps are expected to attract more foreign enterprises and international talent to invest and do business in Hainan.
From investing 220 million yuan in a new coffee processing line and upgrading a coffee culture park, to investing 540 million yuan in building a coffee-themed resort, Thailand’s CP Group has been increasing its investment in Hainan year after year.
“Investing in China is investing in the future. The vast scale of the Chinese market reinforces our confidence,” said Wang Mengjun, senior vice president of Chia Tai (Hainan) Xinglong Coffee Industry Development Co., Ltd., a subsidiary of CP Group.
Since 2021, CP Group’s business in Hainan has doubled annually. In March, its Xinglong Coffee Culture Park was successfully accredited as a national AAA-rated tourist attraction, receiving over 400,000 visits so far.
Hainan is actively creating an internationalized business environment. In recent years, it has explored fully digitized processes for foreign-funded enterprises through an e-registration system, launched a one-stop investment service platform, and introduced 8 service packages for foreign enterprises and foreign nationals, including customs clearance and residence permits.
“Hainan’s favorable business environment and efficient services allow us to focus fully on doing business,” Wang said.
In 2024, despite challenges posed by globalization headwinds, Hainan saw the establishment of over 2,000 new foreign-invested enterprises, a year-on-year increase of around 20%.
At 5 pm Beijing time, a livestream kicked off at a studio of a media company located in the Hainan Cross-Border Digital Information Industrial Park. A host, speaking fluent English, introduced Chinese herbal teas to fitness enthusiasts in the US during their early morning hours.
“Despite changes in the external environment, our revenue has sustained rapid growth,” said Chen Jifeng, general manager of the media company. “This studio’s daily sales have jumped from 10,000 yuan last year to 130,000 yuan now. Our revenue in April was five times that of February.”
According to him, the company’s best-selling product right now is Chinese herbal tea, which is popular among overseas consumers seeking a healthy lifestyle.
In 2023, Chen made the decision to pivot to cross-border e-commerce exports. “We chose Hainan because the FTP’s policies support the secure and orderly flow of data,” he explained.
Starting in 2023, China has supported Hainan in accelerating the implementation of data flow governance policies. A Haikou international communications gateway administration was approved, and China Unicom’s Hainan branch and HNINFORNET, a Hainan based company specializing in information and communications, jointly began developing a cross-border information industry service platform.
“A single terminal now enables users to access the global internet through a compliant, secure cross-border data channel,” said Gan Quan, deputy general manager of China Unicom’s Hainan branch. “This completely solves the issue of unstable internet connections in cross-border e-commerce and enables seamless global network connectivity.”
Dun & Bradstreet, an American company that provides commercial data, analytics, and insights for businesses, established a presence in Hainan in 2022 and became the first enterprise in the province to pass the Cyberspace Administration of China’s outbound data security assessment in 2023.
“In Hainan, both foreign and state-owned enterprises are treated equally with an open and inclusive environment,” said Wu Guangyu, president of Dun & Bradstreet China. “We see Hainan as a key hub bridging domestic and international markets and aggregating data resources. We eagerly anticipate the launch of independent customs operations in Hainan FTP.”