Hainan Free Trade Port: Opportunities and Compliance Insights for Foreign Investors

Kristina Coluccia
Sep 23, 2025
3 min read

China’s Hainan Free Trade Port (FTP) is one of the country’s most ambitious initiatives to promote openness, attract investment, and position Hainan as a global business hub. Officially launched in June 2020, the FTP builds on China’s broader free trade zone strategy but goes further in offering preferential tax, trade, and regulatory policies.

For foreign investors, understanding the framework of the Hainan FTP is critical — not only to seize opportunities but also to stay compliant with evolving policies.

What is the Hainan Free Trade Port?

The Hainan FTP covers the entire island province of Hainan in southern China. Its aim is to transform Hainan into a globally influential free trade port by 2050, comparable to Hong Kong and Singapore.

The roadmap for the FTP is structured in phases:

By 2025: Establish a free trade port system with strong foundations in trade liberalisation, tax reforms, and investment facilitation.
By 2035: Build an advanced system of open economy aligned with global standards.
By 2050: Position Hainan as a world-class free trade port with strong international influence.

Key Features of the Hainan FTP

1. Trade Facilitation

Simplified customs clearance procedures with a focus on “first-line” liberalisation and “second-line” control.
Free flow of goods into Hainan with streamlined processing, while goods moving from Hainan into mainland China remain subject to tariffs and import rules.

2. Tax Incentives

Corporate Income Tax (CIT): Reduced 15% rate for encouraged industries (compared to the standard 25%).
Individual Income Tax (IIT): Capped at 15% for qualified talent in certain sectors.
Exemptions on import duties, value-added tax (VAT), and consumption tax for goods imported into Hainan, provided they remain in the FTP or are used in encouraged industries.

3. Investment Policies

Negative list management system that reduces restrictions on foreign investment.
Easier cross-border capital flows, including support for free convertibility of the Chinese yuan (RMB) in Hainan under capital account conditions.
Pilot financial reforms, such as offshore trading and cross-border asset management.

4. Talent and Immigration

Relaxed visa rules to attract foreign talent, including visa-free entry for citizens from many countries.
Policies to encourage global professionals in technology, finance, tourism, and healthcare to relocate to Hainan.

5. Industry Focus

Hainan FTP policies specifically encourage investment in:

Tourism, modern services, and high-tech industries
Healthcare and pharmaceuticals
Finance and insurance
Agriculture, shipping, and logistics
Education and cultural exchange

Compliance and Risk Considerations

While the opportunities in Hainan are significant, businesses should be aware of:

Policy Adjustments: The FTP framework is evolving, and detailed regulations are being gradually implemented. Frequent updates are expected.
Customs Compliance: Although goods flow freely into Hainan, moving goods to mainland China requires strict adherence to customs and tax rules.
Substance Requirements: To qualify for tax incentives, enterprises must maintain substantial operations in Hainan, not just paper entities.
Sector Eligibility: Tax incentives and benefits are tied to encouraged industries. Companies must carefully assess whether their activities qualify.

Why Hainan FTP Matters for Foreign Investors

The Hainan FTP represents China’s strongest signal of long-term commitment to trade and investment liberalisation. For foreign businesses, it offers:

A strategic gateway to the Chinese market with preferential policies.
Access to favourable tax regimes that can significantly lower operational costs.
Opportunities to participate in pilot reforms in finance, digital trade, and cross-border services.
A location designed to attract international talent and innovation.

How Woodburn Can Support

Entering the Hainan Free Trade Port requires more than recognising its potential — it requires a deep understanding of the regulatory framework, tax incentives, and compliance landscape.

At Woodburn, we help foreign investors and multinational enterprises:

Evaluate eligibility for Hainan’s tax and investment incentives.
Structure operations to ensure substance compliance with local requirements.
Navigate payroll, and government registrations within the FTP.
Stay informed on regulatory updates that may impact your business.

Woodburn Accountants & Advisors is one of China and Hong Kong’s most trusted business setup advisory firms.

Woodburn Accountants & Advisors is specialized in inbound investment to China and Hong Kong. We focus on eliminating the complexities of corporate services and compliance administration. We help clients with services ranging from trademark registration and company incorporation to the full outsourcing solution for accounting, tax, and human resource services. Our advisory services can be tailor-made based on the companies’ objectives, goals and needs which vary depending on the stage they are at on their journey.