ADMINISTRATION OF KAIFENG AREA OF
CHINA(HENAN)PILOT FREE TRADE ZONE

Kaifeng is neither along the coast nor the border, but it has created peerless experience in the pilot free trade zone. In the past, Kaifeng was renowned for its ‘antiquity’, while now it is set to be brilliant for innovation.By Premier Li Keqiang

Boundaries of Kaifeng FTZ

China (Henan) Pilot Free Trade Zone -- Kaifeng FTZ covers an area about 20 sq. km. It is east to Jinming Avenue, south to Zhoutian Road, west to the 21th street, and north to An’shun Road. Functional Positioning Designed by the State Council

Priority will be given to the development of service outsourcing, medical tourism, creative design, culture & media, culture & finance, artwork trading and modern logistics, uplifting of machine building, and international cooperation and trade of agricultural and sideline products processing, setting up the platform for the cooperation of international culture trade, constructing a pilot area of trade service innovation and culture creation industry for the promotion of converged international culture and tourism.

The ‘1246’ general strategy of Kaifeng FTZ

The‘1246’ means One Development Position, to build Kaifeng into an international pilot area of business environment in Central China; Two Mainlines of Industry Development, to focus on the synchronous development of high-end manufacturing and modern service industry; Four Industry Development Directions, to build open industry cluster centering on Platform Economy, Service Economy, Creative Economy and Headquarter Economy; Six Development Systems of Business Environment, which are Government Affairs System, Policies Innovation System, Supervision System of In and After Events, Security System of Legal Environment, Construction System of Open Platform and Support System of Statistical Assessment.

One Center, Four Valleys and Two Hubs

According to its functional positioning, the 20 sq. km. area of Kaifeng FTZ is divided into One Center, Four Valleys and Two Ports, which are CBD, Cultural Creative Valley, Healthy Industry Valley, High and New Tech Valley, Innovation Incubator Valley, International Logistic Hub and International Business Information Hub.

Central Business District (CBD)

The 3.92 sq. km. area is set to focus on the construction of administrative office and commercial building. It will mainly serve as administrative office and for new service industries such as financial service and out-sourcing industry, etc. Meantime, it will make efforts to gather enterprise headquarters, regional head offices or functional head offices here, which will fully play its functional role as the platform for economic development.

Creative Art & Culture Valley

The 1.11 sq. km. area is a carrier for the construction of key Culture and Art Creative Studio, China (Kaifeng) Cultural Art Trading Center, Comic City and Culture Maker Center, etc. It will focus on the industry development involving creative design, cultural & media, culture & finance, cultural trading and related industries, which aims at attracting enterprises of traditional culture resources with the most economic value in Central Plain Area to gather here so as to build itself into a culture industry cluster that integrates cultural resource exploration, developing and trading, striving for a model base of national foreign cultural trade.

Health Industry Valley

Covering 1.92 sq. km., this area is planned for the construction of medical tourism service platform, exchange center for traditional Chinese medicine trade, and pilot projects on international medical treatment & health care tourism. It would also develop both Mid-med and Heavy-med tourism, as well as attract featured institutions of traditional Chinese medicine health care, international clinic medical, health care and medical research etc. to settle in, therefore it would become an international medical tourism model zone in Central China.

Innovation Incubator Valley

With an area of 1.49 sq. km., this area is an innovation carrier for the key projects such as Kaifeng Innovation Industry Research Institute, Business Staring Base for Overseas Top Talents and Industry Technology Trading Center, etc. It will focus on the research, design, incubation, technology consulting of high-new tech as well as cultural creation, financial and commercial service, aiming at attracting a number of R&D Institutions, Experiment Platforms and innovation teams or organizations in and abroad to settle in, thus to build itself into an innovation and entrepreneurship center leading the economic development of Central China.

High and New Tech Valley

This 7.64 sq. km. area is set to focus on the construction of high-new technology industry cluster district and transfer of processing trade industry. It gives priority to the high-end equipment and auto parts, new-type manufacturing, agricultural & sideline products and food processing, distributes the industrial pattern of technology research and development, industrial design and incubation for high-new enterprises, and then sets up an open system of manufacturing industry.

