Following the recent developments in the Hainan Free Trade Port (FTP) scheme relating to yacht importation and registration in Hainan, I note that it is now nearly 10 years since we opened our office at the then just-opened Serenity Marina in Sanya, Hainan.
Simpson Marine’s commitment to the China market had started a few years earlier, with the sale of several yachts to mainland clients in the early 2000s. However, the market really began to pick up in 2007, when we became a strategic partner of the China Cup International Regatta, held annually in Shenzhen ever since (except during the pandemic). Organisers ordered a fleet of 30 Beneteau First 40.7s from us and, with the brand’s support, top international crews were invited to compete, leading to China’s first international yacht regatta. Around this time, we opened offices in Shenzhen and Shanghai.
An adventurous 20 years or so since then has encountered many challenges, including the lack of boating culture in China, a lack of infrastructure, difficult regulations on yacht importation, registration and inter-province cruising, high import tax on yachts and lack of qualified manpower to name but a few. To this, we can add China’s anti-corruption campaign and the targeting of ‘conspicuous displays of wealth’, which understandably resulted in many customers being unwilling to keep their yachts in China.
We welcomed new consumer-friendly policies announced for Hainan in 2017 that proposed China’s southernmost Hainan Province would become a Free Trade Zone (FTZ), renamed FTP, from June 2022. These new business-friendly regulations were intended to attract global trade and tourism to Hainan for the FTP to be fully developed and operational by 2035, making it a global trading and tourism hub by 2050.
The FTP also allows visiting yachts into Hainan for 183 days tax-free and exempts them from paying a bond to the immigration department as was required before. Under the new rules, we have arranged visits by two Sanlorenzo motoryachts over 35 metres.
Under the FTP scheme, brokerage yachts up to five years old can be imported tax-free – a major development that will further boost sales in Hainan.
The Central People’s Government gave impetus to these plans around two years ago, promoting yachting as a lifestyle activity, giving hope for the revival of the China yacht market. In Summer 2020, we sold the first yacht imported into Hainan under the FTP scheme, a Lagoon 46 catamaran; since then, we have sold 12 more yachts under this new policy. Previous heavy 38 per cent import taxes on foreign yachts have now been reduced to zero – a big incentive for Chinese buyers to take up boating. Yachts can now be delivered to Hainan tax-free with no other duty payable.
Initially, procedures for registering yachts were quite complicated, taking up to three months to complete, but the March 2022 announcement by the Hainan government that registration procedures will be simplified from this July is much to our relief. To qualify, yachts must show they are operating as charter vessels; Simpson Marine assists yacht buyers in complying with the rules, completing the whole process from yacht purchase to hand over, fully commissioned in Hainan.
Importation of pre-owned yachts used to be restricted to vessels less than 12 months old, making sales of brokerage yachts into China virtually impossible. Now, under the FTP scheme, brokerage yachts up to five years old can be imported tax-free – a major development that will further boost sales in Hainan.
Government records show that 42 yachts from six metres to 24 metres were imported under the FTP scheme by the end of March 2022. It is anticipated that by 2025 all yachts, including private vessels, will be able to register under the FTP policy as registration procedures are further simplified.
We recently received an order for a second Sanlorenzo SX76 for import into Sanya under the policy, due to arrive this summer. The Simpson Marine China team estimates selling another 10-plus yachts in Hainan within 2022 alone.
I hope they are right.
I would like to thank Stuart Hu, consultant at Sanya Central Business District Administration (SYCBDA) and Godfrey Zwygart, China representative of Global Marine Business Advisors, for providing updated developments on Hainan’s FTP for this story.
About the author
Mike Simpson founded Simpson Marine yacht brokerage and charter business in Hong Kong in 1984. The new yacht and superyacht sales, brokerage, charter, and service company now has 11 offices across seven countries in Asia.