Kerry Logistics Network announced plans to construct a bonded warehouse in Haikou’s integrated free trade zone, as it looks to seize the opportunities presented by China’s plan to develop the province of Hainan as a major trade centre.

Scheduled for completion in the first quarter of 2023, the 50,000-sqm facility will contain 10,000 sqm of cold storage and marks the first time an international 3PL will invest in a premium bonded logistics centre in the Hainan free trade port.

The 3PL operator is optimistic about the prospects of the Hainan free trade port for e-commerce and logistics, particularly with the zero-tariff regime to be established for certain imported goods as well as other tax exemptions.

Also read: Hainan free trade port opens international air cargo route

“We are confident in the prospects of duty-free consumption in Hainan,” said William Ma, group managing director of Kerry Logistics Network.

“Leveraging Hainan province’s geographical advantage in South China and its proximity to Southeast Asia, the Hainan FTP will be an important gateway to handle the fast-growing duty-free and inbound e-commerce cargo,” he added.

In July, Hainan’s annual tax-free shopping quota was increased to US$15,300 (RMB 100,000) per person, which drove up the duty-free sales in that month by 234.2 percent year-on-year. Meanwhile during China’s ‘golden week’ in October, duty-free sales soared close to 150 percent over last year at US$159 million (RMB 1.04 billion), according to customs authorities.

Kerry Logistics says it is poised to tap this growth as the logistics partner of two duty-free shopping centres in Hainan and after winning contracts for three newly registered ones.

“Our new bonded logistics centre in Haikou FTZ will be instrumental in helping our existing customers to expand into the Hainan duty-free sales channels and capture new business opportunities,” noted Ma.

“As the logistics partner of Hainan’s five duty-free shopping centres out of six in total, our new bonded logistics centre will significantly boost our capability to seize the tremendous opportunities presented by this new free trade zone and serve as a powerful engine to propel our growth,” he added.

In the future, imported goods bought by Hainan residents will be exempt from import tariffs, value-added tax and sales tax. Imported goods with over 30 percent value-added processing in the free trade port will be exempt from tariff when sold to other areas in China, the release read.