Overview
Qinhuangdao Comprehensive Free Trade Zone is located on the eastern coast of Qinhuangdao City. The export processing zone was established with the approval of the State Council on June 21, 2002, and passed the inspection by the General Administration of Customs and other seven ministries on September 15, 2003. The State Council approved the integration and optimization of Qinhuangdao Export Processing Zone as a comprehensive free trade zone on September 5, 2019, with a total planned area of 2.04 square kilometers, which will enjoy preferential policies of tax and foreign exchange management related to free trade zones, free trade logistics parks and export processing zones. It will become one of the customs special supervision areas with the highest level, the best policies, and the most complete functions in all the opening-up fields in China.

There are currently twenty-nine registered enterprises in Qinhuangdao Export Processing Zone. In 2019, a total of 20,918 import and export declarations were examined, a year-on-year increase of 29%; the supervision of freight volume was 102,400 tons, and the import and export volume was US$580 million, a year-on-year increase of 84.5%. In the first half of 2020, a total of 8,707 import and export declarations were examined, a year-on-year decrease of 8.8%; 52,600 tons of cargo was supervised, a year-on-year increase of 1.8%; the import and export volume was US$383 million, a year-on-year increase of 40.9%. The increase in import and export indicators is on the top of that in the customs special supervision areas in China.

The Management Committee of Qinhuangdao Export Processing Zone earnestly implements China’s opening-up policy, learns the advanced management experience from the successful export processing zones in the world, focuses on the development of high-end manufacturing, modern logistics, characteristic cold chain logistics and other new business formats, highlights the port-neighboring and highly export-oriented economy, and it has become the biggest variable and strong momentum to boost regional economy. They have made every effort to optimize the investment environment, provide investors with comprehensive, high-quality, and efficient services, and build the comprehensive free trade zone into a new opening-up zone that is in line with the international market, and operates in accordance with international practices.

Advantages
Location: The Qinhuangdao Comprehensive Free Trade Zone faces the Bohai Sea in the south, Yanshan Mountains in the north, Liaoning Province in the east, and Beijing and Tianjin in the west. It is 298 kilometers away from Beijing, 400 kilometers away from Shenyang; about 2 kilometers away from the Wharf of Shanhaiguan Shipbuilding Group and Shanhaiguan Port; 10 kilometers away from Qinhuangdao Port, whose annual throughput is 100 million tons; 2 kilometers away from Beijing-Shenzhen Expressway, and 1 kilometer away from National Highway 102. It is located in the center of the Bohai Rim Region, which is one of the areas with great potential in China, with the Shanhaiguan Connecting Line of the Beijing-Shenyang Expressway in the west, and Beijing-Shenyang Railway in the north. It is the junction of the two major economic zones of Northeast and North China, and an important outlet to the sea. Qinhuangdao is hailed as the “Back Garden of Beijing and Tianjin”. The location of the zone has obvious advantages in sea, land and air transportation.

Environment: The Qinhuangdao Comprehensive Free Trade Zone is a denuded mesa engineering geological zone, with high bearing capacity and superior engineering and hydrogeological conditions. For example, the construction of high-rise buildings does not require pile driving, which greatly reduces construction costs. It is one of the most livable cities in the world, with fresh air, mild climate, warm winter, cool summer, blue sea, white sand, green forest, and golden sunshine. The annual average temperature is 10.6℃, the forest coverage rate is 33.1%, and the urban green coverage rate is 38.5%.

Customs clearance: The Qinhuangdao Comprehensive Free Trade Zone implements a new customs clearance model of “inside and outside customs” and all-round-clock services. In the way of “one declaration, one examination, and one inspection”, customs provides enterprises with the most convenient customs clearance service. The Management Committee of Qinhuangdao Export Processing Zone and Customs provide serve clients with a modern efficient “one-stop service”.

