Shanghai has recently released a new document entitled Opinions on Further Supporting Foreign-Funded R&D Centers to Get Involved in Building Globally Influential Science and Technology Innovation Centers in Shanghai in order to encourage foreign-funded R&D centers to participate in the R&D of major projects, support the building of state-class technology centers and participate in the government planned projects, facilitate the applications for use of major science facilities and attract top-class foreign-funded R&D centers to settle in Shanghai.
According to Shang Yuying, director of Shanghai Municipal Commission of Commerce, foreign-funded R&D centers have become a major force in the building of Shanghai innovation centers. By the end of August 2017, foreign-funded R&D centers settled in Shanghai had accumulated to 416, accounting for a quarter of the total in the mainland of China, ranking first in the country. Some foreign-funded R&D centers have realized the goal of "in Shanghai, serve the world" and "Shanghai Creation, Global Made". The new document is in fact sending a major message, that is, foreign-funded R&D centers will represent Shanghai to involve in global competition and will represent Shanghai in building a globally influential innovation center and they will be a major force in building such center.
The document encourages the new model of R&D, supporting multinational corporations in building open innovation platforms; encourages them to get involved in the R&D of major projects, supporting foreign-funded R&D centers in building state-class technology centers and in getting involved in the R&D of major projects in the strategic and emerging industries; encourages foreign-funded R&D centers to apply their achievements locally. At the same time, it will facilitate cross-border movement of R&D samples and simplify the import procedures for R&D samples and prototypes by providing priority in customs declaration and raising the credit classification management and other means so as to raise R&D efficiency.
The document facilitates the movement of R&D personnel, making it easier for overseas personnel to get work permits and simplify related formalities, allowing foreign-funded R&D centers to make direct applications for overseas personnel they employ. This is the first time for the country to come out with the policy.
Yang Zhao, Deputy Director of Shanghai Municipal Commission of Commerce, said that the document has learned the experience on the "go and try first" of Shanghai Pilot Free Trade Zone. For instance, on financial support of foreign-funded R&D center development, the use of free trade account will be extended for foreign-funded R&D centers, which may enjoy the convenience of cross-border financial services by opening their own free trade accounts.
It is worth noting that this is the second time for Shanghai to come out new policies on foreign investment within 2017. Shanghai announced Opinions on Further Opening up and Accelerating the Building of an Open-Type Economic System in April. Some new changes in the situation of utilizing foreign capital have been brought to Shanghai.
Yang Zhao said, since the beginning of 2017, Shanghai has further shaken off the reliance on the real estate industry in the use of foreign capital and accelerated the transition and upgrading of the high value-added areas. The commercial service industry with the headquarters economy as the core and the information service industry with "Internet +" as the main continued their positive growth. In the first eight months of 2017, the amount of foreign capital put in place in the two areas grew by 2.9 percent and 84.6 percent, respectively. The commercial service industry has become the No. 1 in the utilization of foreign capital in Shanghai. It has taken in and acknowledged 30 regional headquarters of multinational corporations, including 11 Asian-Pacific regional headquarters. By the end of August, overseas capital had established 610 multinational regional headquarters, including 67 Asian-Pacific regional headquarters.
The environment and climate for doing business in Shanghai has been further optimized, with the investment and trade facilitation level improved markedly. The monitoring result of the operations of comparable 13,800 foreign capital enterprises shows that in the first seven months of 2017, the business turnover of foreign capital enterprises increased by 14 percent year on year, the total tax payment rose by 19.3 percent and profit increased by 28.6 percent. The reform of the foreign investment management system has been deepened, over 98 percent of foreign capital establishment and alteration were completed through the putting-on-the record procedures, and the average time spent in the process was shortened to three working days.
"Each article of the document is marked at the end with the responsible unit, making it easier for putting the policy in place. The new opening up policy of Shanghai is really encouraging to me," said Tang Rongji, partner of key customers in greater China area of Ernst & Young. "These new opening-up policies will drive Shanghai to the 'fast lane' in attracting foreign capital."
Opinions on Further Opening up and Accelerating the Building of an Open-Type Economic System has mentioned to lift foreign capital restrictions on many service and manufacture areas, including accounting and auditing, building design, and to strive for more opening-up measures to "go and try first" in China (Shanghai) Pilot Free Trade Zone. It puts forward clear-cut measures for resolving matters that foreign investors are most concerned about, such as anti-monopoly investigations, reform of government procurement, intellectual property right protection, listing of enterprises and in- and out-flow of foreign exchange and the establishment of a mechanism for protecting the rights and interests of foreign investment.
Lan Zhenzhen, vice president of L'Oreal (China), the largest cosmetics group of the world, said that enterprises are the beneficiaries of the primary liaison responsibility system for key enterprises. "At the beginning, I thought there would be a person answering the phone. But later on, I found that the liaison officer does not only help enterprise analyze and interpret policies but also help them overcome their difficulties. The system has been written into Article 28 of the recommendations and that has made us relieved."
The ACC Lab (Shanghai) is the first foreign-capital certification organization established after the Shanghai Pilot Free Trade Zone was set up. Its executive director, Sharon Barner, said that the policy of facilitating overseas people to work in Shanghai is really timely. "Our company is planning to employ an overseas chief scientist, who is over 60. According to the original policy, he could get only a three-month business visa to Shanghai and he has to come and return a number of times a year. But the new policy will allow him to apply for a work visa and stay in Shanghai," he said.
Lv Zhongli, vice president of Carrefour (China), said that Shanghai has given more opportunities for foreign enterprises. Previously, Carrefour has registered an e-commerce company in the Shanghai Pilot Free Trade Zone and moved its China headquarters to Shanghai for years. At present, we are considering the setting up of a regional headquarters in Shanghai.
Liu Jinping, president of Shanghai Association of Foreign Investment, said that foreign capital enterprises have become a major component part of building "international economy, financial, trade and shipping centers" and science innovation center in Shanghai. In 2016, foreign capital enterprises, which accounted for 2 percent of the total in the city, contributed 27 percent of the total output value, 60 percent of the industrial value of enterprises whose annual business turnover exceeding 200,000 yuan, 65 percent of import and export and 33 percent of tax revenue. They employed 20 percent of the work force.
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