Hainan Business Setup Foreign Investment Preferential Policies

On April 13, 2018, Chinese President Xi Jinping solemnly announced at the celebration of the 30th anniversary of the establishment of a special economic zone in Hainan Province that the Party Central Committee decided to support Hainan Island to build a free trade zone and support Hainan to gradually explore and steadily advance. In the construction of a free trade port with Chinese characteristics, a free trade port policy and system will be established in stages and phases. This will be China's first free trade port.

Hainan buiness setup preferential policies launched by the government aims at attracting more foreign investment and talents. With further opening up, China is paying particular attention to the development of Hainan's special economic zone. This shows that Hainan Island will be the next investment channel and and a key area of construction and development in the future. Before setting up a business in Hainan, you may have an understanding of the preferential policy of each sector and industry to better take advantage of the business opportunity.

There are advantages for Hainan Free Trade Zone/Port：

Hainan Visa-Free Policy
Since May 1 of this year a visa exemption policy for 59 countries has been implemented in Hainan Province. This policy has three major highlights.

1. Countries that are eligible to apply for visa exemption has been relaxed from 26 countries to 59 countries. Out of the 59 countries foreign nationals from Russia, the United States, and Japan are now eligible to apply.
2. The visa-free duration has been extended to 30 days.
3. Restrictions on the number of visas issued have been lifted.

Foreign tourists (or investors looking to scope out the island for themselves) can visit the island in their personal capacity without having to do so through a travel group and getting a group travel visa.

Departure Tax Refund Policy
Overseas passengers to the island can take advantage of the tax rebate policy upon their departure, and domestic passengers can benefit from a tax exemption policy. Hainan will further improve the tax-free shopping policies upon departure. For example:

1. the establishment of duty-free shops in the city will continue to increase;
2. the tax-free shopping amount limit will go higher;
3. optimize shopping delivery pick up;
4. integrate famous domestic brands and consumer industries and introduce international first-line consumer goods brands to the market.

Exhibition Promotion Policy
Hainan will optimize the development of the exhibition industry and provide tax incentives and customs clearance for entry-oriented exhibitors.

In the near future, large-scale convention and exhibition activities sponsored and introduced by the Hainan Provincial Department of Commerce will provide a maximum subsidy of RMB 5 million yuan per conference and a maximum subsidy of RMB 5 million yuan per exhibition. If the same event includes conferences and exhibitions, the amount of the total subsidy will not exceed RMB 8 million yuan.

Foreign Investment Policy
The government actively supports listing foreign-funded enterprises in Hainan on the domestic main board, SME board, GEM and overseas capital markets, as well as helping to conduct equity financing, where these enterprises can benefit from relevant supporting policies and corresponding financial subsidies.

For enterprises that have already entered the listing period and are registered by the Hainan Supervisory Bureau of the China Securities Regulatory Commission, as well as having completed the shareholding system restructuring will be given a one-time subsidy of RMB 500,000 yuan.

After the successful listing of domestic and foreign capital markets, the company will given a once-off reward of RMB 1.5 million yuan. A one-time reward of RMB 1 million yuan will be given to foreign-invested enterprises that have been listed and registered to move to Hainan and pay taxes in our province.

Cruise Industry Development Policy
Investors in the cruise industry are entitled to a one-time subsidy of RMB 3 million yuan if they meet the following criteria:

1. Previously established an independent legal company in Haikou or an international cruise company in Haikou;
2. Obtained a domestic/international route operation permit from the transportation administrative department;
3. In operation for more than 2 years;
4. Currently uses Haikou Port as the port of departure for the cruise;
5. Tonnage is 50,000 tons or less;
6. For cruise ships with a total tonnage of 50,000 tons or more, a one-time subsidy of 5 million yuan may be granted.

For cruise companies that use Haikou Port as the port to visit Hong Kong, with the number of guests exceeding 500 passengers as well as visiting Haikou's A-level scenic spots or Haikou city-level tourist resorts are entitled to a subsidy.

Departing from Hong Kong, Macao and Taiwan ports, Asian ports and intercontinental ports are each subsidized by RMB 100,000 yuan, RMB 300,000 yuan, RMB 400,000 yuan and RMB 600,000 yuan.

Cruise ships with a total tonnage of less than 30,000 tons, and with destinations to domestic ports of Hong Kong, Macao and Taiwan ports, Asian ports and intercontinental ports are subsidized by RMB 20,000 yuan, RMB 30,000 yuan, RMB 40,000 yuan and RMB 50,000 yuan per calendar day respectively.

Cruise ships with a total tonnage between 30,000 tons - 50,000 tons, and with destinations to domestic ports of Hong Kong, Macao and Taiwan, Asian ports and intercontinental ports are subsidized by RMB 30,000 yuan, RMB 40,000 yuan, RMB 50,000 yuan and RMB 60,000 yuan per calendar day respectively.

Cruise ships with total tonnage of 50,000 tons or more, and with destinations to domestic ports of Hong Kong, Macao and Taiwan ports, Asian ports and intercontinental ports are subsidized by RMB 40,000 yuan, RMB 50,000 yuan, RMB 80,000 yuan and RMB 90,000 yuan per calendar day respectively.

Pharmaceutical Health Industry Development Policy
Customs shall exempt medical research equipment, science and education products or scientific and technological development supplies from import tariffs and import-related value-added tax and consumption tax.

The medical research equipment within the scope of this policy (including domestic investment projects, foreign investment projects and a Sino-Western Catalogue) is exempt from import duties, and the import value-added tax is levied according to the regulations.

In addition, Hainan will gradually eliminate the restrictions on the proportion of overseas capital of joint ventures or cooperative medical institutions, and gradually liberalize overseas capital to establish wholly-owned medical institutions.

Moreover, the duration for overseas doctors to practice in the Medical Advance Area has been extended to three years. Foreign middle and high-end management and medical professionals serving in the Medical Advance Area will enjoy greater convenience when applying for a work permit and a foreign expert certificate.