Hainan Free Trade Zone Company Registration, Types of Business Formation in Hainan Free Trade Zone

Hainan is the smallest and southernmost province of the People's Republic of China, consisting of various islands in the South China Sea. Hainan Island, separated from Guangdong's Leizhou Peninsula by the Qiongzhou Strait, is the largest Chinese island and makes up the majority of the province.

Haikou is the capital and most populous city of Hainan province, China. It is situated on the northern coast of Hainan. Haikou exports substantial quantities of agricultural produce and livestock. There is a small amount of industry, including canning, textiles, rice hulling, and light engineering.

Sanya lies at the southern tip of Hainan Island at Sanya Bay, In recent years Sanya has become a popular tourist destination Numerous international hotel chains are now established in the area.

Chinese President Xi Jinping has announced plans to transform the entire southern island province of Hainan into a free trade zone (FTZ).

According to a guidance issued by the Communist Party and the State Council, China aims to establish the Hainan FTZ by 2020 and build a Hainan free trade port by 2025. By 2035, Hainan’s free trade system should be completely developed.

Hainan will benefit from relaxed rules for setting up medical institutions, importing medical equipment and pharmaceuticals, and allowing foreign doctors to practice.

Additionally, limited forms of gambling – namely horse racing and sports lotteries – will be permitted in Hainan, as previously rumored. Macau is currently the only jurisdiction in China that allows gambling.

In his announcement, Xi specifically referred to Hainan’s strategic positioning near ASEAN, which makes it an important location for trade with Southeast Asia. “Hainan has the advantage of being on the front line with ASEAN countries,” Xi said. “It should be a pioneer in opening up.”

Xi made the announcement days after his speech at the opening ceremony of the Boao Forum for Asia – which was held in Hainan – where he touted China’s new phase of reform and commitment to free trade and globalization. In his speech, Xi pledged to further open China’s markets to foreign investment and lower tariffs, but many observers were disappointed that he did not announce pilot reforms for Hainan, which were widely expected.

The announcement of the Hainan FTZ was made in celebration of the 30th anniversary of Hainan’s designation as a special economic zone (SEZ). Hainan, which is often referred to as China’s Hawaii due to its tropical climate and large tourism industry, was one of China’s first SEZs and among the first to benefit from the country’s reform and opening up.

There are advantages for Hainan Free Trade Zone/Port Company Registration

1. Free trade port, more advanced open form

The free trade port is a standard form of international cooperation. The " inside the territory while outside the customs" practice free flow, including the free flow of goods and funds. Similar to Singapore and Hong Kong, China, is a more advanced form of openness. At present, Hainan is exploring the construction of a free trade port.

2. Central government's strong policy support for Hainan Free Trade Island

In order to implement the national strategy for Hainan Free Trade Zone construction, the Hainan Provincial Party Committee and the Provincial Government decided to establish the Haikou Jiangdong New District as a centralized exhibition area for the construction of the China (Hainan) Free Trade Zone. In addition, Sanya will become an innovative financial hub in the Hainan Free Trade Zone. Operational activities that are restricted to foreign-funded enterprises are more open on this side, such as finance. The 100-day investment promotion activity in Hainan attracted many enterprises to indicate their presence in Hainan. PricewaterhouseCoopers(PWC), as the world's leading professional services organization and the largest accounting firm, is the first international professional service agency to settle in Hainan.

 3. Tourism Industry Advantage

Tourism is the first of the 12 key industries in Hainan Province. Hainan encourages the establishment of Sino-foreign joint venture travel agencies, strives for relevant policy support, relaxes market access restrictions, and introduces high-quality resources to help the healthy development of tourism. In addition, individuals or teams from 59 countries and regions can travel and enter Hainan without a visa.

 4. Geographical advantage

Hainan has currently opened 44 international air routes and 370 domestic ones. It can reach Vietnam, Hong Kong, Macau, and the Pearl River Delta region in 1 hour, and can reach the Philippines, Brunei, Thailand, Myanmar, Laos, Cambodia, and China in 2 hours. In the triangle area, it can reach Singapore, Malaysia, Indonesia, India, South Korea, Japan, and the Bohai Rim area within 3 hours. Major commercial cities in Southeast Asia are within a 4-5 hour voyage with convenient transportation and excellent geographical location.