International Logistic Hub

The key construction projects such as Kaifeng Comprehensive Bonded Zone and Bonded Logistics Zone will be settled in this 2.53 sq. km. area. It will play the commercial logistic functions of headquarter + logistics, production + logistics, and e-commerce + logistics. With the efforts to gather major logistics enterprises, commercial and trade enterprises and foreign trade business service institutions here, the area will be built into a major modern comprehensive logistics hub.

International Business Information Hub

With a total area of 1.33 sq. km., this area is set to focus on the construction of convention & exhibition center, information service center and commercial buildings. It will mainly develop professional service on convention, business consulting, law, accounting and capital assessment etc., as well as gather supportive commercial service organizations like comprehensive convention service and intermediary service institutions together so as to become an exhibition and service platform for Kaifeng FTZ.

Industrial Pyramid Distribution

Two refers to two characteristic industries, i.e. cultural industry and medical tourism industry.Three represents the development of three high-end manufacturing industries, which are high-end equipment and auto parts, strategic emerging manufacturing and agricultural sideline products and food processing.Four means that the area would accelerate the development of four new service industries, which are modern logistics, service outsourcing, financial service and professional service including international trade, cross-border e-commerce, tech-service and commercial service, etc.

Development of 4 Interconnected Regions

Taking the 20 sq. km. area of Kaifeng FTZ as the center, the government has reserved a development region about 50 sq. km. around it. These two areas will develop together with other two regions, one is the 7 industry cluster district, and the other is the 10 service industry district. By developing jointly, the four districts will fully play the role of overflow and irradiation effect of the FTZ and then realize the multi-area linkage innovation development.

Negative List System:enterprises can do anything which are not prohibited by law

The General Office of the State Council released a new foreign investment negative list for free trade zones on June 16th 2017, which took effect on July 10.The new list is more concise since it covers only 15 sectors, including 40 categories and 95 special management measures. Compared to the 2015 list, it has cut 10 categories and 27 measures. The number of categories on the FTZ negative list has decreased from 190 in 2013, 139 in 2014, 122 in 2015 to 95 in 2017, which means the government has done more to streamline administration, delegate power to the lower-level governments and release the reforming bonus.

Kaifeng FTZ holds the provincial economic management authority: government departments must fully perform their duty as stipulated by law and regulation

The decision to implement the first group provincial economic management authority in the free trade zone, No.30 document released by the provincial government, decides to delegate the power of 455 items provincial authority in economy management to lower-level governments, which involves 31 departments of the provincial government. Therefore, the management committee of Kaifeng FTZ can directly deal with the 455 items without asking relevant provincial departments for instructions, thus would further release the space and power of the FTZ on independent decision making, institution innovation and exploration and practice, and strengthen the magnet effect of Kaifeng FTZ.

A reward of 20 million yuan will be given to the headquarter enterprises of newly established transnational corporation by Henan Province

According to the provisional measures for the management of provincial special funds for the pilot free trade zone and the cross-border e-commerce comprehensive pilot zone in Henan province, drafted mainly by the finance department of the provincial government, the headquarter enterprises of the newly established transnational corporation will be given a bonus no more than 20 million yuan. By taking supportive measures of subsidy, interest subsidy, award instead of subsidy, the finance department will mainly support the development projects of the headquarters in FTZ, and projects of cross-border e-commerce enterprises. Based on the scale of invested projects, headquarter enterprises of the newly established transnational corporation will be given a bonus no more than 20 million yuan after the censorship of Henan FTZ office. Top 500 domestic enterprises (not including enterprises of dining, entertainment and department supermarket) which are newly set in the FTZ and foreign World Top 500 enterprises will be given less than 3 million and 5 million yuan reward respectively. Platform construction project, new industry, and projects of new model would be given special financial aid.

35 items of industrial supporting policies at a very high standard have been formulated.

Kaifeng FTZ has released35 items of industrial supporting policies in areas of headquarter economy, modern logistics, finance, medical treatment and health, cultural tourism, high-end manufacturing and strategic new industries, and provided strong support in areas including financial incentives, housing subsidy, land use tax, individual income tax and corporate income tax. The government has made plans to encourage counties to introduce enterprises to settle in the FTZ: for enterprises in the county which have changed their registration place to the FTZ, the tax income will be 100% paid back to the county, while for enterprises which are newly registered in the FTZ introduced by the county, tax income of the first three years would be 100% paid back to the county.

