Core Viewpoint - The establishment of the Hainan Free Trade Port, with its full closure set for December 18, 2025, is expected to significantly impact the cosmetics industry by expanding the range of zero-tariff products and enhancing the operational environment for international beauty brands [1][12][14]. Group 1: Policy Impact - The zero-tariff product range will expand from approximately 1,900 to about 6,600 tax items, increasing the proportion of zero-tariff products to 74%, a rise of nearly 53 percentage points [6][10]. - The "one line" and "two lines" regulatory framework will allow for free flow of goods, capital, and personnel within Hainan, while controlling the flow of goods to mainland China [4][5][10]. - Consumers in Hainan will be exempt from import tariffs but will still need to pay consumption tax and value-added tax, with the possibility of full tax exemption for purchases within the duty-free limit [6][10]. Group 2: Market Dynamics - Hainan has been a key market for luxury and beauty products, with 2023 imports of beauty and skincare products reaching 16.678 billion yuan [12]. - Major international brands like L'Oréal, Estée Lauder, and Shiseido have established a strong presence in Hainan, viewing it as a strategic market for growth [14][15][20]. - The competitive landscape may shift as both international and domestic beauty brands vie for market share in Hainan's duty-free environment, potentially benefiting local brands [21][22]. Group 3: Business Opportunities - The reduction in operational costs due to zero tariffs is expected to enhance profit margins for international beauty brands, making Hainan an attractive location for investment [14][20]. - Local companies, such as Jingrun Pearl, are already capitalizing on the new policies, with significant cost savings projected from the import and processing of goods [10][11]. - The anticipated influx of foreign investment and talent into Hainan is expected to further stimulate the cosmetics market and enhance its global competitiveness [11][12].