Hainan Free Trade Port

Register a company in the Hainan Free Trade Port, the hottest FTZ in China.

Register a WFOE in the Hainan Free Trade Port

The Hainan Free Trade Port is a special economic zone where trading companies can benefit from preferential policies towards import, export and trade, a relaxed business environment, and access to the Hainan special economic zone. Trading companies registered inside the Hainan Free Trade Port benefit from the following: exemption from paying tax duties on the initial importation of goods into China, a lower corporate tax rate of 15%, simplified and streamlined customs procedures, 0% foreign exchange rate and Hainan Free Trade Port bank accounts in multiple currencies, and a cluster of warehousing and logistic services to choose from.

Hainan Free Trade Port is also an ideal location for trading, as it offers access to both the Chinese market and the global market. Companies registered in Hainan Free Trade Port will enjoy all of these benefits and more.

Import tax exemption

Free foreign exchange

Logistics infrastructure

Lower corp. taxes

hainan free trade port registration

Hainan FTP Registration

01.

Name & Address

Getting you a registered address & preparing documents.

  • WFOE Chinese name
  • Virtual address OR
  • Free trade zone address
  • WFOE application

  • 02.

    Business License

    Your business license and corporate chops are issued.

  • Business License
  • Company Official Chop
  • Financial Chop
  • Legal Representative Chop

  • 03.

    Corporate Accounts

    Opening of your corporate bank account & tax accounts.

  • Corporate bank account
  • Social insurance account
  • Housing fund account
  • Tax registration number

  • 04.

    Trading Certificates

    Issuance of additional licenses where applicable.

  • Import / export license
  • Food & beverage license
  • Alcohol license
  • Medicine license

  • 05.

    Ongoing Support

    Monthly tax & accounting reports for compliance.

  • Monthly tax & accounting
  • Invoice issuance
  • Financial Chop
  • Payroll

  • 06.

    Additional Services

    Opening of your corporate bank account & tax accounts.

  • Annual tax return
  • Trademark registration
  • ICP license
  • E-commerce in China

  • For companies importing into or exporting out of China.

    Trading WFOEs are essentially consulting WFOEs armed with an import/export license and other licenses for specialty products. Trading companies can take advantage of Free Trade zones in Shanghai & Guangdong.

    Our Working Process

    01.

    Consultation & Proposal

    We (can) advise you on the best solution for your business model and send you our comprehensive proposal.

    02.

    Signing & Payment

    After reviewing the proposal, we sign the service contract and receive your payment.

    03.

    Preparing Documents

    We send you an application form as well as the list of documents we need from your side.

    04.

    Take a Break

    Sit back, relax and let us take care of everything from here on out. Your WFOE will be ready in roughly one month.

    Frequently Asked Questions

    Yes. We can register your trading company (WFOE) in the Hainan Free Trade Port.

    Economic policies in the Hainan Free Trade Port are beneficial towards different industries and were implemented to attract specific businesses to specific areas. Originally, the Free Trade Zones were all export and import oriented and served to attract more trading companies. Since 2016, the purpose of Free Trade Zones in China and their policies have varied from region to region. Generally speaking, Free Trade Zones offer tax advantages, services and infrastructure.

    As of May 2021, there are 21 Free Trade Zones in China:

    • Shanghai (2013)
    • Guangdong (2015)
    • Tianjin (2015)
    • Fujian (2015)
    • Chongqing (2016)
    • Sichuan (2016)
    • Shaanxi (2016)
    • Henan (2016)
    • Zhejiang (2016)
    • Hubei (2016)
    • Liaoning (2016)
    • Hainan (2018)
    • Jiangsu (2019)
    • Shandong (2019)
    • Hebei (2019)
    • Heilongjiang (2019)
    • Guangxi (2019)
    • Yunnan (2019)
    • Beijing (2020)
    • Anhui (2020)

    A WFOE is short for Wholly Foreign Owned Enterprise. A WFOE is a 100% foreign-owned (individual or corporate) limited liability company able to generate profit, invoice clients and hire local / foreign employees in China.

    Yes, a WFOE can fully carry out business in China in line with its agreed business scope. It can issue local currency invoices to domestic customers, and make profits from its activities.

    Any operating profit made in China can be converted to foreign currency for transfer to an overseas parent company.

    The government will take into account a few factors for work visa issuance such as: how long has the company been registered, how much tax history does the company have and how many local employees does the company have. This does not apply to shareholders of a new company, as these individuals (local or foreign) will always receive a work visa. 