Policies: The Qinhuangdao Comprehensive Free Trade Zone implements the opening-up policies of the country, Hebei Province and Qinhuangdao City, and has issued the Policies on Supporting Enterprises’ Development. The customs special supervision area has the highest level of ‘opening up’, the best policies, and the most complete functions, as it enjoys preferential policies such as tax free status, with tax rebates, and tax exemptions. It can take the lead in copying and promoting the experience of the pilot free trade zones, and is a pilot and pioneer zone for the country to open up finance, trade, investment, and service transportation. The State Council issued the Guidelines on Promoting the High-Level Opening and High-quality Development of Comprehensive Free Trade Zones in January 2019, which provides a major opportunity for the development of the Qinhuangdao Comprehensive Free Trade Zone.

Infrastructure
Road: The connecting line of Beijing-Shenzhen Expressway lies to the west of the Qinhuangdao Export Processing Zone, with a road width of 22 meters.
Power supply: A 10,000 kVA central distribution room has been built, which can basically meet the power needs of the processing zone in the first phase. Two 500 kVA box transformers, one 3,200 kVA power distribution room, and one 1,600 kVA power distribution room have been built for the workshops.

Water supply: A tap water pipe with a diameter of 500mm has been connected to the processing zone, and a new booster pump station has been built with a daily water supply capacity of 14,000 tons.

Steam: A boiler room with a steam supply capacity of 105 tons has been built.

Drainage: A sewage treatment plant with a daily processing capacity of 1,000 tons has been built.

Telecommunications: The installed capacity is 20,000 phone lines. The advanced program-controlled telephone system can meet the needs of users for direct dial telephone, fax and computer data communication with domestic cities and all over the world.

Workshop: A total of 88,832 square meters of standard workshops have been built in Qinhuangdao Export Processing Zone, including eleven single-story workshops, and five multi-story workshops. Two logistics warehouses with a building area of 25,697 square meters have been built. Two cold storages with a refrigeration capacity of 4,000 tons and a building area of 4,267.4 square meters have been built. A constant temperature storage with a storage capacity of 2,000 tons and a building area of 2,798 square meters has been built.

Preferential policies
Free Trade processing
Mainly including inapplicable items, tax exemption, tax rebate, and tax free customs services.

Inapplicable: The trade bank does not implement processing for the trade bank deposit account system for trade business; the customs Register does not implement the “Registration Manual” management; value-added tax and consumption tax are not applied to export processed products in the comprehensive free trade zone; import and export goods between foreign countries are not subject to import and export quota and license management.

Tax exemption: Tax exemption for imported machinery, equipment, molds and maintenance parts and accessories required for production; tax exemption for the imported machinery, equipment, and basic materials for the construction of workshops and warehouses; tax exemption for office supplies of reasonable quantities imported by enterprises and administrative agencies for their own use; tax exemption for the exported finished products processed by enterprises in the zone, and leftovers, surplus materials, defective products, and wastes in the process of processing and production.

Tax rebate: Goods entering the comprehensive free trade zone from outside the zone are deemed to be exported, and can enjoy export tax rebate; enterprises in the zone enjoy tax rebate in water, electricity, and gas.

Tax free: Tax free for imported raw materials, packaging objects and consumable materials required for processing export products. Foreign exchange management: the certificate for cancellation of foreign exchange after verification is not required for the exported and imported goods in the zone. Quota license: Goods can freely enter and exit between the processing zone and other countries without a quota license, unless specified otherwise as required by the country.

Bonded logistics
Bonded warehouse: The types of goods stored in the zone and the storage time are not restricted; the goods stored in the zone can be classified, selected, marked, and packaged; integrated logistics enterprises can, without changing the property rights, freely distribute the goods stored in the bonded warehouses to the enterprises within and outside the zone, overseas enterprises and other bonded areas according to the instructions of the property right unit; enterprises outside the zone can export various commodities according to customers’ instructions after receiving the tax rebate in the zone. Domestic purchasing companies can purchase and store goods in the comprehensive free trade zone when the price of goods is low, and sell them on the domestic market when the price is high to obtain higher profits. Otherwise, companies can take delivery and pay import tariffs in batches to reduce pressure on circulating funds. With the advantage of low domestic storage costs and low labor costs, inbound or outbound goods may be distributed in the comprehensive free trade zone to reduce logistics costs.

