Key Points

  • Establishment of HQs Encouraged via Start-Up Funding Grants, and Preferential Residency and Rental Policies
  • Up to 3,000 Headquarters Expected by 2013

In a fresh bid to attract more overseas enterprises, Shanghai’s municipal government announced new regulations designed to encourage more multinationals to set up regional headquarters in Shanghai. According to the new rules, newly registered companies, whether focused on investment or management, that select Shanghai for their regional headquarters will receive startup funding from the local government, as well as a preferential rental policy.

Regional headquarters should have comprehensive functions of operation management, capital management, research and development, sales, logistics and support service. Those contributing to Shanghai’s economic development will receive special incentives. In addition, senior management of these companies will be granted “honors” by the local government.

The new rules also introduce preferential residency rules for employees of companies headquartered in Shanghai. ‘High-level foreign managers’ may apply for permanent residency status, while foreign hires of such companies will receive preference when applying for work permits. Domestic employees of regional headquarters and research and development centers will receive a Shanghai hukou (residency permit) more easily.

Liu Jie, an official with Shanghai Headquarters Economy Promotion Centre, told China Daily that by the end of 2007, more than 300 domestically listed companies and 183 multinationals had established their regional headquarters in Shanghai. Another 165 overseas-funded investment companies and 244 multinationals’ research and development centers are located in Shanghai. So far, 10 more multinationals have reportedly been given the official go-ahead to set up their regional headquarters in Shanghai this year.

According to Liu, Shanghai has trumped other mainland cities in attracting regional headquarters of multinationals. However, in a sharp contrast to Hong Kong and Singapore, which are home to 6,000 and 9,000 headquarters respectively, Shanghai still has further to go.

Although Hong Kong and Singapore have certain advantages by way of superb investment environments, favorable government policies, high information transparency and preferential tax policies, Shanghai holds its own aces. It boasts a mature financial market, the most sophisticated infrastructure and a broad consumer base, and is regarded as the ideal place by many multinationals to expand their presence in China, Liu said.

Shanghai is expected to become home to 3,000 headquarters by 2013. Along with big names such as Unilever, GE and Alcatel, which have already set up regional headquarters in Shanghai, some multinationals are now considering moving their regional headquarters from Hong Kong or Singapore to Shanghai.