安永：海南_舉足輕重的消費品進口門戶（英文版）（14頁）.pdf

1、Hainan: Chinas decisive portal for consumer imports The inaugural China International Consumer Products Expo (CICPE) is scheduled in Haikou, Hainan, from 7 May to 10 May 2021. With high-profile endorsement from the Central Government, the Expo will firmly establish the province as a tourism and cons

2、umption center and a trading platform for international consumer products. The Expo will transform Hainans supply chain, consumer market product portfolio and price competitiveness. With its free-trade port status and provincial-level facilitation policy, Hainan will help bring strong consumer deman

3、d from middle-class consumers back to the onshore market. The Expo is only a first taste of the transformations to come for Hainan. The Free Trade Port is expected to become Chinas market-opening leader by 2035, and we have worked closely in the provinces structural reforms and industrial developmen

4、t initiatives. Ultimately, transparency, simplicity, and predictability in the legal and tax systems will be the Ports operating principles, where free movement of trade, investment, capital, talent and information will be facilitated. Hainan: Chinas decisive portal for consumer imports 2Highlights3

5、The largest consumer products expo in Asia-PacificThe inaugural China International Consumer Products Expo (CICPE) is scheduled in Haikou, Hainan, from 7 May to 10 May 2021. With Hainan, a Pioneer of Opening-up in China as its official theme, the Expo is designed to be the largest consumer products

6、exposition in the Asia-Pacific region, with a total area of 80,000 square meters and over 1,000 exhibitors in six zones: fashion, jewelry, food and supplements, lifestyle and outdoors, hospitality and professional services, and the provinces and municipalities of China1. Endorsement from top-level c

7、entral government officialsThe Expos objective is to build Hainan into an international tourism and consumption center and create a trading platform for global consumer products. It is part of the Master Plan for the Construction of Hainan Free Trade Port (Hainan Plan) released in June 2020, alongsi

8、de a favorable tax regime, deregulation for trade and investment, further opening of the service sector and more2. The plan has since received high-profile support from top level central government officials and endorsement from President Xi Jinping3. With the plan soon to be formalized into dedicat

9、ed legislation, the Hainan Free Trade Port is expected to become the highest-level example of Chinas market opening by 20354. “Hainan, a Pioneer of Opening-up in China” Chinas decisive portal for consumer imports Fig 1 Hainan Expo is a leading platform to showcase the latest consumer products to the

10、 world Source: CICPE600+ Top brands60+ Countries1,000+ Exhibitors100+ Professional media80,000sq.m.+ Space4A rising middle class with a strong appetite for importsThe pledge to transform Hainan into a platform for international consumer products came at a time when consumers desire for diversified,

11、personalized and quality goods is increasingly being unlocked. Chinas imports of consumer goods have more than tripled to US$84.9b in 20195from a decade ago, thanks largely to the emergence of the middle and upper classes that value high-quality products, new experience, and a diverse range of produ

12、cts. Meanwhile, the share of consumer goods in Chinas total imports remains remarkably low by international standard, reflecting strong potential in the market. Burgeoning demand for Chinas consumer importsHainan: Chinas decisive portal for consumer imports 02040608010020002005201020152020e% Urban d

13、isposable income per capitaFig 2 Chinas rapid transformation to a middle-class societySource: Wind, EYLowLower middleMiddleUpper middleA Chinas decisive portal for consumer imports Fig 3 Consumer goods imports more than tripled in the past decade2.02.53.03.54.04.5010203040506070809020002004200820122

14、0162020e% of total importsUSD bConsumer goods Imported valueShare of total importsSource: UNComTradeFig 4 The share of consumer imports remains low in ChinaNote: As of 2019Source: UNComTrade05101520USRussiaJapanEUBrazilMexicoIndonesiaChinaIndia% of total importsShare of consumer goodsConsumer spendi

15、ng leakage through outbound tourismHistorically, consumer imports in mainland Chinas domestic market were sold at a significant premium above overseas price due to limited demand and import duties. In the past decade, the price gap has narrowed amid increased volume and tariff cuts6. Favorable domes

16、tic policies, travel restrictions amid the COVID-19 pandemic, mainland-only limited edition products by international luxury brands and the emergence of attractive domestic brands all boosted spending at home. Nevertheless, overseas shopping continues to be strong and constitutes a leakage in Chinas

17、 consumer spending. Chinas decisive portal for consumer imports Fig 5 Around 70% of luxury goods are purchased on overseas tripsSource: YaoK institute-15-10-50510152025300204060801001201401601802013201420152016201720182019% YoYUS$ bChinese purchase of luxury goodsOverseasLocalLocal growth (RHS)Over