Inbound and outbound trade: Enterprises in the zone can expand their business from the current bonded processing to logistics, research and development, testing, maintenance and after-sales service, and are allowed to engage in the purchase of parts, raw materials and other international trade within and outside the country. Trading companies outside the zone can transfer the actual bonded warehouse of goods to the zone, to realize the storage in the zone with the cargo right outside the zone, in order to maximize profits. Customs implements a filing system for the goods between the zone and abroad, and does not implement import and export quotas and license management. National restricted projects are allowed to enter the zone. Foreign businessmen who engage in trade and service trade in the zone are not restricted by policies outside the zone. Enterprises in the zone are allowed to retain cash and use them in circulation. Foreign exchange under trade can be remitted abroad according to business needs. Enterprises inside and outside the zone can settle their accounts either in foreign currencies or in RMB.

Customs supervision: Customs within the comprehensive free trade zone will follow the supervision model of free ports and free trade zones, with the supervision principles of “opening the first line, controlling the second line, free trade in the zone, and tax rebate entering the zone”, and a fully enclosed, informatized, and restricted supervision mode, to realize simple formalities, convenient customs clearance, smooth logistics, and efficient operation. Enterprises in the zone are digitally connected with customs and no paper declaration and inspection is conducted; transactions between enterprises are free, without any restrictions, and no value-added tax and consumption tax are levied. Enterprises in the zone can also make multiple declarations and pay taxes at one time, to reduce the handling of a large amount of funds.

Types of enterprises suitable for entering the zone
I.Bonded processing enterprises

1. All finished products are exported
(1) All raw materials are imported
The source of raw materials and the flow of finished products: All raw materials for production come from overseas, and all products are exported overseas.
Enterprises mainly carry out production and processing with the bonded policies for foreign goods entering the zone, and enjoy tax exemption for imported equipment for their own use, and bonded imported raw materials.

(2) All raw materials are purchased on the domestic market
The source of raw materials and the flow of finished products: All raw materials for production come from domestic sources, and all products are exported overseas.
Enterprises mainly carry out production and processing with the policy of tax rebate for domestic goods entering the zone, and enjoy tax exemption for imported equipment for their own use, and tax rebate for domestic purchased raw materials.

(3) Internal and external procurement of raw materials
The source of raw materials and the flow of finished products: Part of the raw materials for production comes from overseas, and part comes from China, and all products are exported overseas.
Enterprises mainly carry out production and processing with the policies of bonded foreign goods entering the zone, and tax rebate for domestic goods entering the zone, and enjoy a tax exemption for imported equipment for their own use, the tax rebate for domesticly purchased raw materials, and the bonded imported raw materials.

2. All finished products are sold on the domestic market
(4) All raw materials are imported
The source of raw materials and the flow of finished products: All raw materials for production come from overseas, and all products are sold on the domestic market. The tariff rate of domestic finished products is lower than the import tariff rate of raw materials.

Enterprises mainly carry out production and processing with the policy of bonded foreign goods entering the zone, and actual tax for finished products exiting the zone, and enjoy preferential policies of customs special supervision areas and actual tax for domestic sales of finished products, such as tax exemption for imported equipment for their own use, and bonded imported raw materials, etc..

(5) Internal and external procurement of raw materials
The source of raw materials and the flow of finished products: Part or all of the raw materials for production come from domestic, and all finished products are sold on domestic market. The tariff rate of domestic finished products is lower than that of raw materials.
Enterprises mainly carry out production and processing with the policies of bonded foreign goods entering the zone, tax rebate for domestic goods entering the zone, and actual tax for finished products sold on the domestic market, and enjoy preferential policies of customs special supervision areas and actual tax for domestic sales of finished products, such as tax exemption for imported equipment for their own use, and bonded imported raw materials, etc.

