Exclusive | Hainan pitches rules to help Hong Kong retailers, goods enter the booming consumer market of ‘China’s Hawaii’

Draft policies aim to ease access to the tropical destination’s consumer market as China prioritises consumption, sources say
The policies would allow certain goods, such as foods and milk powder, to bypass normally lengthy customs and approval procedures

China's border reopening

Iris Ouyang

Published: 5:41pm, 7 Feb 2023

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Hainan province, sometimes referred to as China’s Hawaii, has drafted new policies to facilitate Hong Kong retailers’ entry into the island’s vast retail market, as consumption tops the nation’s economic agenda this year, according to sources familiar with the matter.

The tropical province will dispatch officials to Hong Kong, as well as Southeast Asia, in mid February to promote the region and its policies, answering Beijing’s call to open up its economy to the world, the South China Morning Post has learned.

The southernmost island in China has submitted to Beijing drafts of policies to introduce more Hong Kong retailers to the local market. The policies, if approved, would allow goods to be transported to and sold in certain parts of Hainan while bypassing lengthy customs and approval procedures, which are normally necessary to enter the mainland Chinese market and usually take a year or two, the sources said.

The coming trip comes as local authorities in China are ramping up efforts to revive the economy, with consumption being a main driver this year after Beijing’s exit from its zero-Covid policies. Other cities and provinces, including Guangdong, Jiangsu and Zhejiang, earlier sent officials to attract investment, trade orders and talent.

An aerial photo taken on January 13, 2023 shows the container terminal of Haikou Port in Haikou, south China’s Hainan Province. Photo: Xinhua

Hong Kong-made foods, milk powder, traditional medicine products and fish gelatin are among the goods likely to be included. The sources were not able to specify a timeline.

The policy move underscores Hainan’s accelerated efforts to enhance its attractiveness to investors, businesses and talent before its zero-tariff regime starts across the board by 2025.

Spearheaded by President Xi Jinping, the 35,000 square kilometre island – 32 times the size of Hong Kong and 49 times that of Singapore – is building itself into China’s largest free-trade port.

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The province will send a team led by the province’s Communist Party chief Shen Xiaoming to Hong Kong, Indonesia and likely Vietnam, to showcase Hainan and its policies and explore possible collaborations later this month, the sources said.

“It’s more to tell the outside world how Hainan is trying to open up and it’s friendly,” one source noted.

This follows a previous trip in December that aimed at securing collaboration and investment from overseas companies and authorities.

Hainan officials pursue investment in visits to Germany, Hong Kong, Japan

Hainan and Hong Kong have strengthened cooperation in areas such as jewellery and diamond processing, finance, logistics and retail.

The booming duty free market in Hainan – where sales of cosmetics and jewellery soared 97.3 per cent and 78.5 per cent, respectively, from 2020 to 2021, has already attracted Hong Kong-based retailers. Chow Tai Fook, for example, has around 16 shops in the province, with branches in the duty free malls in the cities of Sanya and Haikou.

Hainan’s tourism and duty-free market is seen as lucrative, with various favourable policies and promotions. Chinese travellers flocked to the tropical island during the weeklong Chinese New Year holiday in late January, more than tripling duty-free sales to over 360 million yuan (US$53 million) per day, compared with the same period in 2019, according to official data.