HONG KONG SAR - Media OutReach - 16 December 2020 - Kerry Logistics Network Limited ('Kerry Logistics Network'; Stock Code 0636.HK) announced today the development of a bonded logistics centre in the Haikou Integrated Free Trade Zone ('Haikou FTZ') in the Hainan Free Trade Port ('Hainan FTP') to support the Chinese government's new policy. The 50,000 sq m (538,200 sq ft) facility, expected to complete in 2023 Q1, will contain 10,000 sq m (107,600 sq ft) of cold store. Kerry Logistics Network is the first international 3PL to invest and build a premium bonded logistics centre in the Hainan FTP.

China's State Council announced the "Master Plan for the Construction of Hainan Free Trade Port" in June 2020, intending for it to be a globally-significant free trade port by 2050 and the largest free trade zone in Mainland China. To support the development of the tourism, e-commerce and logistics industries in the Hainan FTP, a zero-tariff regime will be established for the trade of goods in which certain categories of imports are entitled to zero-tariff treatment. In the future, imported goods bought by Hainan residents will be exempt from import tariffs, value-added tax and sales tax. Imported goods with over 30% value-added processing in the FTP will be exempt from tariff when sold to other areas in Mainland China.

Since July 2020, Hainan Island's annual tax-free shopping quota has been increased from RMB 30,000 per person per year to RMB 100,000 per person per year, which drove up the duty-free sales in that month by 234.2% year-on-year. Total amount of duty-free sales during Mainland China's National Golden Week in October 2020 has risen by 148.7% year-on-year to RMB 1.04 Billion.

Kerry Logistics Network is well-positioned to capture this growth as it has been the logistics partner of two existing duty-free shopping centres in Hainan since 2011 and has recently been contracted to provide logistics services to three newly-registered duty-free shopping centres. It has a long-established presence of over three decades in Hainan, having set up the Hainan branch in 1987 and commanding significant market share as the largest freight forwarder in Hainan. The Hainan branch has been accredited with Customs AEO Advanced Certificate and is a Top National Customs Brokerage Company in Mainland China as well as the only National Standard Implementation Demonstration Unit for the "Customs Brokerage Service Specification" in Hainan.

William Ma, Group Managing Director of Kerry Logistics Network, said, "We are confident in the prospects of duty-free consumption in Hainan. Leveraging Hainan province's geographical advantage in South China and its proximity to Southeast Asia, the Hainan FTP will be an important gateway to handle the fast-growing duty-free and inbound e-commerce cargoes. Our new bonded logistics centre in Haikou FTZ will be instrumental in helping our existing customers to expand into the Hainan duty-free sales channels and capture new business opportunities. As the logistics partner of Hainan's five duty-free shopping centres out of six in total, our new bonded logistics centre will significantly boost our capability to seize the tremendous opportunities presented by this new free trade zone and serve as a powerful engine to propel our growth."