Hainan details free port rules: goods with 30% value added on the island get special treatment

Hainan’s Department of Finance, Development and Reform Commission and Department of Commerce issued a joint notice on November 2 on how the free trade port operates now that the whole island runs under a special customs regime, China News Service reported.

On the “first line” (the border between Hainan and overseas), goods that entered special customs zones, logistics centres or bonded warehouses from abroad and were only stored, without processing, testing, repair or blending, follow first-line import rules when they move into the rest of the island. Quarantine, inspection and licence checks already completed will not be repeated.

On the “second line” (the border with mainland China), products of encouraged-industry companies that use imported inputs and add 30% or more value in Hainan will, when sold on the island, get the same treatment set for entry into the mainland. The notice took effect on publication.

CSP take: for anyone considering Hainan as a final-assembly or regional stock base, the 30% value-added threshold is the key parameter. Before deciding, model the cost of processing on the island against the tariff gain. This reading is ours, not Hainan’s.