ShanghaiInvestment.docx

ShanghaiInvestment.docx

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ShanghaiInvestment

Shanghai?

esnewpoliciestoencourageforeigninvestment

Shanghaiattracted?

?

billionincontractedforeigninvestmentin1999,a¡ê£¤decreaseover1998.TheinvestmentslumpishighlightedbythefactthatJapanandtheRepublicofKorea,oncemajorinvestors,haveslippedout

ofthetopfivelist.However,positivesignscanalsobeseen,suchas

thearrivalofmore

multinationalsandincreasedindustrialinvestment.Industrial

investmentaccountedfor¡ê£¤oftheforeign_fundedprojectslast

year,absorbingnearlyhalfofthe

totalcontractedfunds.Investmentintohigh_technologysectorslike

informationtechnology,biomedicineandnewmaterialsisontherise.

Moreglobalgiantsare

cashingin.Another19playersofthetop500multinationalfirms

inspiredbytheFortuneGlobalForumhostedbyShanghailastSeptember,

arrivedlastyear,

bringingthecity?

esglobalplayersto254.Accord_ingtolocalforeign

economiccooperationandtradedepartments,Shanghaihasissueda

packageofnewpolicies

toencourageforeigninvestmentandexpandareas

follows:

Foreign_fundedenterprises,whichhavesettledinShanghai,may

importduty_free

equipmentandrelatedtechnology,partsandspareparts,whichare

requiredintheirtechnicaltransformation,providedtheyarewithinthe

scopeencouragedby

Statepolicyandcannotbeproduceddomestically.Technology,whichis

transferredbyaforeignenterprisetoChina,whichisadvanced,or

offersfavorableterms,

maybeexemptfrombusinessincometaxafterbeingapprovedbytax

departments.Theincomefromtechnicaltransferoftheforeign_funded

enterprisewillbe

exemptfrombusinessincometax.Atpresent,newforeign_funded

enterprisesimplementthepolicyofexemptionfromtaxation,taxcredit

andtaxrefund,and

existingforeign_fundedenterprisescarryoutthepolicyof?

¡ãnotax

collection,notaxrefund".Existingforeign_fundedenterpriseshavea

choiceofselectingeither

policybytheendof2000.Whenforeign_fundedenterprisesinvestin

China,theyareallowedtoapplyforRenminbiloansfromdomesticbanks

againstapledgeof

foreigncurrency.Foreign_fundedenterprisesarealsopermittedto

mortgagetheiroverseaspropertytooverseasbranchesofChinesebanks,

andtheiroverseasor

domesticbranchesmaygrantloanstothem.Accordingtothe?

¡ãpositive

andreliableprinciple",foreign_fundedenterprises,whichinvestinthe

state_encouraged

energydevelopmentandcommunicationsfields,areprovidedwith

insuranceagainstpoliticalrisk,breachofcontract,andofguarantees.

Projectsinvestedby

foreign_fundedenterprises,whicharewithinthescopeencouragedby

StatepolicyandhavenoneedofacomprehensivebalancebytheState,

canbeexamined

andapprovedbytheprovincialgovernments,butarerequiredtobe

reportedtotheStatePlanningCommission,theStateEconomicandTrade

Commissionandthe

MOFTECforfiling.Shanghaiwillgraduallyshrinkthescaleof

compulsoryappraisalofvalueforequipmentimportedbyforeign_funded

enterprises.Itwillimprove

theappraisalmethodandnolongerrequirecompulsoryappraisalofvalue

ofequipmentimportedbywhollyforeign_ownedenterprises.Thecustoms

management

willbestandardizedtoraiseefficiencyandacceleratethespeedof

clearance.Foreign_fundedenterprises,whichhaveleasedland,willno

longerpaytheland_use

fees.Shanghaiwillstreamlinepoliciesandregulationspertainingto

foreign_fundedenterprises,andabolishpoliciesandregulationshostile

tooverseasinvestment.It

willimprovethelawandregulationsystemofforeigninvestmentand

graduallyimprovethestandardformanagementofprocessingtrade

businesses.Processing

tradeenterprises,whichhavebeenevaluatedasclassA,willnolonger

implementthebankguaranteemarginaccountsystem.Althoughthe

formalityissimplified,

spot_checkswillbestrengthenedforsupervision.Shanghaiwillconduct

anexperimentinsettingupastandard,closedexport_oriented

processingzone.

Shanghai'sinvestmentzones:

Buyer'smarket

OfChina's44state-leveldevelopmentzones,sevenarein

Shanghai.Theywereapprovedbythecentralgovernmentinthe

early-1990sandtodayco-existwith10

municipal-levelzones.Thecity'smanyzonesarenothaving

aneasytimeofit.UtilisedforeigndirectinvestmentinShanghaiwas

down24%lastyear,toUS$.Eventhe

mostprosperousofthelot,theJinqiaoExport-Processing

Zone,reportednonewinvestorsin1998.Othersarereluctanttoshare

whatarepresumablyratherdismal1998

investmentfigures.

Asharpfall-offininvestmentfromAsiancompaniesand

over-zealousconstructionareresponsiblefortheoversupplyofoffice

andfactoryspacethatnowexistsinmany

investmentzones.Rentalrateshavetumbled,and

competitionfornewtenantshasforcedzonedevelopmentcompaniesto

bargainharder,aswellastoupgradezoneservices

andinfrastructure.Theirtoughluckisgoodnewsfor

foreign-investedenterprisesgoingzoneshoppinginShanghai.

