Inside Hainan’s new customs regime — and what it really means for brands

What Happened On December 18, Hainan Free Trade Port reached a milestone: the island-wide launch of independent customs operations. The move signals China’s push to dramatically enhance Hainan’s connectivity with global markets, attract foreign investment, and promote free trade — enabling freer entry of goods, capital, and people. Simply put, Hainan now operates as a special customs zone under a “domestic-outside” model. For people, the island remains domestic, where residents and tourists can travel freely. For goods, capital, and data, it functions outside the mainland system, allowing international flows to enjoy unprecedented ease and flexibility. The island’s new rules can be summarized as “open at the frontier, controlled at the border, free within the island.” The frontier refers to Hainan’s boundary with the world, where zero-tariff policies take effect. Most imported goods will now be duty-free, with the proportion of zero-tariff items rising from around 21% to 74%, covering daily necessities, raw materials, and high-end equipment — over 6,600 items in total. The border with the mainland, by contrast, is carefully controlled to prevent untaxed goods from flooding domestic markets. Goods entering the mainland are subject to standard customs rules, though items processed in Hainan with at least 30% of their value added can still enjoy duty exemptions. Within the island, freedom takes center stage. Tourist duty-free allowances remain at 100,000 RMB ($14,202) per year, while the range of eligible goods continues to expand. Local residents will gradually gain access to duty-free consumption in their daily life. Capital, goods, and other factors of production can flow relatively freely across the island, with no storage restrictions, allowing operators to store goods wherever they choose. The Jing Take As Hainan’s new customs regime takes effect, social media has sparked a wave of price comparisons around the island’s shopping scene. Take Apple products, for example: Xiaohongshu user @TechGuide (@科技指南) noted that the iPhone 17 Pro 256GB can be purchased using government vouchers on top of the duty-free price, bringing the final cost down to just 7,999 RMB ($1,125), roughly $140 cheaper than at Apple’s official flagship store. Others point out that even with stacked discounts, some products may still cost more than during major domestic e-commerce sales events. These debates clearly highlight the core challenge brands face in Hainan: while price advantages can attract some consumers, they are far from sufficient to retain them over the long term. From shelves to stories: How Hainan serves as a brand-building lab For brands, Hainan’s strategic value goes far beyond cheaper shelves. As tariff advantages become standard, true competitiveness will hinge on whether a brand can leverage Hainan’s “domestic-outside” positioning to move from selling products to creating experiences. Greater freedom in goods circulation and storage allows the island to become a launchpad for limited editions, concept spaces, and bespoke workshops. While other cities focus on standardized offerings, Hainan can turn shopping into an immersive journey through exclusive items and memorable experiences, anchoring the brand narrative on site. At the same time, Hainan, at the frontier of China’s opening, offers a stage to connect with international trends while embracing local culture. Its location makes it a hub for the Asia Pacific’s creative network, enabling brands to collaborate with emerging designers and artists and transform stores from points of sale into trend-setting destinations. In this way, consumers begin to see that visiting Hainan is not just about better prices — it’s about experiencing the latest cultural currents firsthand. For brands aiming to establish themselves in Hainan, the special customs regime is just the starting point for cultivating lasting brand value. The island’s true advantage lies less in rapid distribution than in the opportunity to embed the brand locally. Beyond tax incentives, brands must invest in retail innovation, cultural co-creation, and sustainable fashion practices to help Hainan evolve from a price haven to an experience-led destination. Only then can they escape the trap of price competition and build lasting, resilient value. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

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Inside Hainan’s new customs regime — and what it really means for brands