The Advantages of Kaifeng FTZ

1.Commercial registration being more convenient

Start with governmental function transformation and convenient investment, Kaifeng FTZ has made efforts to streamline and decentralize administration, optimize service and perfect the “approval by one assigned department” mode which takes “approval by one window” as the core, so as to build a more convenient, easier and favorable environment for enterprises to get approved and put on records, etc. Efficiency of commercial registration has been further improved since “different certificates integrated in one” represented by “22 certificates were streamlined to one” has been applied.

2.Investment areas being wider

With the restrictions for foreign investment being loosened, Kaifeng FTZ would be more open, while the management mode of foreign investment being increasingly improved, investment environment would be more convenient.

3. Trade convenience being more prominent

Enterprises investing in Kaifeng FTZ would enjoy services including integrated modern logistics, various interconnected transportation and convenient custom clearance. Meanwhile, innovative and plentiful trade industry types and modes will provide new opportunities for enterprises in and abroad.

4.Capital cost of financial innovation being reduced

Kaifeng FTZ would strongly support the finance to open more in and abroad, improve the efficiency of foreign exchange revenue and increase fund utilization rate of enterprises. The FTZ will also provide various and convenient financial service for enterprises, loosen the management policy and release the space for cross-board investment and financing.

5. Space for industrial development being larger

While focusing on synchronous development of high-end manufacturing and modern service industry, Kaifeng FTZ has made efforts to build special culture industry and medical tourism industry, attract international high-end medical enterprises and research and development institution to gather here, positively introduce foreign high quality education resources to carry out high-level cooperation in running schools, and bring in culture and tourism industries invested by foreign capitals.

6. Production factors being more easily to be acquired

With more enterprises entering Kaifeng FTZ and the scale of enterprises being larger, enterprises in the zone would be easier to acquire capital elements, innovation elements, talent elements, and market elements.

7. More tax preference would be enjoyed

Enterprises in Kaifeng FTZ would enjoy universal tax policy, preferential policy for special tax type, convenient tax service, all of which would be extremely convenient for enterprises to handle tax business.

KAIFENG FTZ IS SET TO BE BRILLIANT FOR ITS INNOVATION

Bearing in mind the reforms of streamlining administration, delegating power to lower-level governments and optimizing administrative regulations and services and the three permission phrases of entering, building, and operation, Kaifeng FTZ has carried out institutional innovation and adopted new rules of international investment and trade at a higher standard. With a lot of brave trials and reforms, Kaifeng FTZ has created its own model of institutional innovation, which has taken the lead in the whole province, even the whole country in some areas.

Kaifeng FTZ has explored to implement new modes of administration and approval system: 5 one-stop approval and supervision new process for investment projects, 5 innovations in commercial registration reform, 5 compulsory measures to guarantee the approval efficiency for investment projects, and 5 protecting measures to improve service efficiency of investment and construction projects.

Kaifeng FTZ has released the first business license that integrated 22 certificates and licenses on March 23rd, meaning the mechanism that 22 certificates being streamlined to one is leading the whole country. Now the number 22 has changed into 35.

Kaifeng FTZ has taken the lead in setting pilot commitment system for investment programs in the whole province on May 26th, and adopting new modes of comprehensive supervision through the whole project: double random spot check, double information push service, double intelligent supervision, joint supervision and regulation, joint disciplinary punishment, and information interconnection.

On September 28, 2017, the brief report of the inter-ministerial joint conference system for free trade zone established by the State Council has published the commitment system for investment projects of enterprises implemented by Kaifeng Pilot Free Trade Zone, which is for the first time that innovation measures created by China (Henan) Pilot Free Trade Zone been recognized by the joint conference system.

Guided by the principle of “first-rate positioning, management and efficiency”, “Free Trade Communication”, a comprehensive service platform has been built to provide enterprises with nice, high efficient and convenient “expert + housekeeper” service in the whole process.