On December 18, 2025, the Hainan Free Trade Port (FTP) officially launched island-wide special customs operations. Among the many benefits of this landmark initiative that enterprises can enjoy, import tariff exemptions for products sold in the Chinese mainland that have undergone value-added processing in Hainan are the biggest draw.

Formally known as the "Import Tariff Exemption Policy for Products with no Less than 30% Added Value after Processing," this pioneering policy applies to goods produced by encouraged industries within the Hainan Free Trade Port that contain imported materials and achieve a minimum added value of 30% after processing in Hainan. These goods are exempt from customs duties (but not import VAT and consumption tax) when entering the mainland from the Hainan FTP. Since its initial implementation in July 2021, the policy has undergone multiple optimizations and adjustments. With the launch of special customs operations, its scope expanded to cover the entire Hainan FTP.

By October 2025, a total of 129 pilot enterprises had been approved under the policy; the domestic sales value of goods they processed reached approximately 11.096 billion yuan (USD 1.58 billion) with about 860 million yuan (USD 123 million) in customs duty exempted, fully demonstrating the tangible value of this beneficial policy.

The import tariff exemption policy underwent major upgrades with the launch of island-wide special customs operations, providing even greater benefits to enterprises:

1. Threshold for enterprises reduced—The restriction that revenue derived from operations in encouraged industries must account for over 60% of an enterprise's total revenue has been abolished. All that is required is that at least some part of a company's revenue must be made within an encouraged industry.

2. Scope of imported materials expanded—The policy previously only applied to bonded goods. Now, enterprises importing "zero-tariff" goods for processing can also benefit from tariff exemptions under the policy, resulting in additional cost savings.

3. Value-added calculation formula optimized—Materials locally produced in Hainan are now also included in the value-added portion of the calculation. The assessed value of locally produced goods can be deducted from the price of domestically procured materials, thereby incorporating their value into the value-added portion, which makes it easier for enterprises to achieve the 30% value-added rate.

4. Scope of cumulative value-added processing expanded—Previously, the policy only applied to goods sold domestically after deep processing within special customs supervision zones and only if their overall added value exceeded 30%. Now, the scope has expanded from special customs supervision zones to the entire island.

Additionally, the value-added portions of bonded goods processed and manufactured by different upstream and downstream enterprises can be accumulated. This means that a single enterprise that previously struggled to achieve the 30% value-added threshold can now collaborate with upstream and downstream partners to jointly reap the benefits.

There are already examples of this mechanism in action. On December 18, 2025, the first day of special customs operations, SINOPEC Hainan Petrochemical Co., Ltd. and its downstream partner, Danzhou Weida Chemical Co., Ltd., cleared their first batch of "cumulative value-added processing" goods through customs. SINOPEC Hainan provided raw polypropylene, which Weida Chemical processed into high-value-added bulk container bags. The cumulative value-added exceeded 30%, allowing the final product to enter the Chinese mainland tariff-free.

This first-day model serves as a blueprint for industries involving multiple processing stages, such as petrochemicals, food processing, and medical apparatus and instruments, attracting key players in the industrial chain to establish operations and form an end-to-end processing chain comprising raw materials, intermediate goods, and finished products.

The newly upgraded tariff exemption policy has lowered the access threshold, expanded coverage, and can be combined with other policies, sparking synergy that better meets the production needs of Hainan-based enterprises and contributes to building industrial chains and clusters.