Hainan Free Trade Port – New Era, New Opening-up, New Opportunity

In order to promote economic and trade cooperation between the province and the UK, the Hainan authorities are holding a conference during the afternoon of Friday, 9th June 2023.
 
In 2020, the Chinese government released a plan aiming to make the province one of the most liberalised business environments in the country – this has led to a huge and growing interest in Hainan.  
 
Facts and figures about Hainan:
 
-    Trends

• A future duty free giant: A KPMG report said that Hainan is set to capture 21% of the global travel retail market by 2028 (up from 12% in 2022)
• Chinese are increasing buying luxury at home: Bain and Company predict that Chinese consumers will make 26-28% of their luxury purchases at home by 2025

 
-    Economics

• First Quarter Growth: Hainan grew 6.8% YoY in the first quarter of 2023, much higher than the national average
• Growth Through the Pandemic: From a record high base – and during the COVID-19 epidemic – Hainan’s offshore duty free sector increased 127% in 2020 and 87% in 2021 (KPMG white paper)
• Spring Festival Success 2023: Hainan made 2.572 billion yuan ($295 million) in sales during the Spring Festival period this year, 329% more than in 2019.
• Recovery of Foreign Tourism: UNWTO (United Nations World Tourism Organisation) estimates that international tourism to Hainan will recover to 80-95% of its pre-pandemic levels in 2023

 
-    General

• The Province: It’s China’s smallest and newest province (became a fully-fledged province in 1988, was part of Guangdong before that), and it is China’s largest ‘Special Economic Zone.’
• Hainan Free Port: The whole island is set to be ‘cut off’ from China in 2025 to become its own jurisdiction in terms of customs. Products moving from mainland China to Hainan will count as exports, and as imports the other way around. They’re laying the regulatory groundwork for that right now.
• Generous Duty Free: Hainan has massively expanded its duty free offering. There’s now a RMB 100,000/year limit on duty free shopping, the number of products available as duty free has expanded massively to include things like tech, you can buy your duty free things online now, and they have the world’s biggest duty free malls (12 covering a total of 500,000 sqm, the equivalent to 70 football pitches).
• Negative list: Hainan has the shortest ‘negative list’ (list of areas/items where foreign business involvement is banned), at just 27 items.
• Tourism Advantage: Only 10% of Chinese people have passports, meaning that 90% of consumers can only travel and shop duty free within China – pointing to strong opportunities for Hainan