Hainan uses offshore duty-free policy to boost economy

12:38, March 07, 2011      

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Three shops in Hainan, the most southern province of China and an increasingly popular tourist destination, were recently approved by central authorities to offer duty-free goods. This means that Hainan has taken one step further on its way to becoming an international tourist island in terms of business.

The offshore duty-free policy means that international tourists are allowed to purchase certain items on the island without taxation on the condition that they show flight tickets proving the date of their departure. This policy is aimed at attracting more international big brand discount stores to set up shop on the island.

Central administrative departments, such as the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation, jointly gave the green light for this crucial duty-free program, which is one of a series of provincial policies for promoting Hainan as an international tourist island.

The related supervision regulations and the software will soon be finalized, said Luo Baoyou, governor of Hainan Province.

Luo also lists some current limits of this policy. For example, the type and amount of items are limited, and sales are limited to certain customers in order to prevent smuggling.

According to the statistics that have been collected since the tax-refund policy trial was launched on Jan. 1, few tourists have come from Japan, South Korea and Russia, which raised critical doubts about the effectiveness of the policy.

It is a question of fit and the art of marketing, Luo responded, when commodity items prepared perfectly fit the needs of overseas tourists, and when the marketing strategies are delicately tailored for the local situation, things can be expected to greatly improve.

By Li Yancheng, People's Daily Online

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