'Zero tariffs' boost business in Hainan

The Hainan Free Trade Port is taking shape as policies promoting "zero tariffs" and "low tax rates "continue to deliver benefits, Yu Wenzhong, deputy director of the Office of the Free Trade Port Working Committee of the Communist Party of China Hainan Provincial Committee, said on Wednesday.

Speaking at a news conference during Hainan's annual legislative and consultative sessions in Haikou, the provincial capital, Yu highlighted measures such as tariff exemptions for imported pharmaceuticals and medical devices. Approval authority for tax exemptions on value-added processing products for domestic sales has also been delegated to Hainan and applied provincewide.

Zhou Zheng, deputy director of Hainan's Department of Finance, said on Dec 31 that the tariff exemptions for imported pharmaceuticals and medical devices are expected to reduce patient costs and boost the Free Trade Port's competitiveness. The policy is designed to accelerate the introduction of international medical technologies and products.

One early beneficiary is MED-EL, an Austrian hearing implant company. Hospitals in the Boao Lecheng International Medical Tourism Pilot Zone in Qionghai city began importing MED-EL products, taking advantage of tax exemptions in December.

The medical devices include cochlear implants, auditory brainstem implants, bone conduction implants and the latest artificial intelligence machine implant systems. These devices assist doctors in implanting cochlear electrodes, reducing damage to the inner ear and expanding treatment possibilities for patients.

"The 'zero tariffs' policy for imported medical devices has given us a direct cost advantage, enabling lower market prices and allowing us to pass the savings on to patients," said Yang Qing, business director of MED-EL China. "This reduction is a relief for many families, making international advanced medical technologies more accessible."

Since Hainan introduced the value-added processing tax policy in July 2021, 30 companies have conducted such activities, generating nearly 6 billion yuan ($819.1 million) in domestic sales value and saving about 480 million yuan in tariffs as of October 2024, Haikou Customs said.

Last year, Haikou Customs conducted on-site investigations at value-added processing enterprises, expanding the scope of tariff exemptions under the "three unlimited" principle.

The principle removes restrictions on enterprises located in specific customs supervision areas or key industrial parks within the free trade port. Furthermore, companies that can demonstrate the added value of their goods exceeds 30 percent no longer need to apply for Authorized Economic Operators certification.

One beneficiary, Hainan Ouyijia Food Co, based in Danzhou city, sold 22 metric tons of processed pork products domestically last year, taking advantage of the new policy.

"Our company, located in Wangwu Industrial Park, previously did not qualify for the tariff exemptions because we are outside key industrial parks," said Wang Hongbin, general manager of Hainan Ouyijia Food Co. "After the 'three unlimited' principle was introduced, Haikou Customs briefed us on the policy, allowing us to benefit."