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Shanghai Daily News Digest

Multinational Companies in Shanghai - 2016-10-14


To attract multinational companies (MNCs) to invest and develop in Shanghai is an important element of the city’s opening up to the outside world and constructing the open economy system. Since China's reform and opening up, Shanghai has enjoyed sustained and rapid economic development, which has a close relationship with foreign multinational companies. In 2015, the number of multinational companies with regional headquarters in Shanghai reached 535, involving 165countries and regions. The number of investment companies and foreign R & D centers reached 312 and 396 respectively. Shanghai has become the mainland city with the largest concentration of investment companies and multinational regional headquarters. In the same year, utilization of foreign capital in Shanghai contracts reached $58.943 billion, 86% up from a year earlier, hitting a new high in annual investment and achieving first place in the nation.

The actual utilization of foreign capital continued to maintain growth on the basis of the previous year, reaching $18.459 billion, 1.6% up from a year earlier and achieving growth for 16 years in a row. What attracted so many multinational companies to come to Shanghai? And how will Shanghai attract more foreign investment in the future?

The reason for MNCs coming to Shanghai

Shanghai hasa superior geographical position, with convenient transportationanda comprehensive land- sea - air trinity traffic network.At the same time, rich human resources and scientific research and education resources can provide MNCs with knowledge-intensive resources.

Since Shanghai issued Tentative Provisions Encouraging Foreign Multinational Corporations’ Establishment of Regional Headquarters in July 2002, the municipal government in 2008 and 2011 issued the second amendment: Provisions on Shanghai Encouraging Foreign Multinational Corporations’ Establishment of Regional Headquarters, and Implementation Advice, strongly promoting the economic development of Shanghai headquarters.

In recent years, Shanghai has provided higher-level national treatment for multinational companies, to improve foreign market access through simplifying approval procedures. For example, Shanghai took the lead in exploring the negative list management mode in the free trade zone, promoting service industries as wider open to the outside world. Shanghai issued Supplement Provisions of Implement Advice on Shanghai Encouraging Foreign Multinational Corporations’ Establishment of Regional Headquarters, clarifying agency headquarters applications, identification and management methods and encouragement policy. Shanghai will continuously provide an international business environment, promote the reform of the foreign investment management system, and introduce facilitation measures for entry by foreign nationals.

MNCs’ promotion of Shanghai’s development

Multinational companies have injected new momentum into the development of Shanghai. On the one hand, MNCs help promote the converging of Shanghai’s innovative elements and talents, improve Shanghai’s participation capability in global science and technology innovation resources configuration and promote Shanghai’s industrial transformation and upgrading. On the other hand, foreign research and development has become for Shanghai an important interface in the global innovation network.

In attracting foreign investment, Shanghai gave priority to secondary industry from 1980 to 2004. Numerous large foreign industrial projects directly promoted Shanghai’s industrial structure adjustment and improved the overall level of manufacturing industry. Entering the new century, with Shanghai economic structure adjustment and accelerated construction of the “four centers”, the service industry has gradually become the main field for Shanghai to attract foreign investment. In addition, Shanghai has been attracting foreign investment to international trade, shipping, financial and other diversified fields.

Future Planning

According to the “Thirteenth Five-year” Plan, the Free Trade Zone, multinational companies and intelligent manufacturing will become three keys to attracting foreign investment in the future. At the same time, Shanghai will accelerate the implementation of “10 Big Plan” including upgrading of Asia-Pacific operators and foreign R&D centers, and overseas investment promotion. “The Belt and Road”, “Yangtze River Economic Belt”, “Regional Integration in Yangtze River Delta” and other opening-up strategies have been implemented to improve the level of utilization of foreign capital and international cooperation and to promote the transnational operation ability and international competitiveness of the city’s enterprises.


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