5. Less time to finish the company registration

It will take approx. 1 month to register a Consulting Free-Trade Zone company in Hainan. While for a Trading Free-Trade Zone company, it takes 1.5 months.

Setting Up A Business in Hainan Free Trade Zone

Hainan Free Trade Zone company registration is also referred to as Hainan corporate formation, Hainan business setup, Hainan company incorporation. Hainan is the smallest and southernmost province of the People's Republic of China, consisting of various islands in the South China Sea. Being China’s largest Special Economic Zone, nominal GDP of Hainan province has been increasing steadily. In simple words, Hainan provides many opportunities for foreign businesses.

To facilitate people who want to invest and set up business in Hainan Free Trade Zone , here is an introduction of Types of business presence in China:

Before starting up a business in China, you have to know what are the options. Foreign Investors generally establish a business presence in China in one of five modes: Wholly Foreign Owned Enterprise (WFOE); Representative Office; Foreign Invested Partnership Enterprises (FIPE); Joint Venture and Hong Kong HoldingCompany.

WhollyForeign Owned Enterprise (WFOE) is a Limited liability company wholly owned by the foreign investor. WFOE requires no registered capital and it's liability of equity , can generate income, pay tax in China and it's profit could be repatriate back to investor's home country. Any enterprise in China which is 100 percent owned by a foreign company or companies can be called as WFOE.

RepresentativeOffice (RO) is a Liaison Office of it's parent company. It requires no registered capital. It's activities would be: product or service promotion, market research of it's parent company's business, Quality Control liaison office etc in China. RO generally is prohibited to generate any revenue nor generating contracts with local businesses in China.

JointVenture (JV) is a Limited liability company formed between Chinese investor andForeign investor. The parties agree to create a entity by both contributing equity, and they then share in the revenues, expenses, and control of the enterprise. JV usually been used by foreign investor to engage the so called restricted in areas such like: Education, Mining, Hospital etc.

SinceMarch 1, 2010: Measures of Establishment of Foreign Invested PartnershipEnterprises (FIPE) in China is taking effect. The regulation, which take effect since March 1, 2010, are known as the Administrative Measures for the Establishment of Partnership Enterprise in China by Foreign Enterprises or Individuals. There's no required minimum registered capital for a Foreign Invested Partnership Enterprise (FIPE) in Shanghai, Beijing, Guangzhou, Shenzhen, Hangzhou and rest cities of China

HongKong Company usually been used as a Special Purpose vehicle (SPV) to investMainland China. Hong Kong is one of the quickest locations to Incorporate a business. Although a HK company is not a legal entity in Mainland China (MainlandChina and Hong Kong, See Wiki 1 country, 2 systems), lots foreign investors, especially investors from Europe and North America still chose to setting up a Hong Kong company as SPV to invest China.

After China's entry to WTO, most industries in China welcome foreign investment, WFOEsetting up in China becomes the first option of foreign investment's entitystructures instead of Rep. Office setting up in China. At the mean time, for tax purpose, effective licensing system etc more and more investors use Hong Kong as the holding company to invest China mainland, using this offshore company to hold their operations in China.

Business set-up in Hainan is a big project by itself, which requires financial and time commitments, business management knowledge and China expertise. Identifying a competent agent to manage the complex process will be a cost and time effective way to avoid potential pitfalls . Tommy China Business Consulting has direct connections in the local government

Since 2006, TCBC has been focusing on consulting services for our clients to invest in Haikou, Sanya Hainan China. We are specialized in establishment of wholly foreign owned enterprises (WFOEs), setting up of offshore companies, trading services, tax minimization, Assist in obtaining government approvals and certificates for running business, negotiate and draft various legal documents provide legal advice, negotiate government officer for Land acquisition. Advising on formation of WOFE and business structures, managing and controlling WOFE in Hainan China, drafting privacy policies and structuring commercial transactions

TCBC will manage all aspects of incorporation to get you a business license in Hainan China. We offer a range of company formation services including helping you to set up:

-Wholly Foreign Owned Enterprises (WFOE )

-RepresentativeOffices

-Joint Ventures (Equity/Co-operative)

-Foreign Invested Partnership Enterprises (FIPE)

-HongKong Holding Company.

Contact Tom Lee for company registration in  Hainan Free Trade Zone