In the past few days, there have been numerous jokes online about buying luxury cars in Hainan, such as the 350,000 yuan X5 and the 600,000 yuan Cayenne. However, it turns out that ordinary people cannot benefit from these deals.

Zero-tariff imported cars are only targeted at enterprises, and the restrictions are very strict: they must be transportation or tourism enterprises, and the cars must be used for operations, with a maximum stay in mainland China of no more than 120 days. There are no avenues for buying a car to take back home, and those claiming to provide purchasing services are all scams.

Many people still do not understand the significance of this Hainan situation for trade. Firstly, goods from outside can enter Hainan with zero tariffs, but to enter the mainland from Hainan tax-free, there is a condition: the added value from processing must exceed 30%. Originally, when importing wool from New Zealand to the mainland to make sweaters, import taxes had to be paid; now, with wool entering Hainan tax-free, sweaters sold to the mainland do not incur taxes.

Thus, enterprises will certainly set up factories in Hainan. The 30% added value threshold is set to prevent factories from relocating abroad, especially to Southeast Asia where labor is cheap. Another point is that the added value of upstream and downstream enterprises can be combined for statistics, which encourages enterprises to cluster together and form an industrial chain.

The most anxious party is probably Singapore. It relies on being located at the Strait of Malacca, creating a high-speed service area for maritime transport. Previously, raw materials from Southeast Asia had to transit through Singapore to reach the mainland, but now they can enter Hainan directly tax-free.