China’s Hainan Island Talks Up Potential for Russian Trade & Investment

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  • Duty free import of Russian products
  • Access to mainland China consumers 
  • Attractive tax regime and lifestyle 

China’s Hainan Island can be attractive for Russian companies in terms of tax incentives and prospects for entering the entire Chinese market, the head of the International Economic Development Department of Hainan Province Han Shengjian has said at the China International Consumer Products Exhibition in Haikou.

“I believe that in the future there will be an increase in the flow of Russian companies, as well as Russian talent on Hainan, who will be able to start their own business here,” he said, expressing confidence that there are prospects in opening the head offices of Russian companies on Hainan with subsequent access to the entire Chinese market. “The Hainan market itself is not very big, only about 10 million people live here, but when talking about Hainan, we are talking about the entire Chinese market with a population of over 1.4 billion people, which provides great opportunities for both Russian goods, and for Russian services,” said Han.

Speaking about the prospects for cooperation with Russia, the head of the department pointed out that such areas as aerospace, tourism, agriculture, trade, finance, construction, medicine, education, and new technologies are actively developing in Hainan. In addition, Hainan provides for the exemption from import duties for foreign products exported to the mainland of China, if at least 30% of added value was created due to processing in Hainan.

Hainan Island has the status of a Province within China and possesses a unique business and tax regime which allows it to provide services and import products that are not otherwise available in mainland China, including medical facilities. It is conveniently located an hour’s flight south-east from Hong Kong and is very close to markets in Vietnam and ASEAN. Russia has a free trade agreement with Vietnam via the Eurasian Economic Union, while China has a free trade agreement with ASEAN.

Hainan is also the main Chinese seed production base, since up to 80% of the seeds for the entire Chinese market are grown on the island. This could also be promising in terms of cooperation with Russian agricultural specialists.

Business friendly changes are underway in Hainan, with the construction of a free trade port, and over 60 different preferential policies and legislation. Among these are zero tariffs on imported goods and low tax rates.

After 2025, Hainan will also have its own special customs administration rules. Not only individual industrial parks, but the entire island will turn into a duty-free zone, meaning that imported goods (such as those from Russia) will no longer be subject to import tax, VAT, and consumption tax.

Russian companies and exporters looking to access the China market may find establishing an import-export trading, or light manufacturing/processing business in Hainan makes commercial sense. Dezan Shira & Associates can assist, please contact Maria Kotova at china@dezshira.com. These other articles are also of reference:

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About Us

Russia Briefing is written by Dezan Shira & Associates. The firm has 28 offices throughout Eurasia, including China, Russia, India, and the ASEAN nations, assisting foreign investors into the Eurasian region. Please contact Maria Kotova at russia@dezshira.com for Russian investment advisory or assistance with market intelligence, legal, tax and compliance issues throughout Asia.

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