18、seas growth (RHS)Travelers from the Mainland spent US$255b overseas in 2019, out of which around a third was spent on merchandise shopping7. Industry studies have found that as much as 40% of global luxury goods were purchased by China consumers, although around 70% of transactions were done oversea

19、s8. Strong demand for overseas products has given rise to the parallel import industry and a significant offsetting factor in Chinas balance of payment 6 Oversea shopping contributed to a sizeable deficit in Chinas balance of paymentSource: Wind-3.0-2.5-2.0-1.5-1.0-0.50.0201020112012201320142015201

20、62017201820192020USD tBalance of payment deficit from tourism7For the consumer sector, the Hainan Plan calls for the province to leverage its unique features as a Free Trade Port, a tropical tourist paradise and a duty-free shopping destination to play a pivotal role in Chinas consumer sector transf

21、ormation. Competitive product portfolio and pricing Hainans offshore duty-free policy took off in 2018 when domestic travelers departing the island by airplane, train, or ship were allowed to enjoy zero import duty shopping on specific items for a quota of RMB30,000 per person per year, with no limi

22、t on times of purchase9. The policy has since expanded in 2020 to 1) expand the eligible list from 38 to 45 items to include mobile phones and computers; 2) remove the single purchase limit; and 3) raise the annual quota to RMB100,000 per person per year10. The policy change, rapid recovery of China

23、s economy from COVID-19 and ongoing restrictions for overseas travels contributed to a boom in Hainans duty-free sales in 2020. A pivot in consumer sector transformationHainan: Chinas decisive portal for consumer imports Fig 7 Hainan duty-free sales reached three-digit growth in 2020Source: Wind, EY

24、02040608010012005101520253020132014201520162017201820192020%YoYRMB bDuty free sales in HainanDuty free salesGrowth (RHS) Chinas decisive portal for consumer imports So far, the limited choice of products, lack of shopping locations and the persistent price gap with overseas outlets continued to dra

25、w criticism for Hainan11. Because of this, the Hainan government has stated that it is actively exploring new pro-business policies to expand the number of duty-free shops, innovate delivery options12 and reduce restrictions on duty-free purchases13. In our view, the Expo is an important step toward

26、 committing Hainan as a premier shopping location for consumer imports in China. For leading international brands, it is an opportunity to boost their recognition in China by offering a more comprehensive range of their products at a more competitive price level. A national hub for inbound retail cr

27、oss-border e-commerceThe Hainan government is also positioning the province as a national hub in Chinas inbound retail cross-border e-commerce (CBEC). Inbound CBEC is intended to make importing certain foreign goods easier for personal use than duty-free shopping. No license is required to import mo

28、re than 1400 items on the inbound CBEC positive list14, while consumers are still liable to tax payment, albeit at preferential rates for small purchases. Specifically, the Hainan government has pledged to fully utilize its status as Chinas largest free trade area and designated pilot area for inbou

29、nd retail CBEC15. In August 2020, it announced a plan to facilitate inbound CBEC business development requiring both the use of its bonded area as a stopping point for high volume imports and direct customs clearance (Customs supervision code 1210 and 9610)16. Under this plan, e-commerce platforms c

30、ould offer their imported products to Chinas consumers with expedited delivery using Hainans bonded warehouses. Additionally, inbound retail CBEC platforms are encouraged to open experience centers at duty-free shopping complexes to showcase their products, possibly as an attraction offered as part

31、of travel packages17.11. Chinas decisive portal for consumer imports Fig 8 Two models for inbound retail cross-border e-commerceBonded area import model (Code 1210)Source from oversea retailersPackaging in bulkInternational logistics to ChinaCustom declarationProducts stored in bonded warehou

32、seCustomer makes order onlineDomestic delivery (individual packaging)Customer receives productDirect clearance model (Code 9610)Customer makes order onlineSource from oversea retailersIndividual packagingInternational logistics to ChinaCustom clearanceDomestic deliveryCustomer receives productSource

33、: EY10The first of many steps to become Chinas market-opening leaderThese measures are expected to incentivize Chinas consumer spending to repatriate to the domestic market and strengthen Hainans position as an international tourism and consumption center in the next five years. Yet these are only t

34、he first few of a series of steps that will turn Hainan into Chinas market-opening leader by 2035. With liberalization and facilitation as the keywords found in both the draft of Hainan Free Trade Ports overarching legislation18and the provinces dedicated section in the 14th Five-Year Plan19, we exp

35、ect further breakthroughs to come in stages. It will call for a comprehensive upgrade in the Free Trade Ports regulatory and physical infrastructure: Transparency, simplicity and predictability in the legal and tax systems to provide an ideal environment for business and entrepreneursDeregulation of

36、 cross-border service trade (including financial, technology, communications, logistics, health care and professional services) that will be closely integrated with the release of the national negative list for service trade High-level liberalization of the remaining restrictions in foreign investme