3. Internal and external sales of finished products
(6) Various sources of raw materials
The source of raw materials and the flow of finished products: The raw materials for production come from overseas or domesticly, and the finished products are exported or sold on the domestic market. The tariff rate of domesticly finished products is lower than the import tariff rate of raw materials.

Enterprises mainly carry out production and processing with the policy of bonded foreign goods entering the zone, tax rebate for domestic goods entering the zone, and actual tax for finished products sold on domestic market, and enjoy preferential policies of customs special taxation, actual tax for domestic sales of finished products, and value-added tax exemption for the enterprises in the zone, such as tax exemption for imported equipment for their own use, and bonded imported raw materials, etc..

4. Finished products are sold and carried over onto the domestic market
(7) Bonded carry over
The source of raw materials and the flow of finished products: The raw materials come from overseas or domesticly, and the finished products are carried over to domestic processing trade enterprises, or carried over to other customs special supervision areas, or a bonded supervision place.

Enterprises mainly carry out production and processing with the policies of bonded foreign goods entering the zone, and tax rebate for domestic goods entering the zone, and enjoy preferential tax policies in special customs supervision areas and policies for goods exiting the zone with import formalities, such as tax exemption for imported equipment for their own use, tax rebate for domestic purchases of raw materials, and bonded imported raw materials.

II. Bonded logistics enterprises
(8) Export consolidation type
The source and flow of the company's goods: All the goods come from overseas or domesticly, being stored in the zone, and exported overseas after disassembly and consolidation.

Enterprises mainly carry out production and processing with policies such as bonded foreign goods entering the zone, tax rebate for domestic goods entering the zone, tax exemption for imported equipment for their own use, value-added tax exemption for enterprises in the zone, and without storage period requirements for bonded goods in the zone.

(9) Imported distribution type
The source and flow of the company’s goods: All the goods come from overseas or domesticly, being stored in the zone, and distributed to the domestic market after disassembly and consolidation.

Enterprises mainly carry out production and processing with policies,  such as bonded foreign goods entering the zone, tax rebate for domestic goods entering the zone, tax exemption for imported equipment for their own use, value-added tax exemption for enterprises in the zone, and without storage period requirements for bonded goods in the zone.

(10) Simple processing type
The source and flow of the company's goods: The goods come from overseas or domesticly, being exported or imported after simple circulation processing, such as marking, sorting, repackaging, or changing packaging in the zone.

Enterprises mainly carry out production and processing with policies such as bonded foreign goods entering the zone, tax rebate for domestic goods entering the zone, tax exemption for imported equipment for their own use, value-added tax exemption for enterprises in the zone, and without storage period requirements for bonded goods in the zone.

(11) Domestic carry over type
The source and flow of the company's goods: All the goods come from domestic sources, being stored in the zone, and imported to the domestic market.

Enterprises mainly carry out production and processing with policies such as tax rebate for domestic goods entering the zone, without storage period requirements for bonded goods in the zone, and import formalities for goods exiting the zone.

(12) Integrated logistics type
The source and flow of the company’s goods: All the goods come from overseas or domesticly, being stored in the zone, exported or imported after simple circulation processing, such as disassembly, consolidation, marking, sorting, repackaging, or changing packaging, or carried over to other special customs supervision areas or a bonded supervision place.

Enterprises mainly carry out production and processing with policies, such as bonded foreign goods entering the zone, tax rebate for domestic goods entering the zone, tax exemption for imported equipment for their own use, value-added tax exemption for enterprises in the zone, without storage period requirements for bonded goods in the zone, and import formalities for goods exiting the zone.

