The official island-wide customs closure of the Hainan Free Trade Port (FTP), effective December 18, 2025, marks a historic leap in China’s opening-up. For global businesses, this unlocks unprecedented access to a vast, duty-free market. However, a critical question emerges: Is your potential Hainan partner qualified to enjoy these groundbreaking benefits?
Understanding and verifying a company’s status as an “Eligible Entity” (or “享惠主体”) is no longer just due diligence—it’s a fundamental step for risk mitigation and ensuring your venture’s profitability. This guide will walk you through what this status means, why it’s crucial, and how you can verify it effectively.
Understanding the “Eligible Entity” in Hainan FTP
First, let’s demystify the term. An “Eligible Entity” refers to enterprises and organizations registered within the Hainan FTP that are entitled to import most goods from overseas (the “first line”) at zero tariff, zero import VAT, and zero consumption tax.
According to core policy documents like the Notice on Tax Policies for Goods Entering/Exiting the “First Line” and “Second Line” and Circulating Within Hainan FTP (Cai Guan Shui [2025] No. 12), this category generally includes:
- Enterprises registered in Hainan FTP with independent legal person status.
- Institutions and public service units established in Hainan FTP.
- Certain technology and education-oriented non-profit private entities registered in Hainan.
Why does this status matter to you, an overseas business?
- Cost Advantage: Partnering with an Eligible Entity means your goods sold to them can potentially enter Hainan duty-free, making your offer more competitive.
- Supply Chain Efficiency: These entities can freely circulate zero-tariff goods among themselves within Hainan, simplifying logistics.
- Access to Processing Value-Added Policy: Only eligible enterprises engaged in encouraged industries can manufacture goods within Hainan and, if the value-added exceeds 30%, sell them to Mainland China (“second line”) exempt from import tariffs. This is a massive incentive for manufacturing partnerships.
- Regulatory Compliance: Doing business with a non-eligible entity for zero-tariff goods could lead to legal complications, back taxes, and penalties.
Simply put, verifying this status is the first checkpoint in assessing a Hainan partner’s legitimacy and the feasibility of your planned business model.
Step-by-Step Guide to Verifying “Eligible Entity” Status
Verification requires a multi-layered approach, combining public checks and professional scrutiny. Here is your actionable guide:
Step 1: Conduct Basic Due Diligence on Business Registration
This is the foundational step. You need to confirm the company legally exists and is registered in Hainan.
- Official Channel: Access the National Enterprise Credit Information Publicity System (国家企业信用信息公示系统). This is the primary government portal for basic Chinese company information.
- What to Check:
- Unified Social Credit Code: Verify its authenticity.
- Legal Representative & Registered Capital: Confirm the key figures.
- Registered Address: Ensure it is within the Hainan province.
- Operational Status: Check if it is “In Operation,” “Revoked,” or “Liquidated.”
- Limitation: This system confirms legal existence but does NOT explicitly state “Eligible Entity” status for FTP policies.
Step 2: Investigate Business Scope and Industry Alignment
The FTP’s benefits are closely tied to the Encouraged Industries Catalog. Eligible Entities, especially those aiming for processing value-added benefits, are typically engaged in these sectors (e.g., high-end manufacturing, biotech, modern logistics).
- Action: On the Enterprise Credit Publicity System, examine the company’s “Business Scope” (经营范围). Does it align with Hainan’s encouraged industries?
- Cross-Reference: Review Hainan’s latest encouraged industry lists published by provincial authorities.
Step 3: The Crucial Step – Seeking Official Confirmation of Eligibility
This is the most definitive yet challenging part. The official list of Eligible Entities is determined by the Hainan Provincial Government and shared with relevant ministries.
- Direct Inquiry: Politely ask your potential partner to provide official documentation or a filing receipt that proves their recognition as an “Eligible Entity” by Hainan authorities.
- Public Information Platforms: Monitor official Hainan FTP information portals and the China (Hainan) International Trade Single Window. Some public announcements or lists might be published regarding enterprises filing for specific policies, like the processing value-added policy.
Step 4: In-Depth Background Check and Risk Assessment
Basic registration is not enough. A comprehensive background check is essential to understand the company’s health and credibility.
- Financial Health: Analyze its financial statements (if available) to assess stability.
- Legal and Litigation Records: Check for ongoing lawsuits, court judgments, or administrative penalties. This can signal operational risks.
- Shareholder and Ownership Structure: Understand the ownership hierarchy to identify any hidden risks or beneficial owners.
- Executive Background: Investigate the reputation and track record of the legal representative and key executives.
This is where the process can become complex for overseas businesses, navigating Chinese regulatory databases and interpreting local documents.
Beyond Verification: Comprehensive Partner Due Diligence
Verifying Eligible Entity status is one pillar. A full partnership assessment should also consider:
- Reputation and Market Standing: Seek testimonials, review industry reports, and analyze their market presence.
- Operational Capacity: Assess their physical assets, team size, and past project experience.
- Compliance with “Negative Lists”: Ensure their operations don’t involve goods on the Hainan FTP Prohibited and Restricted Import/Export Goods List or the Hainan FTP Import Taxable Goods Catalog (the zero-tariff negative list).
How ChinaBizInsight Can Be Your Trusted Guide
Navigating this verification maze alone can be time-consuming and fraught with language and regulatory barriers. Professional business intelligence services can be your strategic advantage.
At ChinaBizInsight, we specialize in helping international businesses “Know Your Chinese Partners.” We bridge the information gap by providing:
- Official Enterprise Credit Reports: Detailed reports pulling data from official Chinese sources, confirming legal status, and highlighting red flags.
- In-Depth Due Diligence: We go beyond basics to investigate financials, litigation history, ownership, and executive backgrounds, giving you a 360-degree view.
- Customized Research: We can assist in gathering intelligence specific to a company’s alignment with Hainan FTP policies and its industry reputation.
Verifying a partner’s credentials is not a lack of trust—it’s the foundation of a secure and prosperous business relationship. In the dynamic new landscape of the Hainan Free Trade Port, being informed is your most valuable asset.
Ready to vet your potential Hainan partner with confidence? Explore our suite of Business Credit Report and Due Diligence Services to make your market entry into Hainan informed, secure, and successful.