Pilot FTZ enhances China market access
In the September/October issue of Exporter we shared some insight into China’s Pilot Free Trade Zone. Now Shanghai-based contributor Damon Paling explains the outcomes for Kiwi exporters.
It was September 2013 when the new China (Shanghai) Pilot Free Trade Zone (SPFTZ) was officially opened. As was expected, rather than being a ‘big bang’ event a series of reform measures were released over several months. These measures can enhance China market access opportunities for certain New Zealand companies.
The purpose of the SPFTZ is to expand the services sector and promote reform of the foreign investment management system. This includes regional headquarter activities and new trade facilitation reforms at the Customs border. Capital account convertibility and the full opening up of the financial services sector – notwithstanding the Negative List – should take place.
From a Government perspective risks will be controlled and a stepby-step principle adopted for rolling out these measures.
The SPFTZ includes the four existing zones of: Shanghai Waigaoqiao Bonded Zone, the Shanghai Waigaoqiao Bonded Logistics Park, the Yangshan Bonded Port and the Shanghai Pudong Airport Comprehensive Bonded Zone. These four areas cover about 28 square kilometres and are located adjacent to Shanghai’s major international air and sea ports.
Since September 2013 several thousand new companies – domestic and foreign – have registered within the SPFTZ. These new companies are trading in goods and services such as financial services and logistics. Some of the notable foreign companies to register include Microsoft (for Xbox One) and Amazon (for cross-border e-commerce).
New Zealand companies establishing a new Wholly Foreign Owned Enterprise (WOFE) may consider registering in the SPFTZ in order to benefit from certain preferential financial subsidies and cross-border e-commerce. A central business district office location may still be used to house employees and to be close to local vendors and customers.
The market price per square metre per day for leasing warehousing space within the SPFTZ increased in the lead up to, and shortly after, opening. Fastforward to October 2014 and prices are generally stable. From a regional viewpoint they remain at about onethird of that prevailing in Hong Kong, which for some companies represents a significant cost saving.
Over the past 14 months the frequency of cargo vessel/aircraft arrival/ departures continued to increase, which is an important consideration when competing for limited freight space and