Pharma Industry Sees Opportunity in China’s Hainan Free Trade Port

Plans by China to create a free trade port in Hainan province, which have moved forward swiftly this year, bolster opportunities for the growth of the country’s pharmaceutical industry. They are also likely to lower prices on imports for Chinese consumers who travel to the province known for its beach resorts and, increasingly, medical tourism.

Investors are not waiting for legislation that would formally establish the island province as a “Free Trade Port” to become law to establish business beachheads in the area. And the province is taking significant measures to encourage that trend. Already Hainan has established a series of preferential tax policies, including exemption from corporate income tax on new foreign direct investment in a raft of industries. Regulations have been relaxed on internet sales of prescription drugs, on the sale and use of bulk medical products and on the use of agricultural products in the development of medicines.

When the legislation is fully passed into law, perhaps as soon as this year, Hainan will become the largest of China’s more than 20 free trade areas. Import duties will be scrapped, income tax rates for top skilled workers will be lowered, company taxes will be capped, and visa requirements for tourists and business travelers will be easily obtainable. The moves are designed to broaden market access to China for foreign firms and to build Chinese industry influence in overseas markets.