The Hainan FTZ is an area that when completed will set the tone for all new free trade zones in the world. As the Chinese government unveils the new creation, we’re seeing a wonderful expression of ingenuity, scientific advancement, as well as excitement from the residents, come to fruition. There comes a time in every country's destiny when rising above the noise and enter into the global economy becomes a reality. This new FTZ is a special moment for the island of Hainan. It’s one of those times where people are starting to get a glimpse of the possibilities to come.
Let’s talk about how Hainan will take advantage of modern elements in automation to streamline the process of getting off the ground. If we look at the major industries in mainland China, you’ll see that it’s financial services and professional services like tourism and exporting services, B2B software as a service, and other technological innovations that will set the tone.
This entire sector has been dominated by a trend of automation that has no end in sight. What we’re seeing now consists of multiple innovators in a single-phase clamoring to reach the top. Who will be the first enterprise organization to take a foothold in Hainan. That is an answer that can only be speculated.
Automated AI Technology Is Crossing Multiple Sectors
One thing is for sure, the advancements in the automation industry will take hold in Hainan very rapidly. For all other industries that use a cookie-cutter approach, we can say goodbye to them. Things like tourism platforms, financial trading platforms, other professional service platforms, and automated logistics firms will start to take on a new personalized look. Let’s take for example large industry players like e-commerce resellers of wholesale Chinese products.
We can expect many e-commerce retailers from mainland China to relocate their base of operations into Hainan to take advantage of the incredible income tax savings provided by Beijing. The central government wants everyone entering into Hainan to leverage their opportunity to automate their services and take advantage of future technologies. Many wholesale Chinese suppliers are realizing that this scenario will resemble a shift towards personalizing the products they sell. In reality, that manifests itself by offering individual customers the ability to personalize goods manufactured in mainland China but sold through Hainan.
Who will be the first wholesale Chinese retailers or global resellers of Chinese merchandise to successfully automate their process and become large players in Hainan?
Economists, financial predictors, and global strategists estimate that by 2025, we will live in a world entirely automated by systems in place that delivers personalized services, advertisements, custom products, and everything else to cater to the preferences of the global market.
If this sounds interesting to you, it definitely should. The future players of Hainan will take on a highly sophisticated look. How that outlook will affect the global economy is yet to be seen. The rules and regulations set by Beijing will automatically impact every entrepreneur, financial player, and enterprise organization moving into the Hainan free trade zone. Those regulations are set in place to help the new FTZ get off the ground as soon as possible.
As you may already know, many economists and global strategists estimate that it will take a minimum of 10 years for Hainan to be competitive with the numbers that Hong Kong and Shanghai are putting off. However, only the tide of innovation has the potential to push that number down to 5 years, or less.
Where Do Logistics Services Sit-In Terms Of The Hainan FTZ
Not many people expect logistic services to take foot in the Hainan FTZ. However, the network of Chinese trade agents, suppliers, resellers, and brokers may find a way to leverage the new tax incentives to make bold leaps forward. Considering the duty-free nature of the regulations set by Beijing, the middleman between the manufacturers and end-users around the world may find an advantage by operating in Hainan versus mainland China.
One thing the government wants to avoid is that Hainan becomes a new manufacturing center. Some of the previous Free Trade Zones have instantly become places where manufacturers have to take part in the new tax incentive. However, this new FTZ will have an emphasis on financial and professional services to take advantage of innovative technologies to serve the global market.
Having the freedom to interact with all the global markets from around the world will play a huge role in who sets up shop in Hainan. If startups, investors, and finance gurus find a few financial players, the opportunity to do good work in Hainan could reimagine the global landscape. Imagine yourself being a customs broker helping facilitate the transaction of products produced in Shenzhen but shipped to the United States. Nothing is stopping you from having a good presence in mainland China; however, your headquarters operate out of Hainan.
This is actually what the Chinese government is encouraging; they want innovative players to enter the market and discover new ways to produce. This seriousness of Chinese innovation has never been a question; it has always been a question of the numbers.
Will Global Financial Institutions Stamp Out Entrepreneurism In The New Hainan FTZ
Another aspect to consider is if global financial institutions quickly become players in the local region, this will offer unlimited access for outside partners to collaborate and also influence the local economy. The lowered tax rate will inevitably mean large financial assistance from around the world will seek out a foothold in Hainan for them.
The day that financial players set up shop in Hainan are the day that everything will change. With unlimited access to trade stocks, bonds, and every other financial product under the sun, it seems like a matter of time rather than anything else.
One interesting aspect that has been debated time and time again is how the Chinese government wants to avoid Hainan becoming another property bubble. That would mean the government would have to insulate property values as well as investors that wish to take part in the FTZ. This is yet another distinguishing factor that sets the Hainan FTZ apart from places like Hong Kong, Shanghai, and Singapore. As you already know, property bubbles in areas like Hong Kong, Singapore, and Shanghai have forced out the traditional communities to make room for financial players with enough capital to last a downturn over the initial first 5 to 10 years.
This is not something that is explicitly mentioned in the action plan for Hainan. If you would like to participate in this new free trade zone, it will be a place where everyone with the real determination and drive can come take a place and find a new fortune for their family, the company and they’re colleagues. If one thing is for sure, it’s the fact that the first player to see success in the market will be sophisticated automated investors, financial players, and perhaps B2B service providers serving the global economy.
This is very promising for the average entrepreneur that doesn’t have much capital as a financial services firm or even a large manufacturer that has been operating around the world already.
