Sanya has big plans as free trade port creates historic opportunities

Five months since becoming a free trade port, south China’s island province Hainan is translating policies and promises on paper into growing crowds of tourists and investors, projects-in-progress and sealed deals.

Changes in the city of Sanya on the island, one of the most popular tourist destinations in the country, shed light into what has happened since the master plan for the free trade port was announced in June; as well as what is coming next.

The tourist city with fewer than 800,000 permanent residents is facing a historic opportunity for transformation.

“Shenzhen drew the attention for the past 40 years. Many now say everyone will look to Hainan for the next 40,” Bao Hongwen, Sanya’s deputy Party secetary and acting mayor, told Shanghai Daily in an exclusive interview last week.

“Details of the master plan and policies are continuously revealed, many beneficial for foreign companies and talent. In one sentence: Whatever can be done abroad economically, can also be done in Hainan, step by step.”

Such policies include tax exemption and reduction for qualified companies and individuals, cuts in tariffs and removal of non-tariff barriers, as well as setting up key industrial parks, among others.

According to the master plan, a free trade port system focusing on trade and investment liberalization and facilitation will be “basically established” in Hainan by 2025 and become “more mature” by 2035.

“I’m confident that when you come back to visit in three to five years, you will see huge transformations in our city,” Bao said.

Many aspects in Sanya have already been changing.

Most obvious are the crowds in the city’s duty-free shopping center, the world’s largest single-building duty-free mall covering around 120,000 square meters.

One week after the country’s National Day “golden week” holiday, it was still packed with queues in front of many brands. Shop assistants said these crowds were nothing compared with peak time, when it was difficult to set foot inside the huge space.

The resort island of Hainan had a duty-free shopping policy previously, and the allowance was increased a few times, but never as much as the new policy announced on July 1. The quota for one person was increased from 30,000 yuan (US$4,410) to 100,000 yuan annually, while an earlier limit of 8,000 yuan on a single product was removed, meaning consumers have more incentives to buy expensive products.

The province recorded 8.61 billion yuan in duty-free spending by visitors between July 1 and September 30, a surge of 227.5 percent year on year. In Sanya, spending grew 251.6 percent, 217.1 percent and 241.3 percent in each of the three months, respectively. Three other duty-free chains have already registered in the city, and are expected to open soon.

“We are already seeing a trend of consumption-driven tourism, as compared with before when real estate drove tourism or tourism motivated consumption,” Bao explained with the city’s map.

“We are building an international tourism and consumption center on the east part of the city, where you have probably seen many top-notch hotels and resorts during your visit this time; these are quite packed now. Next, we will build a more comprehensive tourism ecosystem by adding and improving more service sectors, such as exhibitions and conferences, health-care and entertainment facilities.”

The city’s west hosts the Yazhou Bay Science and Technology City and its central area hosts a central business district with cruise companies, financial services and more duty-free shops. Both areas are among the 11 key industrial parks of Hainan unveiled by the central government.

“A major change since June is the unprecedented inflow of investors, who have spotted great opportunities and potential in our city. The first batch are mainly Chinese companies due to current international travel restrictions, and we are also seeing rising inquiries from international companies,” said Bao, who met executives from a green-energy company just the day before the interview.

Meetings with company executives have become increasingly common in his schedule.

High-tech companies like his most recent guest are most likely to find a spot in Yazhou Bay Science and Technology City, being built as a hub of high-tech industries and an attractive environment for senior researchers and tech professionals.

The industrial park includes a seed-breeding base, a deep-sea research center, a university town and a global animal and plant germsplasm resource introduction and transfer base. By the end of September, the science and technology city had 1,325 registered enterprises and 78 projects-in-progress. In Internet services alone, 370 companies have offered more than 4,000 jobs.

In the city’s CBD, 415 companies have joined the industrial park this year, with 20 projects in progress. Its administrative headquarters, sitting next to an expanding cruising port, offers one-stop services for companies. It is a window into the city’s accelerating efforts to streamline administrative approval procedures and build a top-notch business environment.

Sanya was the first city in the province to set up a bureau for business environment services, and adopted 79 reforms, some already with results in institutional innovation.

“We will become a top-notch business environment in China by 2025; and by 2035, top-notch in the world,” Bao said.

“In order to do it, we ought to have an efficient and sound legal system, become more international and more convenient.”

He elaborated further: “So far, we have focused on institutional innovation, aimed to streamline administration procedures and cut red tape. Render unto the market what belongs to the market, our job is like a child-care service, or a ‘city assistant’ like a shop assistant, trying our best to respond to what companies need.”

One result from such innovations are increasing number of registered companies, and the other, inflowing talent from all over the country including first-tier cities like Beijing, Shanghai and Guangzhou, and quite possibly all over the world if not for travel restrictions due to the pandemic.

A visit to Sanya Tourism Promotion Board, set up in April, turned up a hunt for local employees from Sanya, as the office gathered accents from all over China. Its director’s position is still vacant, reserved for a foreign talent. The recruiting process was delayed due to the pandemic.

The board is one of several new statutory bodies set up in Sanya, which are government bureaus operated like corporations in order to be more efficient and market-oriented. The province’s new policy allows such bodies, as well as universities, hospitals, scientific research institutes to have foreign talent serving as legal representatives. Many, like the tourism board, are hiring internationally.

While improving its business environment, Sanya has also continued its efforts to protect its ecological environment. It has tackled key issues that were revealed in previous crackdowns, promoted green production and life styles through various campaigns, and accelerated its transformation into a zero-waste city.

Recent changes and future opportunities in Sanya will also be introduced to virtual and physical visitors to the 2020 China International Import Expo.

“We ought to believe in China’s further reform and opening-up. President Xi Jinping has made it clear that China’s door will never shut, but only open further. The free trade port is its most open form,” Bao concluded.