Hainan tropical island hub for global investment

For Michael Heilig, who is from Germany's federal association for small and medium-sized enterprises, his trip to Hainan province last week felt almost destined.

His Chinese name, "Hai Li Ge", carries a special meaning. "Hai" means sea, "Li" means reason and trust, while "Ge" means character and taste. "I believe these qualities — facing the sea, rationality, character — can be transported to Hainan and reflected in our cooperation," Heilig said.

Heilig was one of more than 100 executives from 19 countries and regions who landed in Hainan on May 25-26 for the International Life and Health Enterprises Hainan Visit event, co-hosted by CITIC Group and the Hainan provincial government. Among them were 80 foreign life-health companies and 105 senior executives from global giants such as Siemens, Pfizer and Novo Nordisk, as well as a host of German "hidden champions".

What brought them here, in the heat of late May, was not the island's famous beaches, though those were a welcome bonus, but the accelerating dividends of the island-wide special customs operations, which kicked off in Hainan Free Trade Port on Dec 18.

For Heilig, the most eye-catching policy is the 30-percent value-added processing rule. "German SMEs are often called 'hidden champions'. The policy we learned about today — 30 percent value-added processing in Hainan allowing tariff-free access to China's mainland — is particularly innovative and appealing," he said.

"Given Hainan's strategic location, it can connect to the huge Chinese mainland market as well as the broader Asia-Pacific and Southeast Asia. This will be very important for German SMEs as they restructure their supply chains under the current economic situation," Heilig added.

More than 20 European companies accompanied Heilig on the trip. "The feedback has been very positive. They are very interested in Hainan, find the policies attractive and are considering the possibility of establishing a presence here — finding their own place in Hainan," he said.

Peter Burnett, chief executive of the China-Britain Business Council, who has visited Hainan several times, put it more bluntly. "Hainan is not just a free trade zone — it's a free trade port, the only one in China. That means the whole island is included, with very low tax rates and low tariffs," Burnett said."Once you're in Hainan, you're free to operate and you have the ability to access the mainland — it's a launch pad."

Burnett, who led a delegation of British companies, said the 30-percent value-added policy is "of great interest". "Some companies have already set up in Hainan. Success will breed success. I expect more companies to realize the potential."

"For the United Kingdom, 80 percent of our economic output is in services. Many companies in our delegation to Hainan this time are in services — not just financial services, but also engineering, publications, media and creative industries," Burnett added.

The event was not merely a gathering of foreign firms, it was also a demonstration of how Chinese enterprises are facilitating global cooperation. Xi Guohua, chairman of CITIC Group, called Hainan Free Trade Port the highest-level form of China's opening-up.

"The full implementation of Hainan's policies presents historic opportunities for the bio-health industry to integrate into global industrial chains," Xi said. He added that CITIC will leverage its strengths as a multinational conglomerate to serve as a bridge between China and the world, deepening cooperation with Hainan in biomedicine, high-end medical care and wellness services.

To put words into action, CITIC has provided a financing support package exceeding 39 billion yuan ($5.76 billion) to facilitate win-win cooperation during this trip, Xi disclosed.

The success of this event, Xi said, confirms that China is a grand stage and a vast market for investment, Hainan is a new highland and a new gateway for open cooperation, and CITIC is a reliable guide and bridge for global partners.

Xi made three proposals: first, to build an open and win-win island by establishing multi-level cooperation mechanisms; second, to create an innovative and dynamic island by integrating financial resources and strengthening the Hainan-Hong Kong dual-hub linkage; and third, to foster a culturally charming island through publishing, think tanks and media to enhance international cultural exchanges.