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Wangfujing Group has teamed up with natural rubber manufacturer Hainan Rubber to establish joint ventures to provide duty-free products to Hainan residents, taking advantage of a new tax-exemption policy not yet written into law, but expected in the coming period.
Under the agreement, the two companies are creating two joint subsidiaries, the Hainan Haiken Wangfujing Daily Duty Free Commodities Management Co. and the Hainan Wangfu Jinghaiken Duty Free Products Co. (both names still tentative) for the development, operation and management of duty-free items in Hainan.
The two are jointly investing Rmb100m ($15.4m) for the Hainan Haiken Wangfujing Daily Duty Free Commodities Management Co., with Hainan Rubber putting down Rmb60m, holding 60% of the shares of that company, while Wangfujing is investing Rmb40m to hold 40% of the shares.
The Hainan Wangfu Jinghaiken Duty Free Products Co. will see Wangfujing invest Rmb60m, holding 60% of the shares, while Hainan Rubber is investing Rmb40m for 40% of the shares.
According to the Shanghai Stock Exchange (SSE), the ventures’ scope is the wholesale and retail operation of duty-free goods, along with customs supervision of goods warehousing services.
On the retail side, the ventures will be able to operate sales of maternal and child products, watches, fashion items, handbags, and electrical items among other categories.
The two companies are venturing into unknown waters with what is considered as a new business model in Hainan, SSE noted, as the tax-exemption policy allowing the new companies to cater to Hainan residents has not yet been approved by the government.
Source：DFNIonline.com
