Hainan officially began island-wide special customs operations on 18 December 2025. In headlines this is often shortened to “customs closure”, which can sound as if the island became harder to enter.
That is not what happened. Hainan became a special customs supervision area designed to make trade with overseas markets more open while managing goods moving between Hainan and mainland China through a separate line.
The three-part model
The first line: Hainan and overseas markets
The first line covers movement between Hainan and places outside mainland China. The policy aims for freer and more convenient movement of goods, subject to prohibited and restricted items, the dutiable-goods catalogue and customs supervision.
Qualifying entities may import goods outside the dutiable catalogue without import duty, import VAT and consumption tax.
The second line: Hainan and mainland China
The second line covers movement between Hainan and the rest of mainland China. Goods entering the mainland from Hainan can be treated under import rules, with taxes determined by the policy and the goods involved.
This prevents a zero-tariff import into Hainan from automatically becoming a tax-free import into every mainland city.
Circulation within Hainan
Goods can circulate within the island under the applicable Free Trade Port rules and supervision. Transfers, use and disposal of zero-tariff goods may still need to be recorded, and tax can arise in specified situations.
“Island-wide freedom” does not mean an absence of records.
Does this affect company registration?
The customs system does not fundamentally change the legal steps for incorporating an ordinary Hainan company. You still need to check foreign investment access, prepare shareholder documents, register the entity and complete tax and banking setup.
It changes the commercial analysis for companies whose business involves goods. Importers, manufacturers, processors, logistics providers, transport operators, tourism businesses and exporters should consider the customs treatment when choosing Hainan.
Four business models to examine
Importing equipment for use in Hainan
An eligible entity may be able to import qualifying equipment outside the dutiable catalogue without the three import taxes. Use, registration and supervision conditions still matter.
Importing inputs and processing in Hainan
The company can model the saving on imported inputs and examine whether the finished goods qualify for the processing value-added policy when sold into the mainland.
Importing goods for sale within Hainan
The product and seller must satisfy the relevant zero-tariff and circulation rules. Domestic VAT and consumer-market regulations should be considered separately.
Using Hainan as a pass-through warehouse
A structure that imports into Hainan and immediately sends goods to the mainland may offer less benefit than the phrase “zero tariff” suggests. Second-line taxes, logistics, customs records and working capital need to be modelled.
The 30% processing value-added policy
Goods produced by qualifying encouraged-industry enterprises can receive import-duty exemption when entering mainland China if processing in Hainan achieves the required value-added level of at least 30%, subject to the applicable rules.
This can be commercially significant for genuine processing operations. It is not a paper calculation added after import. The company needs an eligible activity, traceable inputs, compliant production and a supportable value-added calculation.
What founders should model before choosing Hainan
- customs codes and tax rates for the imported goods;
- whether the goods fall outside the dutiable catalogue;
- the cost of second-line movement into the mainland;
- Hainan warehousing and production costs;
- processing value added and evidence;
- licences and product standards;
- inventory and customs-system integration; and
- alternative routes through other Chinese ports.
The Free Trade Port advantage should survive a full landed-cost calculation, not just a tariff comparison.
Does customs closure affect people travelling to Hainan?
No special domestic travel document is required because of the customs operation. The system primarily concerns goods and customs supervision. Immigration and visa rules remain separate.
Related reading
- Hainan’s zero-tariff policy for foreign companies
- How to set up a company in Hainan Free Trade Port
- Hainan’s 15% corporate income tax: who qualifies?
Official sources
- Official launch of Hainan island-wide special customs operations
- Tax policy for the first line, second line and island circulation
- National Immigration Administration explanation of customs operations
- 2026 Hainan Free Trade Port Investment Guide
Customs treatment is product- and transaction-specific. Obtain a classification and landed-cost assessment before building a Hainan supply chain.
Read our editorial standards and corrections policy
Thanks for your feedback.