37、nt, including further deregulation in capital flow, protection of intellectual property, and simplification of administrative hurdles Creation of an attractive environment for foreign talent with relaxed restriction for travel and residence, a negative list for work permit to expand the opportunity

38、for employment of foreign professionals, and competitive health care and education support Aggressive reforms in the environmental and ecological preservation, government and fiscal budgetary structure, residence registration system and data securityHow EY can help Hainan: Chinas decisive portal for

39、 consumer imports 18. Chinas decisive portal for consumer imports Source: EYFig 9 Hainan Free Trade Port LawHainan Free Trade Port LawTrade and investment liberalization and facilitationSimplified tax regimeEcological and environmental protectionTransitional regulation and responsibilityIndustry a

40、nd talent development and supportAdminstrative and legal authorityEY role in Hainans transformationEY is among the first professional services organizations to offer comprehensive services in Hainan. Since 2018, we have been one of the most active participants in developing the Free Trade Port, work

41、ing closely with the government both as a third-party advisor in the provinces regulatory reform and as a professional services provider in its industrial development. Government structural and regulatory reform: EY has collaborated with the provincial Committee for Hainans Comprehensive Deepening o

42、f Reform since 2019. In the process, EY witnessed Hainans development from a pilot area to a Free Trade Port, as the province deepened its institutional innovations and reforms.So far, more than 111 innovations have been proposed to break departmental silos and upgrade the regulatory competitiveness

43、 in Hainan, and many have received high-level recognition from the Central Government. They include the automated approval system in Hainans e-government portal and simplified import lab screening requirements for cosmetics. These innovations are then expected to be evaluated and studied for nationa

44、l implementation. 12Hainan: Chinas decisive portal for consumer imports Business environment competitiveness: EY also assisted the provincial government to evaluate its foreign direct investment policy as a third-party consultant. With our professional experience in investment promotion programs wor

45、ldwide, EY member firms are engaged by local governments at different levels to assess their business environment and offer customized solutions and training to strengthen their international competitiveness. Between February 2019 and March 2021, 85 improvements have been proposed in Hainan, and hal

46、f of them are focused on facilitating the provinces business attractiveness. Hi-tech industry development: In addition, EY is involved in advising on project planning, policy research, and investment promotion of both the Moon Island and the Sanya Nanfan Science and Technology City projects. Moon Is

47、land is an artificial island earmarked to become a global transit base for animal and plant germplasm resources, which will work alongside high-level research capability at Nanfan. So far, EY teams have made 129 proposals on industrial development policy, out of which 32 have been announced, and the

48、 proposal to deregulate seed production permit has been adopted. Much more than a customs inspection and quarantine center for agricultural products, Moon Island and Nanfan are promised to become research and development bases and personnel training centers with extensive collaboration with foreign

49、countries in germplasm-related technologies. These projects are going to be the crown jewel of the Free Trade Port to contribute to the provinces technological upgrade, Chinas ambition in agricultural science and technology, and the countrys ultimate goal for food self-sufficiency. Source: Hainan Fr

50、ee Trade PortFig 10 Moon Island, Chinas agricultural science hub and transit base for germplasm resources13Hainan: Chinas decisive portal for consumer imports Customized business solutions: With our extensive networks in China and knowledge in Hainan, we can help EY clients navigate through policy t

51、o capitalize on new opportunities and implement the right balance of bold strategic choices. From devising an agile business strategy for high-end consumer product business in the Free Trade Port, optimizing tax structure for eligible inbound retail CBEC and adopting a suitable model for cross-borde

52、r capital management for Qualified Foreign Limited Partner, to understanding new service sector reforms in tourism and finance, and recruiting high-caliber international talent, we have developed targeted solutions to help businesses fulfill regulatory requirements, keep investors informed and meet

53、stakeholder needs.Capitalizing on new opportunities in the transformation In Hainan, we are witnessing the dynamism of China in a transformative age. It is a world where traditional business models are upended, sectors are converging and workforces are transitioning while the economy is becoming eve

54、r more complex. With the consumer sector as the first step, this is also a world in which Chinas technology-focused and domestically driven growth engines are created. It is up to business sectors leaders to anticipate emerging expectations, reinvent themselves and build the capabilities that future

55、 relevance will require. This is where we come in through our four integrated service lines Assurance, Consulting, Strategy and Transactions, and Tax and our local insights for EY clients to capitalize on new opportunities as China delivers the high-quality growth outlined in the 14th Five-Year Plan

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60、 no. 03012261ED None.This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, legal or other professional advice. Please refer to your advisors for specific us on WeChatScan the QR code and stay up-to-date with the latest EY news.