Hainan Free Trade Port: Ushering in a Strategic New Era for Global Procurement at the Moment of Historic Customs Closure
December 18, 2025, a day destined to be inscribed in the history of China's reform and opening-up. From this very moment, the Hainan Free Trade Port officially commences its island-wide independent customs operation, transforming the entire Hainan Island into a special customs supervision zone.
This marks Hainan's entry into a new, higher-level phase of opening-up characterized by "relaxation at the first line, control at the second line, and freedom within the island." It is also a crucial step in China's transition from openness focused on the flow of goods and factors to one centered on institutional openness.
01 The Sealing-off Moment: The Formal Shaping of a Strategic Pivot
This is a critical juncture transitioning from the "ongoing" to the "completed." According to the official announcement released by the People's Government of Hainan Province, the island-wide independent customs operation starts on December 18, 2025, with supporting core policy documents on goods taxation, customs supervision, and other areas taking effect simultaneously.
After multiple rounds of "full-process, full-element, full-coverage" stress testing and integrated drills, all software and hardware preparations for the operation are fully complete.
"The island-wide independent customs operation is a new starting point for the construction of the Hainan Free Trade Port," stated Wang Fengli, Deputy Director of the Hainan Provincial Party Committee's Office for Deepening Reform. He noted that this lays the foundational conditions for Hainan to advance opening-up on a broader and deeper scale.
For the global procurement landscape, this means a strategic pivot for cost restructuring and risk diversification, long in the making, has transformed from a policy blueprint into a tangible, operational reality.
02 A Leap in Policy Effectiveness: The Fundamental Restructuring of Procurement Cost Models
The independent customs operation is not simple physical isolation but a comprehensive systemic and institutional upgrade. Its core lies in the concentrated release and optimization of a series of policy dividends, directly impacting traditional cost models.
First, a historic leap in the level of "zero tariffs." Post-operation, the range of goods eligible for "zero tariffs" will expand significantly from approximately 1,900 tariff lines to about 6,600, increasing coverage from 21% to 74%. This means almost all imported production equipment and raw materials can enjoy duty-free treatment, potentially saving equipment-importing enterprises about 20% in tax costs.
Second, a profound optimization of the "Processing Value-Added" policy. Policy thresholds have been significantly lowered: the requirement for enterprises to derive at least 60% of revenue from encouraged industries has been removed; "zero-tariff" imported goods are now included in the scope of materials; and the value of goods produced in Hainan is even allowed to be counted towards the value-added portion, making it easier for enterprises to meet the 30% value-added rate requirement.
Furthermore, a qualitative improvement in trade facilitation. For most "zero-tariff" and bonded goods, customs will implement an efficient "direct release" procedure, greatly enhancing clearance efficiency. Enterprises can also adopt measures such as "ship in batches out of the island and declare centrally," significantly reducing logistics and capital occupancy costs.
03 Insights from Corporate Practice: From Policy Dividends to Industrial Momentum
Policy advantages are rapidly transforming into developmental momentum for enterprises. Hainan Weili Medical imports latex from Southeast Asia and processes it into medical catheters in Hainan. Leveraging the Processing Value-Added duty exemption policy, its domestically sold products have saved over 4 million RMB in costs, with cumulative duty-exempted sales reaching approximately 300 million RMB.
The company has been able to reinvest the saved costs into R&D and production capacity expansion, achieving an annual output value growth of over 10%.
In the Boao Lecheng International Medical Tourism Pilot Zone, the "zero-tariff" policy for imported pharmaceuticals and medical devices, combined with special medical treatment policies, allows global innovative drugs and devices to benefit Chinese patients simultaneously and more affordably. This reveals Hainan's unique potential as a "value-adding hub" for high-value-added industries: utilizing low-cost core materials and international innovative factors to complete crucial value-added processes on the island.
Experts from the National Development and Reform Commission pointed out that the independent customs operation will assist Hainan in building an efficient trade route of "Southeast Asian raw materials - Hainan processing - domestic distribution," positioning it as a strategic hub connecting the domestic and international dual circulations.
04 Future-Oriented Layout: An Action Roadmap for Procurement Strategy
Facing this historic opportunity, procurement strategies require forward-looking adjustment. Synthesizing official and expert advice, corporate planning can be divided into three tiers:
The primary task is to thoroughly understand the policies and position precisely. Enterprises must deeply study key policies like Processing Value-Added and the Zero-Tariff List, clarify the eligibility conditions and pathways for their own products and businesses, and avoid blind investment.
The core strategy is to optimize supply chain layout. Companies can assess the feasibility of establishing regional distribution centers, high-end assembly, or R&D bases in Hainan, embedding the island into global supply chains as a flexible backup for production capacity and a cost-optimization node for the Asia-Pacific market.
The long-term key is to ensure substantive operation and compliance management. Hainan's tax incentives (e.g., the 15% corporate income tax rate) are closely tied to the "substantive operation" requirement. Enterprises must ensure they possess genuine physical premises, teams, and business management in Hainan, rather than merely registering shell companies, to continuously enjoy the benefits and control risks.
05 Tide Rising in the South China Sea: A More Open, Convenient, and Exciting Future
With the independent customs operation commencing tomorrow, Hainan stands at a brand-new starting point. For island residents, it means access to a wider variety of duty-free goods and more opportunities to participate in international exchange and cooperation.
For consumers nationwide, the golden icon of "Shop in Hainan, Shop the World" duty-free shopping will shine even brighter.
Post-operation, Hainan's ambitions extend far beyond this. It is committed to becoming an important gateway leading China's opening-up in the new era, strengthening linkages with regions like the Guangdong-Hong Kong-Macao Greater Bay Area, and playing a leading role in the nation's high-level opening-up.
Winds blow from the sea, tides surge in the Free Trade Port. The launch of the island-wide independent customs operation is like a key, officially unlocking a new era for strategic procurement. It not only opens new space for cost optimization and supply chain resilience but also initiates a gateway to participate in the nation's high-level opening-up and jointly create a new landscape for global trade and commerce