On Thursday, December 18, 2025, China began implementing special customs incentives across the entire island of Hainan as part of the Hainan Free Trade Port (FTP) project β the largest free trade zone in China by area.
For exporters, this means a new way to enter the Chinese market: goods can enter Hainan duty-free, be processed or packaged there, and then sold on mainland China with preferential customs treatment.
Hainan FTP is not just another ordinary free trade zone. With the new legal framework, the entire island has been transformed into a unique free trade port, with its own customs, tax, and regulatory system. The goal is for Hainan to become a regional competitor to Hong Kong and Singapore β a hub for trade, services, finance, and tourism, with rules that are more liberal than the rest of China.
Want to check whether Hainan Free Trade Port makes sense for your product and entry strategy into the Chinese market? Send us a brief product description and planned volume, and we'll create an initial analysis with no obligation.
Request Hainan Assessment βThis guide is for exporters who are thinking about how to:
- reduce customs costs when entering the Chinese market,
- use Hainan as a platform for processing, packaging, and product finishing,
- combine existing benefits (e.g., agreement with Serbia or zero-tariff treatment for Africa) with FTP rules,
- use the lower 15% corporate tax rate for activities on Hainan.
Why Hainan FTP is Important for Exporters
While global trade faces rising tariffs and protectionism, China is opening Hainan as one of its most important gateways for free trade. For foreign exporters, Hainan FTP offers three key advantages:
- Tariff reduction or elimination for a large number of products when entering the island,
- Ability to process on the island with the 30% value-added rule and further export to mainland without tariffs,
- Lower corporate tax (15%) for companies operating on Hainan in incentivized industries.
For many exporters, this practically means that part of the process they currently do "at home" (packaging, finishing, final preparation, adapting packaging) can be moved to Hainan, with savings on tariffs and better access to Chinese customers.
Three Pillars of Hainan FTP: 74% Zero Tariff, 30% Value Added, 15% Tax
Hainan FTP is based on three main pillars:
- Zero tariff for a large number of products β the share of goods eligible for zero tariff increased from 21% to approximately 74% of all tariff products. The list of items that can be imported duty-free expanded from around 1,900 to over 6,600 products.
- 30% value-added rule β goods imported to Hainan duty-free, then processed on the island with at least 30% value added, can be sold on the mainland Chinese market without tariffs.
- 15% corporate tax β for companies registered and genuinely operating on Hainan that belong to incentivized industries, the corporate tax rate is 15%, compared to 25% in mainland China.
These three pillars together make Hainan FTP unique compared to other Chinese free trade zones.
Zero Tariff: What It Exactly Means for Your Product
The share of goods eligible for zero tariff increased from 21% to approximately 74% of all tariff products. In practice, this means that if you export goods to China, products sold on Hainan can be up to 20% more price-competitive compared to the rest of the Chinese market.
For many products (food, beverages, industrial equipment, textiles), tariffs are completely eliminated upon first import to Hainan, provided the goods remain on the island or are processed in accordance with FTP rules.
Key points:
- check whether your product falls on the "zero-tariff" list,
- understand whether you plan for goods to remain on Hainan or go further to the mainland,
- assess whether it's worthwhile to process goods on Hainan to use the 30% value-added rule.
30% Value Added Rule: How It Works in Practice
The second extremely important part of this law relates to semi-finished products and goods processing. Goods imported to Hainan duty-free, then processed on the island with at least 30% value added, can be sold on the mainland Chinese market without tariffs.
Simply put: if you have a product, you can deliver it to Hainan, perform finishing, packaging, or final processing, and then sell it across China without customs costs.
Example 1 β candies: If you have your own candy brand, you can deliver them to Hainan in semi-finished form, perform packaging and adaptation to the Chinese market (language, labels, design), and thus be ready for placement across the entire Chinese market without tariffs.
Example 2 β industrial equipment: If you export machine parts, you can deliver them to Hainan, assemble them into the final product, add software, calibration, labels, and documentation in Chinese, and thus achieve 30% value added.
For exporters of food, beverages, textiles, and industrial equipment, this means that part of the process they currently do at home can be moved to Hainan, with savings on tariffs and better access to Chinese customers.
15% Corporate Tax: Who Can Use It and How
The third significant incentive relates to companies that are registered and genuinely operating on Hainan and belong to incentivized industries. For them, corporate tax is 15%, compared to 25% in mainland China and 16.5% in Hong Kong.
The list of incentivized industries is broad and includes, among others:
- desalination equipment,
- commercial spaces,
- import food processing,
- modern agriculture,
- certain forms of tourism and accommodation,
- logistics and warehousing.
It's important to note that customs and import procedures are further simplified, including elimination of licensing requirements for many used mechanical and electrical products.
