Duty free & free trade zone

A customs border in the middle of China

In 2018 China's leadership decided to turn all of Hainan into a free trade zone — not a single port zone but a province of around ten million people. On 18 December 2025 the so-called island-wide special customs operation began. Since then many goods can enter the island largely duty-free but are checked as soon as they leave Hainan for the mainland.

In customs terms the island thus lies outside China, so to speak, while politically it's right in the middle. Anyone flying from here to Xiamen or Beijing passes a customs check even though they're not leaving the country at all.

Why people fly here to shop

The most visible part of this policy is shopping. Since 2011 travellers leaving Hainan have been allowed to shop duty-free on the island. In 2020 the allowance was raised to 100,000 yuan per person per year — since then a holiday sideline has become a reason to travel in its own right.

The motive is economic. For years Chinese customers bought their luxury goods abroad, in Hong Kong, Tokyo, Seoul or Paris, because taxes made them much cheaper there. That money flowed out. Hainan brings it back by dropping the taxes on the island.

It works: in the six months after the latest reform in November 2025, almost three million people shopped duty-free for 22.2 billion yuan, more than 17 million items.

The biggest store of its time

The duty-free centre in Haitang Bay opened in 2014 and was then considered the largest duty-free store in the world. Since 2022 the new store in Haikou has claimed that title. There are now twelve such stores on the island in total.

Prices are the same everywhere — the stores mostly belong to the same state-owned group. The difference lies in the range: Sanya has the most brands and the largest watch and luxury section, Haikou is often quieter. For visitors the building itself is already a sight — a shopping centre on a scale unknown in Europe, with restaurants, hotels and tens of thousands of people on a public holiday.

Foreigners too

Anyone aged 18 or over can shop if they show valid ID — foreigners their passport — and hold a ticket leaving Hainan within 30 days, whether by plane, train or ferry. Since November 2025 this also applies to travellers flying directly from Hainan abroad.

The 100,000-yuan allowance applies per person and calendar year and resets on 1 January. There are also quantity limits per trip: at most 30 cosmetic items, four mobile phones and 1.5 litres of alcohol.

Where you really save

Three taxes are saved above all: customs duty, VAT and China's consumption tax. The higher these taxes, the bigger the advantage. For cosmetics it's often around 30 per cent — a skincare product costing 800 yuan in a Chinese department store is about 560 here. For expensive watches the tax burden in China can be around 60 per cent.

For Europeans the advantage is smaller than it sounds, though. The discounts are relative to Chinese shop prices, which because of taxes are often higher than European ones. If you buy more cheaply at home anyway, you save less here. Comparing pays off — Chinese brands such as tea, which are also discounted, are particularly interesting.

How collection works

There are three ways. Many items up to 20,000 yuan, such as cosmetics, perfume or bags, can be taken away immediately; customs automatically checks when you leave the island that they travel with you. Everything else is collected after security at the airport, station or port — in Sanya you have to order at least six hours before departure, in Haikou at least 24 hours. Liquids over 100 millilitres and large items can be shipped home for 20 to 50 yuan.