Hainan Customs Observation: Geographical Reconstruction of Electronic Component Supply Chain and "Hainan Options"

Recently, the entire island of Hainan Free Trade Port has officially launched its closed operation, injecting a signal of change into the electronic components industry with a new trade system centered on "zero tariffs". After the closure, a regulatory model of "opening up the first line, regulating the second line, and allowing freedom within the island" will be implemented. Enterprises can enjoy two core benefits: firstly, import of self use equipment, key components, etc. (excluding negative lists) will be exempt from tariffs and import taxes; Secondly, after the processing value of imported materials exceeds 30%, the domestic sales of the products can be exempted from tariffs. For the electronic components industry, Hainan is upgrading from a geographical concept to a "new industrial testing ground", promoting the accelerated implementation of industry cost structure and supply chain optimization.

The most direct attraction of the "zero tariff" policy to enterprises lies in significant cost reduction. The electronic manufacturing industry is highly dependent on imported high-end chips, specialty chemicals, precision components, and expensive production and testing equipment. Taking an imported advanced surface mount machine or tester as an example, in the past, it had to bear high comprehensive import taxes and fees. After the closure, enterprises that establish research and development centers or production bases in Hainan can enjoy "zero tariffs" on importing these core production factors, directly reducing fixed asset investment and raw material inventory capital occupation. A more strategic cost restructuring lies in optimizing tariff costs for the mainland market. A company with a factory in Hainan can import core components tax-free and conduct packaging testing, module manufacturing, or finished product assembly in Hainan. As long as the processing value increases by more than 30%, its products can enjoy tariff reductions when entering the vast mainland market. Under the new regulations, the use of "Hainan self-produced" intermediate goods can further reduce the difficulty of achieving tariff exemption conditions, which essentially builds a highly competitive "tax middle layer" for enterprises between "overseas procurement" and "mainland sales".

The cost advantage will directly drive the rethinking of supply chain layout, and Hainan is transforming from a simple "policy highland" to a "new node in the supply chain" with practical value. This will first attract the clustering of high value-added manufacturing processes, such as semiconductor packaging and testing, high-end module manufacturing, which rely on imported core components and can generate significant value added, perfectly in line with Hainan's policies. In fact, the industrial trend has taken a step ahead, and the Haikou Comprehensive Bonded Zone has successfully attracted relevant enterprises to invest in the construction of advanced sealing and testing bases. Its person in charge clearly pointed out that the "zero tariff, low tax rate" policy effectively enhances the international competitiveness of enterprises. A precise investment attraction aimed at forming a local industrial cluster has been launched around such "chain owner" enterprises. Secondly, this will give rise to new types of "short chains" and "regional chains". The closure policy encourages the use of "Hainan self-produced goods", aiming to promote the closed-loop of the island's industrial chain and encourage enterprises to transfer some of the high-end manufacturing links originally laid out overseas or in other regions of China to Hainan, forming a shorter and more efficient collaborative chain.

The opportunity map brought by Hainan's lockdown varies for different types of enterprises. IDM or packaging manufacturers can rely on equipment import tax exemption and product domestic sales tax exemption to lay out advanced packaging and module manufacturing production lines. Component designers and traders have the opportunity to establish more cost-effective bonded warehousing and distribution centers, and carry out regional bonded logistics business. Terminal electronic product manufacturers can transfer high value-added assembly and testing processes to Hainan by reducing core component procurement costs and optimizing the tax structure for domestic sales of finished products. However, opportunities and challenges coexist. The relatively weak industrial supporting foundation, shortage of high-end technical talents, and high initial operating costs are all practical constraints that require careful evaluation by enterprises. At the same time, the long-term stability of policies and the transparency of implementation details will continue to affect the investment decisions and long-term confidence of enterprises.