Examples: How Exporters Can Use Hainan FTP
Options depend on the nature of your product, volume, and target segment. Here are several examples:
Example 1: Food Products and Beverages
An food manufacturer from the EU exports semi-final products (e.g., raw materials for sweets, baking mixes) to Hainan. On the island, the following is performed:
- final baking/processing,
- repackaging into smaller packages,
- printing packaging in Chinese,
- applying labels and barcodes.
If 30% value added is achieved, the product can be sold across the entire Chinese market without tariffs, with lower tax treatment for the company on Hainan.
Example 2: Textiles and Footwear
A textile manufacturer from Africa exports fabrics or semi-finished clothing to Hainan. On the island, the following is performed:
- cutting and sewing,
- additional processing (washing, dyeing, finishing),
- packaging and branding.
Here, 30% value added can also be achieved, enabling sales on mainland China without tariffs.
Example 3: Industrial Equipment and Parts
A machinery and parts manufacturer from Europe exports components to Hainan. On the island, the following is performed:
- assembly of final machines,
- software installation,
- calibration and testing,
- packaging and documentation in Chinese.
Here too, the 30% value-added rule enables further export to mainland without tariffs, with lower corporate tax for the company on Hainan.
What This Means for Exporters from Serbia and Africa
For exporters from Serbia and 53 African countries that already have free trade agreements or zero-tariff treatment with China, Hainan FTP is an additional model that can be combined with existing benefits as needed.
Serbia signed a Free Trade Agreement with China in 2024, enabling gradual tariff liberalization for a large number of products. Many African countries received unilateral zero-tariff treatment for 100% of tariff items. For exporters from these countries, Hainan is not mandatory but an option that can be worthwhile depending on the type of product, margin, and market entry method.
If you produce in Serbia or an African country and target the Chinese market, Hainan FTP can be a useful solution for:
- finishing and packaging products before entering the mainland,
- adapting packaging and labels for the Chinese market,
- warehousing and distribution to customers in China.
Our Role: How We Help You with Hainan FTP
Our office in Sanya exists precisely so that Hainan doesn't remain just an interesting story on paper, but a concrete tool in your strategy for entering the Chinese market. Depending on the product and target segment, Hainan can be used as an entry point for warehousing, packaging, finishing, local distribution, or a combination of these activities.
Options are numerous and largely depend on the nature of your business. We can help you find appropriate local partners on Hainan and prepare your product for entry into the Chinese market.
Do you have a product you could place in China, or are you thinking about moving part of the process to Hainan? Send us a brief product description and planned volume, and we'll assess whether Hainan and Hainan Free Trade Port make sense for your case.
Send Product Description βIf you want to check through a concrete calculation whether Hainan FTP makes sense for your product β from product analysis and FTP condition verification, through finding local partners, to operational support and logistics β send us an inquiry for Hainan FTP consultations.
The process usually includes:
- analysis of product and goals in the Chinese market,
- verification whether the product and planned process fit existing FTP rules (whether it falls on the zero-tariff list, whether it's worthwhile to achieve 30% value added),
- defining the model β what to do on Hainan and what to keep in the country of origin,
- establishing cooperation with local partners and organizing operational flow.
The concrete calculation always depends on your industry, volume, margins, and target customer. That's why the first step is always analysis β whether you're looking at Hainan as a tourist, business partner, or as a new entry point into the Chinese market.
Our presence on Hainan is not accidental. Given the announcements about Hainan Free Trade Port development, in 2019 we moved part of our operations from Guangzhou to Hainan, to the city of Sanya, where we established the company Sanya Gabriel Import & Export Co., Ltd.
For international companies, Hainan represents a unique opportunity and significantly eases entry into the Chinese market through a more favorable regulatory and tax framework. That's exactly why our company headquarters is located in Sanya β in a location with a unique position: deeply connected to China, yet simultaneously open to the rest of the world, with a clear goal of efficiently linking these two markets.
Frequently Asked Questions
Does Hainan Free Trade Port mean there is no tariff for all goods?
No. Hainan FTP provides zero tariff for a large number of products on the privileged treatment list, but not for all goods. That's why it's important to check whether your product falls into the category that can use this benefit.
What does the 30% value-added rule mean?
It means that goods imported to Hainan, then processed there to achieve at least 30% value added, can be further sold on mainland China without tariffs.
Who can use the 15% corporate tax rate?
This rate can be used by companies that are registered and genuinely operating on Hainan, provided they belong to incentivized industries specified in Hainan FTP rules.
Which products and business models does Hainan Free Trade Port benefit most?
Hainan Free Trade Port is most useful for products that can be finished, repackaged, or finally processed on the island before entering mainland China, as well as for companies that want to use lower tax treatment and a logistics center for distribution in China.
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