    Although there is now (since changes in 2016) no fixed minimum requirement, in practice most WFOEs will still require capital injection. The planned amount is reviewed by local authorities during application and it makes business / tax sense to get the level right from the start.

    The amount will vary greatly for different types of business – naturally a small consulting company requires much less than a complex manufacturer. As a guide, sufficient funding is needed to cover the WFOE’s financial obligations before the company is self-supporting (often set as 1 year). Note that there is now much more flexibility than in the past regarding the time period over which capital should be injected.

    It is important to set the capital level appropriately during formation. If it is set too low, any additional funding must be taxed as income (further capital injection is possible but there is a very time consuming approval process). Set it too high, and of course funds may be tied up that could be used elsewhere (and these will be hard to release).

    A WFOE registration is the most complete and flexible option for opening a company in China. It has many advantages over a Representative Office or a Joint Venture operation. Here are some of the key advantages we see in WFOE formation.

    Can be formed without a Chinese partner

    A WFOE is independent, able to manage its own operations, funding and business development. Without a parent, it does not need to share profits, strategies or Intellectual Property.

    Can make profits in China

    A WFOE can fully carry out business in China, in line with its agreed business scope. It can issue local currency invoices to domestic customers, and make profits from its activities.

    Able to send funds overseas

    Any operating profit made in China can be converted to foreign currency for transfer to an overseas parent company.

    Able to hire staff directly

    A WFOE can manage its own human resources (without using an agency), and hire staff both locally and from overseas.

    The best option to protect IPR in China

    The WFOE structure provides some level of protection under Chinese law.

    1. Apply for name approval and registration

    The first step in registering a WFOE in China is to choose an compliant name and get it approved.

    The name choice must follow rules set up in Chinese company registration laws. The company name must include the company industry or brand, operating region of the business, and a suffix of “Company Limited.”

    The following will be checked during name approval:

    • Availability of the requested name. This can be checked independently on the SAIC website (http://www.saic.gov.cn/sbjEnglish)
    • Inclusion of restricted words, such as “China”, “State” or “National”
    • Inclusion of foreign characters or symbols
    • Whether the name is confusing or misleading

    Don’t forget the importance of naming strategy and branding. Just as overseas, your company’s name is the first impression of your company. It should clearly reflect the company role and image. Consideration should also be made of the characteristics of the Chinese characters. Many words or characters have similar meaning or sounds which can strongly influence the impact of the chosen name (both positively and negatively!)

    Note that the name registration can be done early whilst you prepare further, and to aid trademark registration. It is not necessary to immediately submit company filing to MOFCOM after the name is approved. Note also that it is common to submit more than one name for consideration.

    1. Rent office space as necessary

    Before submission for WFOE incorporation, it is necessary to have a lease for company space in the city of registration. The contract for this needs to be valid for a year from registration date. It is advisable to include a condition in the leasing contract to cancel the lease in case of registration refusal or difficulties. As with any contract in China, steps should be taken to minimize future problems – such as checking the owner’s details and land rights certificate for the property being leased.

    1. Carry out environmental impact assessment – Only for a manufacturing WFOE

    If registering a manufacturing WFOE, an environmental impact assessment will need to be carried out by a registered agency. This is done in order to obtain an approval certificate from the local environmental protection authority.

    The procedure and required approval varies with the scale of the manufacturing operation and its potential impact, and will include consideration of material used, produced and disposed, machinery to be used, as well as any existing plans for environmental protection.

    1. Online registration via MOFCOM

    The registration process has been significantly simplified in recent years, and now makes use of an online filing submission. This is much faster than the previous methods, but still requires a lot of documentation! It should be noted that there is a somewhat greater burden with online submissions to have all details correct and finalized. The process of “blind submission” does not allow for discussion with authorities during submission.  If rejected, the application will need to be revised and resubmitted.

    1. Apply for a “5 in 1” business license from local AIC

    Following approval from MOFCOM, the application for a business license with the local Administration of Industry and Commerce (AIC) needs to be made. This is another process that has been greatly simplified and quickened in the past couple of years. An application is now made for a so-called “5 in 1” business license, which covers all the major licenses required for a new company. Previously each of these required separate applications and naturally this was much more time consuming.

    Again, this is now an electronic submission, accompanied by significant documentation (see section on documents required). Once submitted the AIC will share documentation with other relevant authorities to issue licenses – a major time improvement!

