China free trade zone (FTZ) refers to a specific class of special economic zones, which is an area where goods may be landed, handled, manufactured and re-exported without intervention of the customs authority. China’s first free trade zone opened in Shanghai in 2013 was seen as a milestone in doing business in China. It replaced the previous “low-cost land policy” of the more traditional industrial zones and is used to try and explore policies for modernizing Chinese businesses. After the opening in Shanghai, several other FTZ’s have been initiated in April 2015, namely, Tianjin, Guangdong and Fujian.
Benefit of the Free Trade Zones
FTZ should be seen as a blueprint of further reform throughout China. Unlike other types of SEZs, free-trade zones can experiment with financial models and attract investment. Below is a shortlist of concrete benefits showing why foreign investors should register companies in a FTZ.
Choosing a virtual office instead of a real one;
Procedures registering in a FTZ are much quicker and easier;
Less or no (import/export) taxes;
Easier conversion from RMB to foreign currencies;
Special customs monitoring system;
Detailed customs clearance is only needed in a later stage;
Faster custom clearances of goods;
No import tax when imported into the FTZ;
Bonded warehouses;
Broadening of investment horizons.
Retail & Wholesale Investment in FTZs
(1) Mail order & online shopping
Foreign invested companies will be allowed to operate mail order and online retail services with direct mail delivery from overseas, without the need for warehousing in China, while restrictions will remain outside the FTZ. The changes appear to allow large mail order retailers from abroad to set up businesses independently in China.
(2) Food retail, wholesale & distribution
Inside the FTZ, foreign invested companies are allowed to retail, wholesale and distribute products such as grain, vegetable oil and sugar, without a restriction on the number of outlets.
(3) Manufacturing & sales of gaming consoles
Foreign investors are permitted to register a company inside of the FTZ to operate manufacturing and sales of gaming consoles to the Chinese market, (with approval of gaming content).
Bank Account Opening in FTZs
In the FTZ, foreign financial institutions are permitted to establish wholly foreign-owned banks, or joint ventures with qualified private capital.
Qualified Chinese banks in the FTZ are allowed to open a Free Trade Account for financing, investment and other cross-border transactions separated from onshore transactions.
Restricted licence banks (banks working primarily in wholesale banking) are to be allowed in the FTZ on a trial basis.
Contact Us
If you have further inquires, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website english.tannet-group.com, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to tannet-solution@hotmail.com. You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020,Dongmen Rd South, Luohu , Shenzhen, China.
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