III. Bonded service enterprises
(13) R&D, testing and maintenance type
Enterprises that provide services in R&D, testing and after-sales maintenance of export products in the zone.

Enterprises mainly carry out production and processing with policies such as tax exemption for imported equipment for their own use and repair parts, bonded foreign goods entering the zone, tax rebate for domestic goods entering the zone, and value-added tax exemption for enterprises in the zone.

(14) Bonded display type
Enterprises that conduct the exhibition of imported goods in the special customs supervision areas or the described places outside the zone approved by the customs.

Enterprises mainly carry out production and processing with policies, such as bonded foreign goods entering the zone.

(15) Service outsourcing type
Enterprises that carry out information technology outsourcing services (ITO), business process outsourcing services (BPO), and maintenance of outsourcing equipment in the special customs supervision area.

Enterprises mainly carry out production and processing with policies, such as tax exemption for imported equipment for their own use and repair parts, and value-added tax exemption for enterprises in the zone.

(16) Other types
With the approval of the General Administration of Customs, enterprises in the zone can carry out futures bonded delivery, financial leasing and other new types of bonded services under the premise that relevant national policies are clear.

 Enterprises mainly carry out production and processing with policies such as bonded foreign goods entering the zone, and value-added tax exemption for enterprises in the zone.

Benefits brought to enterprises by the comprehensive free trade zone
The comprehensive free trade zone will play an important role in improving the city’s opening to the outside world, optimizing the city’s economic and industrial structure, and promoting Qinhuangdao as a logistics center in the Bohai Sea Rim Region. In particular, various preferential policies in Qinhuangdao Comprehensive Free Trade Zone can greatly reduce the production and operation costs of enterprises:

1. Reduce the tax payment costs to processing enterprises. The preferential policies, such as value-added tax exemption for production and processing enterprises in the zone, and tax rebate for water, electricity, and gas consumed in the production process can save more than 5% of costs for export processing enterprises. Enterprises outside the zone can store their raw materials purchased from overseas in a bonded warehouse in the processing zone, conduct part delivery according to production needs, and pay import duties for each delivery, which greatly reduces capital consumption.

2. Reduce costs of in time and inventory occupation. Local enterprises can purchase foreign products from Qinhuangdao Export Processing Zone; it only takes one or a few hours. The goods are delivered quickly from the bonded warehouse in the comprehensive free trade zone to the production workshop, which truly realizes production under the conditions of “zero inventory”, and saves inventory funds consumption and investment in storage facilities construction.

3. Reduce costs of storage and port occupation. Warehousing costs and labor costs in Qinhuangdao are much lower than that in surrounding areas. Companies can save cost of in labor, port occupation, and storage in the Qinhuangdao Comprehensive Free Trade Zone.

4. Reduce procurement costs by attracting raw material suppliers to the zone. Qinhuangdao imports a massive amount of raw materials from overseas every year. The comprehensive free trade zone can attract these raw material suppliers into the zone for inventory, and enterprises can import what they need from the zone, which not only reduces the capital occupied by raw materials, but also reduces the capital occupation of import tariffs, which greatly reduces the purchase cost of enterprises.

5. Serve enterprises with “one-day trip”. Enterprises used to choose Hong Kong, South Korea, or domestic free trade logistics parks as the destination of “one-day trip”. Now the Qinhuangdao Comprehensive Free Trade Zone can offer this service to save time and expenses for enterprises.

6. Help enterprises effectively avoid price risk and exchange rate risk. The comprehensive free trade zone can effectively play the role of a "reservoir", so that enterprises can determine the amount of bonded material inventory based on the price of raw materials, finished products and exchange rates, and effectively avoid the price risk and exchange rate risk from international raw material procurement and finished product exports.

7. Reduce the cost of R&D, testing and maintenance of enterprises. Enterprises establish centers of R&D, testing and maintenance in the zone, and import equipment and instruments under the bonded and tax exemption policies, which can greatly reduce costs compared with those outside the zone.