From 24 to 26 March 2021, the Belgian-Chinese Chamber of Commerce (BCECC) and Voka Mechelen-Kempen Chamber of Commerce & Industry (CCI) organized a 3-day virtual trade mission to Hainan. During the first two days, the participating Belgian companies had the chance to learn about the beneficial policies of the Hainan Free Trade Port (FTP) and get information about the China International Consumer Products Expo (or Hainan Expo), to be held from 7 to 10 May 2021. Additionally, several speakers gave presentations on cross-border e-commerce, marketing in China and case studies. On the third and final day, a virtual B2B matchmaking event was held, during which the Belgian companies had the chance to meet with potential Chinese partners.
The Overall Plan for the Construction of Hainan Free Trade Port, also called “the Masterplan”,is a large-scale plan to transform the entire island province into a Free Trade Port (FTP) – making it the largest special economic zone in China. Hainan is the smallest and most Southern province of China, located in a strategic position along the Maritime Belt and Road. The island is a key hub of the New International Land-Sea Corridor and is at the heart of the Asia-Pacific region, which recently witnessed the signing of the Regional Comprehensive Economic Partnership free trade agreement.
Officially, the Hainan FTP is already operational, but obviously it will take some time until all conditions and infrastructure are fully in place. Nevertheless, more than 1000 foreign-invested enterprises (FIEs) were already set up in Hainan in 2020, which is 3 times more than in 2019. About one third of these FIEs were set up in Haikou, the capital city of Hainan Province, home to 4 of the 11 key industrial parks at the core of the Hainan FTP.
The overall goal is to liberalize the cross-border flows of trade, people and investment and to create a major international market which is easily accessible for foreign companies. Hainan has adopted special policies, such as attractive customs policies, increased market access, cross-border movement facilitation (of people, capital and data) and tax incentives.
The Hainan FTP is also an important factor in the so-called “dual circulation” development model, which on the one hand aims to diminish China’s dependence on earnings from export, foreign technologies and suppliers, and at the same time aims to stimulate domestic innovation, increase R&D spending and protect core technology supply chains from external shocks. In this respect it is clear that the fundamental purpose of the Hainan FTP is mainly to serve domestic consumption and technological development.
Opportunities for Belgian companies?
At this moment most foreign investment flows into the Hainan FTP originate from large organizations and Fortune 500 companies, which also seems to be the focus of the local authorities. However, there are certainly opportunities for Belgian companies in sectors such as healthcare, education, tourism, telecommunications, consumer products and professional services. Moreover, producers of key components, raw and auxiliary materials are able to export their goods (duty-free) to Hainan-based manufacturers in the machinery, aviation and IT sector. Finally, European SMEs that locate their operational headquarters in Hainan, will be able to expand their business networks across the rest of China, while at the same time enjoying a reduced 15% corporate income tax rate, as well as the many other supportive policies.
To conclude: it is definitely worthwhile for Belgian SMEs to establish contacts with potential local partners, but at the same time keep an open mind and prepare well before taking any strategic decisions.
BCECC has privileged relations with the local government and CCPIT in Hainan. Please contact the Belgian-Chinese Chamber of Commerce (BCECC) in case you need more information.