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China’s free trade zones facilitate market exploration

Updated: Aug 12,2018 9:56 AM

China’s growing needs for imported products and its opening-up policy have driven the establishment of pilot free trade zones in several major cities over the past five years, including the Henan Pilot Free Trade Zone, which opened last year with the aim of expanding business opportunities in the populous province in Central China.

China has imported over 200.57 million liters of wine in the first quarter of 2018, worth $792 million, according to the China Association for Import and Export of Wine and Spirits (CAWS).

“Living standards are getting higher these days, and Chinese people are paying more attention to their health. Drinking a certain amount of wine each week is believed to lower cardiovascular disease, so wine sales are increasing day by day,” said Dong Fei, sales consultant at Grevino, an American wine brand.

China’s imports of alcoholic drinks grew 9.1 percent year-on-year in 2017, and growth of wine imports reached 17.95 percent in the same period, according to official data.

To meet the growing demand for overseas food, beverages and other products, free trade zones can now be found all over the country, each with a different focus.

What are China’s free trade zones?

Free trade zones in China are a specific class of special economic zones, where goods can be landed, handled, and re-exported without intervention of the customs authorities. China’s first free trade zone was launched in Shanghai in 2013 as a milestone in doing business in China.

In addition to new financial models and preferential policies to attract investment, they also have geographical advantages for trade, including major seaports and international airports.

The focus of Henan Pilot Free Trade Zone is logistics, because of the province’s location in Central China.

Grevino established a presence for itself there five years ago. The company’s marketing director said China’s free trade zone program makes importing wine into China easier than ever.

“The biggest perk is the establishment of the so-called ‘integrated free trade zone’ in airports under the scheme. This means I can store my wines in a warehouse when they arrive without having to pay customs fees. I can wait until my customers come pick up their wines to do that. This could lower my business costs,” said Duan Zhaohang.

Although the storing prices are determined by the market, the free trade zones can help with facilitating customs clearance.

“The warehouses are developed and managed by certain companies. The prices are determined by the market, but the government can give some guidance, unless the government offers subsidies,” said Zhang Yanming, director of Henan Commercial Department.

“It’s not easy to interfere with the market. But as for customs clearance, the government will do more to make it easier.”

China is also planning to collaborate with foreign companies to introduce their advanced management skills, added Zhang.