Policy spreads duty-free benefits to more buyers

As the Hainan Free Trade Port's island-wide special customs operations get underway, the optimization of the offshore duty-free policy, a key step in its opening-up drive, will help turn the island into a consumption hub that offers greater opportunities for both domestic and foreign players, experts said.

Recent updates have expanded product categories, extended the eligibility to more tourists and allowed unlimited purchases for qualified residents, making it easier for residents and tourists to shop, they added.

Hainan's offshore duty-free policy is a tax incentive that allows eligible travelers and residents to buy goods exempt from import duties, value-added tax and consumption tax when departing the island.

Under the updated policy, effective from Nov 1, the range of duty-free goods available offshore has expanded to 47 categories. New additions include pet supplies, portable musical instruments, mini drones and small home appliances.

Domestic products such as apparel, footwear and headwear, ceramics, scarves, coffee and tea may be sold in offshore duty-free shops and qualify for exemptions and refunds of value-added tax and consumption tax, according to a notice issued by the Ministry of Finance, the General Administration of Customs and the State Taxation Administration in October.

"The island's duty-free appeal traditionally relied almost entirely on offering travelers access to sought-after international brands at lower prices," said Zhu Keli, founding director of the China Institute of New Economy.

"Now, the updated policy integrates domestic brands into the duty-free system — a move that aligns with the rise of guochao, or China-chic, which has been gaining traction and influence among both Chinese and overseas consumers," he added.

Zhu said that Hainan's refined duty-free policy is becoming a practical catalyst for China's consumption upgrade and going global efforts by turning the island into a curated gateway where "Made in China" engages with the world.

The new duty-free policy also extends to outbound travelers. Purchases made by passengers departing Hainan for destinations abroad will count toward entirely on offering travelers access to sought-after international brands at lower prices," said Zhu Keli, founding director of the China Institute of New Economy.

"Now, the updated policy integrates domestic brands into the duty-free system — a move that aligns with the rise of guochao, or China-chic, which has been gaining traction and influence among both Chinese and overseas consumers," he added.

Zhu said that Hainan's refined duty-free policy is becoming a practical catalyst for China's consumption upgrade and going global efforts by turning the island into a curated gateway where "Made in China" engages with the world.

The new duty-free policy also extends to outbound travelers. Purchases made by passengers departing Hainan for destinations abroad will count toward their annual offshore duty-free shopping quota of 100,000 yuan ($14,200), with no restriction on the number of transactions.

Hainan has recorded nearly 2.55 million inbound and outbound trips this year through Dec 16, marking a 25.9 percent increase from the same period last year, according to local authorities.

In particular, the inbound and outbound trips made by foreign visitors surpassed 1.38 million, a jump of 44.1 percent year-on-year, showing the island's rising appeal as an international destination.

"To meet the growing consumption demand from outbound travelers, this policy adjustment extends benefits to departing passengers, significantly enhancing the attractiveness and convenience of shopping in Hainan, especially for international visitors," said Zhou Zheng, deputy director of Hainan's provincial finance department.

For Hainan residents who have departed the island within a calendar year, they can make unlimited purchases of offshore duty-free goods during that year.

For local residents like Weng Huayu, a mother of two living in Haikou, provincial capital of Hainan, the latest tweaks to Hainan's duty-free shopping policy are less about high-end luxury and more about practical household savings.

"As an island resident, the policy optimization has made daily shopping so much more convenient," Weng said. "Things like imported infant formula and diapers for my kids — I can now buy them anytime with immediate purchase and pick-up, as long as I have a record of having left the island. The prices are better, and it's a real quality-of-life benefit."

According to Haikou Customs, the upgraded offshore duty-free policy recorded 2.38 billion yuan in sales during its first month of implementation in November, marking a year-on-year increase of 27.1 percent. The policy drew in 329,000 shoppers, who purchased more than 1.9 million items.

For international brands, Hainan offers a high-traffic, tariff-advantaged gateway into one of the world's most robust consumer markets, said Zhou Mi, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation.

Meanwhile, for Chinese manufacturers, it provides an important platform to test, showcase and elevate their products alongside global peers in front of a broader audience, Zhou added.

wangkeju@chinadaily.com.cn