Hainan Foreign Investment Policy

China has been making efforts to remove barriers to market access and requires local governments to create healthy business environment for fair competition. To attract foreign investors, since October last year the approval of foreign enterprises in Hainan has only taken three days, compared with 18 days previously. Hainan took the lead on online administrative approval in July 2017, enabling applicants to submit administrative approval affairs at home with a computer.

To attract foreign capital, Hainan also identified 12 key industries, including tourism, Internet, medical treatment and bio-pharmaceuticals, and introduced preferential policies. Due to the policies, the island province has become a hot spot for foreign investment. In the past five years, 360 foreign-funded enterprises have been set up in the province, with contracted foreign capital reaching 25.4 billion U.S. dollars. In 2017, the island signed almost 40 foreign investment projects.

Legal Framework on Foreign Investment
On April 13, 1988, the first session of the seventh National People’s Congress passed the decision to set up Hainan Province and the resolution on the establishment of the Hainan Special Economic Zone. In order to speed up the development and construction of the Hainan Special Economic Zone and attract foreign investment, on March 16, 1991, standing committee of Hainan Provincial People’s Congress promulgated Hainan Special Economic Zone Foreign Investment Regulations, which shall go into effect as of the date of promulgation, by referring to People’s Republic of China’s relevant laws, regulations, and specific conditions of the Hainan Special Economic Zone.

Basic Contents of Foreign Capital Law
Hainan Special Economic Zone Foreign Investment Regulations encourages foreign companies, enterprises and other economic organizations or entities to invest in Hainan Island, start various economic and social causes, and protects the legal rights of foreign businesses according to law. Please refer to attachment 1 of this report for the full-length text. Its basic contents include:

Foreign capital types and investment methods, which include Sino-foreign equity joint ventures, Sino-foreign co-operative joint ventures, wholly foreign-owned enterprises and other types of enterprises permitted by law; investment methods include compensation trade, processing and assembly of supplied materials and co-operative production; participating in and buying existing enterprises; purchasing negotiable securities such as stocks and bonds; obtaining leaseholds according to law, and developing and engaging in business related to large tracts of land; and other internationally current methods of investment.

Establishment and registration of enterprises. Unless the State provides otherwise, the establishment of foreign investment enterprises in the Hainan Special Economic Zone shall be examined and approved by the administrative department of Hainan province in charge of economic cooperation and the agency authorized by the Hainan Provincial People's Government. Approval certificates shall be issued by the administrative department of Hainan Province in charge of economic cooperation.

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