    The 5 licenses issued by the AIC are:

    • The business license
    • Tax registration certificate
    • Organization code certificate
    • Social security registration certificate
    • Statistical registration certificate

    The company now exists and is licensed to do business in China, and the remaining set-up steps can be considered “post licensing” tasks. We would expect to reach this point in 2-3 months.

    1. Carving chops for the new company

    To Chinese business newcomers, the importance of chops is often a surprise! Every company requires a set of chops, or seals, to be used as representation for signing official documents.  These hold the final say, above individual signatures.

    Chops can be applied for through the Public Security Bureau (PSB) following company set up. Several additional chops are needed for different business areas (e.g. financial, invoice sealing and customs if appropriate). Each will have the company name in Chinese and English if required.

    1. Opening bank accounts

    Once chops are obtained, they can be used to open the WFOEs Chinese bank accounts. A WFOE should have at least two accounts, preferable with the same institution (Chinese or foreign banking institution are equally acceptable depending on company preference).

    • A local currency RMB standard company account. This can be used for payments and receipts in RMB, as well as for company tax payments and day to day operating costs.
    • A separate capital contribution account, designated in foreign currency. This is the official account through which capital can be injected from overseas.
    1. VAT registration

    WFOEs must be registered for VAT payments with the local tax bureau. There are two different categories for VAT registration for all companies – “general” and “small scale” (with low sales volume).  A new WFOE which qualifies for small scale may choose to register under either category.

    In general, a lower VAT rate is paid for companies that qualify as small scale, but there are some potential advantages in registration for general status (such as the ability to deduct input VAT). Discussion of individual situation with a tax expert is advisable here.

    1. Customs and import-exit registration – for trading WFOEs only

    For trading WFOEs involved in import-export there are several additional registrations required, which are not automatic under the AIC business license application. These must be made separately following company incorporation and the exact requirements depend on the company operation area, but will likely include the following:

    • Import-export license
    • Customs registration certificate
    • Registration with Entry-Exit Inspection and Quarantine Bureau (for quality inspection)
    1. Issue contracts and complete necessary registration for employees

    Whilst this is not formally necessary before the company starts trading, it is best at this stage to ensure everything is set up correctly. Formal contracts need to be issued from the new WFOE for all local employees. Also, registration will need to be made for employee tax and social benefits accounts.

    Companies may well already have local employees working for them, often through a previous representative office structure or employed on their behalf by a Chinese agency. The new WFOE can now employ them directly.

    A WFOE requires an executive director or board, as well as one or more separate supervisors who oversee director and company performance. A general manager (who can also be a director) is needed with responsibility for day to day operations. Ratios and requirements for boards are defined and depend on company size.

    A WFOE is the best option to protect your IP rights in China. There is no need to share business information with a partner, and the WFOE structure provides some level of protection under Chinese law.

    A WFOE can manage its own human resources (without using an agency), and hire staff both locally and from overseas.

    A WFOE is independent, able to manage its own operations, funding and business development. Without a parent, it does not need to share profits, strategies or Intellectual Property.

    Hainan Free Trade Port – 60 Key Policies for Foreign Investments

    Table of Contents

    The Chinese government has recently announced the building of the high-quality and high-standard Hainan free trade port in south China’s Hainan Province.

    In 2018, China also announced the decision to develop Hainan into a pilot free trade zone, and with this move, the government wants to continue to develop the province, opening-up to foreign investments to help the economy.

    China aims to build the southern island province into a globally influential duty-free trading center by the middle of the century.

    The plan aims to facilitate free trade, investment and cross-border capital flows in Hainan and says designated imported goods will be exempted from tariffs on the whole island.

    Below we list all the 60 key policies to facilitate foreign investments in the province.

    Policies about Taxes

    1. Maximum personal income tax of 15 percent for eligible talents

    2. Corporate income tax of 15 percent on encouraged industrial enterprises

    3. Allow qualified capital expenditures to be fully tax deducted, or to accelerate depreciation and amortization

    4. Export tax rebates on domestically built ships that are registered at Yangpu Port of China and engaged in international transport

    5. Adopt a trial policy of tax rebates at the port of departure on goods that use Yangpu Port of China as a transit port for the final departure from China

    Policies about Exemptions

    6. Exemption from import duties, import value-added tax, and consumption tax on imported production equipment for enterprises’ own use

    7. Exemption from import duties, import value-added tax, and consumption tax on imported operational vehicles and yachts

    8. Exemption from import duties, import value-added tax, and consumption tax on raw and auxiliary materials imported for production

