Type of Industrial Areas and Zones in China

China has a host of three letter industrial zones that although slightly different in category often have similar functions.  Below is a list of the terms that one encounters frequently in China with an explanation of their history and terms of reference.  Hopefully the below will help those trying to look for a location to either produce or to source products and better understand the circumstances that exist in that defined commercial entity.

Special Economic Zone (SEZ)
  • Initiative by Mr. Deng Xiaoping in 1979
  • The first window of China open to the outside world
  • Experimental arena for China’s economic reform and open-door policy
  • 5+1: Shenzhen, Zhuhai, Shantou, Xiamen, Hainan Island, and Shanghai Pudong, all in the coastal area
  • Special policies and incentives (duty free, tax break etc.) granted at early stage, not many at present
  • 15% corporate income tax rate for all enterprises, compared to the rate of 33% in most parts of China
  • Shanghai Pudong and Shenzhen emerged as China’s international cities 
Economic & Technological Development Zone (ETDZ)
  • national certified, located in major industrial and commercial cities across the country
  • Pioneering zones in the region with good infrastructure to observe foreign investment
  • Focus on manufacturing of labor-intensive consumer products
  • Foreign investors aiming at China market entry or lowering cost for export
  • Many other local ETDZs, not national certified, less regulated, not recommended
Free Trade Zone (FTZ)
  • Enclosed, bonded zones
  • all along coastal area in cities with port facilities
  • Function: transit trading, distribution, logistics service, and manufacturing
  • Besides the same policies and incentives as ETDZs, FTZ also enjoys:
  • Import license free
  • Duty free/bonded for all imported goods (manufacturing and office equipments, components etc.)
    • -    No VAT in the zone
      –    Simplified customs clearance procedures
      –    No customs fee for storage and transit goods
      –    Less foreign exchange control
High-Tech Park
  • focus on new and advanced technologies
  • Function: technology products manufacturing, R&D, start-up, and education
  • Park in park: Incubator Campus, Software Park, IC Design Park, Overseas Returnees Park etc.
  • Home for the China high-tech big companies like Huawei, Lenovo, SMIC, ZTE etc.
  • Pool of international and local venture capitals
  • Besides the same policies and incentives as ETDZs, High-Tech Park also enjoys:
-Local governments subsidized land price and property rental
-Central and local government funding support
- VAT subsidies

Export Processing Zone (EPZ)
  • most located in ETDZs
  • Enclosed, bonded zones
  • Function: manufacturing for export only
  • Besides the same policies and incentives as ETDZs, EPZ also enjoys:
–  Import license free
–  Duty free/bonded for all imported goods (manufacturing and office equipments, components etc.)
–  No VAT in the zone
–  Goods (including public utilities) export to EPZ from China qualified for VAT rebate
–  Simplified customs clearance procedures, 24/7 schedule –    Less foreign exchange control

Bonded Logistics Zone (BLZ)
  • BLZ: Shanghai, Shenzhen, Dalian, Tianjin, Qingdao, Zhangjiagang, Ningbo, and Xiamen. All connect to ports, so called “Zone-Port Connection”
  • Bonded Logistics Center (Type B): Suzhou
  • Function: bonded warehousing, international distribution/delivery, simple processing & value-added service, transit trading, and virtual port
  • Incentive:
–  Goods from overseas are bonded, no customs duty or VAT required
–  Goods from China are regarded as exports and enjoy VAT rebate when entering BLZ
–  Goods in BLZ are allowed to consolidate, transfer and store without time limit

More on Industrial Parks in Asia:


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