weekly
Written by: Zhao Guanqi
2020-07-20 17:00
Last update date: 2020-07-20 17:00On June 1, the "Overall Plan for the Construction of Hainan Free Trade Port" (hereinafter referred to as the "Plan") was officially released, which is clearly a national strategic decision. From the various policy objectives in the "Plan", we can see that such system facilitation programs as zero tariff, low corporate income tax, low personal income tax, tax exemption for domestic consumption, tax exemption for outlying islands, and visa-free entry seem to be very similar to Hong Kong. In addition, Hong Kong’s historical industrial selling points are also found in the contents of the “Plan”, such as implementing the policy of expanding the opening up of the financial industry, supporting the construction of international energy, shipping, property rights, equity and other trading venues, and accelerating the development of settlement centers; opening value-added telecommunications services in a safe and orderly manner , Phasing out foreign equity ratios, etc., and launching international Internet data interaction trials, establishing international communications gateways, etc.
IPhone products displayed at the Duty Free Shop in Riyue Square, Haikou, Hainan. (Profile picture/China News Service)
Hainan iPhone Pinggang version exceeds 1,000
On July 1, Hainan implemented the new policy of "Duty Free Shopping for Outlying Island Tourists". The annual tax-free shopping limit per person was increased from 30,000 yuan (RMB, the same below) to 100,000 yuan. The tax exemptions include customs duties, import value-added taxes and consumption taxes. Duty-free products have increased from 38 to 45. The new categories include tablet computers, electronic consumer products such as wireless headsets, mobile phones, and electronic game consoles. Take the iPhone 11 Pro Max 256GB version as an example. The duty-free price of this product in Hainan is 8,625 yuan. The price of the same version of the iPhone on Apple's mainland website is 10,899 yuan, and the Hong Kong Apple website is priced at 10,799 Hong Kong dollars (about RMB 9,746). In other words, the duty-free price of this iPhone in Hainan is about 1,121 yuan lower than the price in Hong Kong.
From the perspective of preferential policies, Hainan’s tax allowance is as high as 100,000 yuan, while Hong Kong’s tax allowance for shopping in the Mainland is only 5,000 yuan. Of course there are differences in attractiveness. More importantly, once Hainan has established an "independent customs territory" like Hong Kong, and implements zero tariffs across the territory like Hong Kong, then in terms of tax design, the conditions of the two places are already similar, and it may not be possible that Hong Kong can maintain extra in this area. Advantage.
The sights in Hong Kong come and go, nothing more than the night view of Victoria Harbour, overlooking the scenery below Victoria Peak. (Profile picture/Visual China)
Hong Kong should adjust as soon as possible to adapt to the new situation
Tourism and retail are inseparable, improving the infrastructure of the tourism industry, which will promote the consumption of tourists locally. There are only a few places in Hong Kong that come and go. They are nothing more than the night view of Victoria Harbour, overlooking the scenery under the Victoria Peak, visiting the Big Buddha, playing in the Ocean Park, etc. The tourism experience may have to be updated. Mainland tourists, as the largest source of tourists in Hong Kong, have begun to change their travel consumption patterns. From the beginning they became rich and "buy" products, and now they are more willing to buy life experience and taste. Hong Kong can be committed to moving towards high value-added tourism, and achieve the goal of industrial transformation by increasing the per capita consumption of tourists.
According to the past development model, it is nothing more than crowding tourists into residential and commercial districts, allowing pharmacies, cosmetics stores, jewelry shops and luxury goods stores to line up on both sides of the crowded streets. To put it bluntly, they are all based on the advantages of the free port. Store. In the foreseeable future, the Mainland will continue to accelerate the process of reform and opening up, and Hong Kong's role as a "window to the outside world" is constantly being challenged. The Hainan Free Trade Port plan will be one of them, but it will never be the only one. In fact, it is not just the travel retail industry. To maintain the upper hand in the market competition where you do not advance or retreat, all walks of life in Hong Kong must quickly resolve the deep-seated contradictions that have been discussed for many years and master the methods to adapt to the new situation.
The above is excerpted from the 223th issue of "Hong Kong 01" Weekly Report (July 20, 2020) "Hainan's "Tax Free New Deal"" where will Hong Kong's travel retail industry go ahead? ". To read the full text, please click here to subscribe to the weekly report, or click here to preview the weekly e-newsletter for more in-depth reports.
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