    9. Exemption from import duties, import value-added tax, and consumption tax on imported goods purchased by island residents

    10. Exemption from corporate tax on the income acquired from a new foreign direct investment before 2025 for tourism, modern services, and high-tech industry enterprises

    11. Tax exemption on imports and sales for overseas exhibits during the exhibition

    12. Products originating from Hainan, including output products whose added value exceeds 30 percent after the domestic processing of imported intermediary products, are exempt from taxes when entering the rest of China

    Policies about Industries

    13. Build Yangpu Port of China into an international port of registry

    14. Build Hainan into an island featuring innovative and international education

    15. Establish a multi-functional free trade account system

    16. Establish Hainan International Intellectual Property Rights Exchange

    17. Support overseas securities, funds, and futures institutions to set up wholly-owned or jointly-owned institutes in Hainan

    18. Support the establishment of property insurance, life insurance, and reinsurance companies, mutual insurance organizations, and self-insurance companies

    19. Build an international aviation hub

    20. Build a new international land and sea transport hub to connect Western China with the world

    21. Build a regional medical center

    22. Build a national base featuring China’ s technology blockchain and industrial innovation

    23. Build a pilot zone for cruise tourism

    24. Build a pilot zone for reform, development, and innovation of the yacht industry

    25. Build Hainan into an International Design Island

    26. Build a national sino-foreign culture and trade exchange base

    Policies about Financial and Insurance Markets

    27. Replace pre-audit with post-audit for the banking sector on authenticity review of cross-border and new international trade

    28. Remove restrictions on overseas ship and aircraft financing

    29. Decentralize the registration management of foreign debts issued by enterprises to Hainan

    30. Expand the scope of cross-border asset transfer

    31. Allow enterprises listed overseas to handle foreign exchange registration directly at banks

    32. Support to develop cross-border medical insurance products in cooperation with overseas institutions

    33. Support the construction of trading venues for international energy, shipping, property rights, and equity stakes

    34. Enable non-residents to participate in trading and fund settlement at trading venues

    35. Develop over-the-counter (OTC) derivatives services

    36. Conduct cross-border asset management services

    37. Issue Hainan provincial bonds globally

    Policies about Data and Telecommunication

    38. Open up value-added telecommunications services

    39. Conduct services of online data processing and transaction processing

    40. Open up basic telecommunications services in a safe and orderly fashion

    41. Conduct the International Internet Data Interaction Pilot Project

    Policies about Market Access

    42. Conduct the negative list of cross-border trade in services for Hainan Free Trade Port

    43. Grant enterprises to get access to the market with a prior commitment

    44. Conduct the special list of market access to the Hainan Free Trade Port

    45. Conduct the negative list of foreign investment access to the Hainan Free Trade Port

    Policies about Visa

    46. Implement a more convenient visa-free entry policy

    47. Conduct a negative list management system on the issuance of work permits for foreign employees

    General Policies

    48. Allow flights in and out of Hainan to refuel with bonded aviation fuel

    49. Allow ships (those engaged in domestic and foreign trade) that transit at Yangpu Port of China to refuel with bonded oil

    50. Allow overseas high-level universities and vocational colleges specialized in science, engineering, agriculture and medicine to open branch schools independently in Hainan

    51. Treat domestic and foreign enterprises as equals in government procurement

    52. Salary ranges employed as main indices to evaluate talents

    53. Permit foreign personnel to serve as legal representatives in legal bodies, public institutions, and state-owned enterprises

    54. Prioritize the support of listing Chinese enterprises overseas

    55. Expand air traffic rights, including the Fifth Freedom and Seventh Freedom

    56. Authorize the Hainan government to manage and adjust the use of cultivated land, permanent basic farmland, forestland, and land for construction

    57. Grant greater autonomy to various industry organizations

    58. Formulate laws and regulations based on the reality of Hainan’ s free trade port construction

    59. Raise the quota for offshore duty-free shopping to RMB 100,000 per person per year and expand the categories of duty-free products

    60. Adopt an import & export management system featuring “free flow through the first line and efficient control at the second line” in Yangpu Bonded Port Area and other qualified zones.

    How can we help your business in China?

    We are a non-state consulting firm based in Shanghai that helps foreign businesses enter the Chinese market and develop their operations. Our clients are assisted from initial stages with company formation and employment solutions, to further support-requiring stages with our business solutions such as tax & accounting and payroll & tax.

    If you are interested to know more about the new Hainan Free Trade Port Zone and want to expand your business in the Chinese province, request a free consultation today!