Manufacturing, autos and logistics
Free zone
An area with special customs, tax or ownership rules to attract trade and investment.
Facts checked against sources onWhat does Free zone mean?
A free zone (also called a free trade zone or, in India, a special economic zone) is a defined area where goods can be imported, stored, processed and re-exported without paying the usual customs duties, often with tax breaks, simpler licensing and, in some countries, full foreign ownership. Jebel Ali Free Zone (JAFZA) in Dubai is a well-known example, and India has many special economic zones. Example: a firm that imports 10 million of components into a UAE free zone, assembles them and re-exports the product avoids the 5 percent customs duty that would otherwise apply, saving 500,000. Rules differ by zone, and goods sold into the local market usually pay duty.
Where does it come up in case interview prep?
- Tariffs, trade agreements and rules of originLesson in Sourcing, trade and supply risk
- Nearshoring, friend-shoring and "China plus one"Lesson in Sourcing, trade and supply risk
- The Gulf for case solversLesson in Regions for case solvers: the big markets of the world
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- Logistics players, hubs and trade lanes, trends 2024 to 2026, and how to crack the casesLesson in Logistics, shipping, ports and supply-chain services
- Who owns what: transport infrastructure region by regionLesson in Transport infrastructure: airports, seaports, toll roads and rail
Related terms
- Transshipment hubA port where containers are moved between ships on their way to other destinations.
- Landed costThe full cost of getting a product to your door, not just its purchase price.
- VAT and GSTSales taxes collected by businesses for the government.
- OEM (original equipment manufacturer)In autos and machinery, the company that designs, assembles and brands the final product.
- Tier 1 supplierA supplier that sells complete parts or systems directly to the carmaker.
- Vehicle platformA shared set of engineering underpinnings used for many car models.
- Battery pack costThe cost of an electric vehicle's battery pack, usually quoted per kWh of capacity.
- Installed baseThe number of a company's machines or systems currently in use at customers.
Learn it in context
See Free zone at work in a lesson from Sourcing, trade and supply risk, with checks as you go.
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