Entry barriers eased at Hainan FTP

China will further ease market entry criteria for companies seeking to tap duty-free and preferential policies in its Hainan Free Trade Port, Customs officials said on Tuesday, ahead of the port's island-wide special Customs operations on Dec 18.

Speaking at a news conference in Beijing, Xin Yan, deputy director of the General Administration of Customs' department of duty collection, said the rule requiring companies to derive at least 60 percent of their revenue from encouraged industries had been scrapped — a shift that will broaden eligibility and enable more firms to benefit from Hainan FTP's preferential policies.

Moreover, the scope of eligible imported production material and industrial parts has been expanded. In addition to bonded goods covered by the policy previously, "zero-tariff" imports have also been included, said Xin.

To strengthen local processing activity, the government has revised the value-added calculation measure. The value of goods produced within the Hainan FTP can now be deducted from the cost of domestically sourced inputs — in effect allowing Hainan FTP-made products to be counted toward the value-added threshold, according to the administration.

The recognition of such locally produced goods will be handled by relevant authorities in Hainan province.

Xin said that the policy also broadens the application of cumulative value-added benefits. When bonded import goods undergo processing across multiple registered enterprises within the Hainan FTP — whether upstream or downstream in the production chain — the value added at different stages of the process can be accumulated.

"This encourages companies to deepen industrial cooperation, extend value chains and expand production links within the free trade port," she said.

Gao Ruifeng, head of Haikou Customs, said that the necessary hardware and software conditions for the island-wide special Customs operations are now fully in place.

Key facilities, including an international travel healthcare center, a smart supervision technology facility and a laboratory, have all been completed and put into operation as of September last year, said Gao.

Hainan also expanded its island-departure duty-free shopping policy on Nov 1. Following the latest adjustment, the island's offshore duty-free list now covers 47 product categories, from mini drones and portable musical instruments to clothing and tea.

Hua Zhenghong, deputy director of the GAC's department of port control, said the policy adjustments will further meet the diversified shopping needs of travelers and will play a positive role in boosting domestic consumption and attracting inbound spending.

She said that the Customs authorities will upgrade the duty-free supervision system for island departures, deploy intelligent monitoring equipment and tighten digital oversight.

"All duty-free goods will be subject to full-process traceability, supported by dynamic risk-monitoring models to accurately identify and effectively curb illegal purchase activities," said Pan Cheng, director of the GAC's department of free trade zone and special control area.

China announced in 2018 that it would develop Hainan into a pilot free trade zone while gradually exploring and steadily promoting the establishment of an FTP with Chinese characteristics. In 2020, a master plan was unveiled to build the island into a globally influential and high-standard FTP by the middle of the century.