Firststop:

Pudong

ThePudongNewArea,createdbythecentralgovernmentin

1990ontheeasternsideofHuangpuRiver,remainsthepreferred

locationformostmultinationals.Taxincentives,

anabundanceoflandandgoodinfrastructuremakesetting

upshopinPudongrelativelyconvenient.

Pudongisstillnoteveryone'sideaoffun.Itlacksthe

cosmopolitantrappingsthatmakeShanghaiafavouritepostingformany

foreigners.ExpatriateslivinginPudongcomplainof

boredomandasenseofisolationfromdowntown.Therideto

Pudong'smoredistantzonesislong:

itcantakeanhourtogettothe

WaigaoqiaoFreeTradeZonefromcentral

Shanghai.

Hugeinfrastructureprojectsscheduledforcompletionthis

year--PudongInternationalAirport,theNo2SubwayLineanda

pedestrianunderpassbeneaththeHuangpu--will

help.Andtheinternationalimageforwhichtheareais

strivingseemsalmostwithinreach:

theFortune500GlobalForum,a

meetingoftheworld'smostinfluentialCEOs,has

chosenthePudongInternationalConventionCentreforits

Octobergathering.

Manyfinancialinstitutionsarerelocatingtheir

headquarterstoLujiazuiFinanceandTradeZone,thefinancialdistrict

thathassprungupacrosstheriverfromtheBund.Nearly20

foreignbanksareconductinglocal-currencybusinessin

thezone.Lujiazuiisconvenientlylocated,andwillbethefirstPudong

stoponthenewsubwayline.Buttheareaisstill

eerilyquiet.Therewasonlyonenewrealestateinvestment

inLujiazuilastyearandmanyinstitutionssaytheyhavebeenpressured

intomovingtheiroperationsfromacrossthe

river.Asenseofreluctanceisevident:

somereportshave

vacancyratesat80%.

OtherzonesaredoingtheirbesttomakePudongalivable

place.JinqiaoExportProcessingZonehassuccessfullycourtedmajor

internationalcompanies（includingGM,NECand

Alcatel'sShanghaiBell）notonlybyloweringprices,but

alsobyimprovingservices.Onceadesolateplace,Jinqiaonowhas

extensiveexpatriateandlocalhousing

developments,hospitals,internationalschools,research

institutes,anditsowncommercialdistrict.

TheShanghaigovernmenthasdonewelltoplaceresearch

centresanduniversitybranchcampuseswheretheyareneededinPudong.

AtZhangjiangHigh-TechPark,which

targetspharmaceuticalsandotherhigh-techindustries,

staffcanbedrawnfromJiaotongUniversity'snearbybranchcampus;

ShanghaiNo2MedicalUniversitywillalsoopena

branchinZhangjiangsoon.

OfallPudong'szones,themostversatileremainsthe

WaigaoqiaoFreeTradeZone.Morethan3,500companieshaveopened

officesandrentedwarehousespacetheretotake

advantageofitsuniqueprivileges.Forexample,

foreign-investedenterprisesestablishedinWaigaoqiaocanconduct

import-exportbusinessandconvertrenminbiintoforeign

exchangethroughthezone'scommoditiesexchange.For

preciselythisreason,asforeignexchangecontrolsstiffenedlastyear

andbuyerscouldnotobtainhardcurrency,

foreigncompaniesbegantosellproductsintoChinathrough

Waigaoqiao.Indeed,manyforeignenterprisesthereexistonpaperonly,

withthebulkoftheirstaff,equipmentand

operationsacrosstheriverinPuxi.

Puxireveille

MultinationalsusedtobedrawntoPudongbecauseofits

lowprices,taxincentivesandhigh-qualityfacilities.Butsuch

benefitsarenolongerexclusivetoPudong.Indeed,there

isgoodreasontoreconsiderwesternShanghai.Zonesin

Puxihavedroppedrentalratesandlandcostssignificantly.

Municipal-levelzonesinPuxigrantthesametaxbreaks

availableinallPudongzones.Andnewinfrastructurein

thecitycentremeansthecommutetowork,oncetorturouslyslow,isnow

fairlyspeedy.

ForCaohejingHigh-TechPark,located8kmwestofthecity

centre,sluggishtrafficwasamajordisincentivetoinvestors.The

completionofoverpassesonCaoxiLuandthe

OuterRingRoad,however,solvedall."Itcouldn'tbemore

convenient.Trafficmovessmoothly.We'reclosetothecityandcloseto

theairport,"saysanexecutiveinCaohejing.

Employeeswithouttheirowntransportationmayfindthe

zonealittlelessconvenient,astherearenotyetanynearbybusor

subwaysstops;workerstaketaxisorshuttlebuses

fromdesignateddrop-offpoints.

Foreign-investedenterprisesinCaohejingsaythezone's

utilitiesandinfrastructureareexcellent,andthemanagementextremely

accommodating.Theonlyproblemwith

Caohejing,saysoneexecutive,isalackofrestaurants.

Eventhe47-kmroutetoMinhangEconomicandTechnological

DevelopmentZone,theoldestandremotestofShanghai'sstate-level

zones,isbearable.AnemployeeataUS

c