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April 25, 2019

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Welcome to a place world’s enterprises can call home

By Tracy Li | 00:00 UTC+8 April 25, 2019 | Print Edition

Shanghai, a city with a long history of welcoming the world with open arms, recognizes the advantages of attracting overseas enterprises, entrepreneurs and capital.

Foreign-invested enterprises make up only 2 percent of companies in the city, but their contribution is enormous. They employ one-fifth of the city’s workers, creating 27 percent of local GDP, around a third of tax revenue and 60 percent of total industrial output value. Overseas businesses are directly behind around two thirds of imports and exports.

Data showed that a total of US$240.4 billion worth of actual foreign investment has been poured into Shanghai since China launched the reform and opening-up policy in 1978.

It took only three years for the number to soar from US$100 billion to US$150 billion, and another three years to reach US$200 billion.

In July 2018, Shanghai introduced 100 new measures to expand opening-up. On the same day, perhaps not entirely coincidentally, US automaker Tesla Inc announced that it was to set up its first overseas plant. And the location of that plant? The emerging community of Lingang in the Pudong New Area. Tesla thereby became the very first company to benefit from a new policy allowing foreign automakers to set up wholly owned subsidiaries in the country.

The story of Shanghai’s growth is a tale of non-stop efforts by local and national governments to attract businesses.

In 2017, China-Russia Commercial Aircraft International Co Ltd, a joint venture by the Commercial Aircraft Corporation of China and Russia’s United Aircraft Corporation, was established in Pudong.

Engineers from both sides are working together on new-generation wide-body passenger aircraft, of which the CRAIC CR929 will be the first to make commercial flights. More than just a jet liner, the CRAIC CR929 is an icon of China and Shanghai’s international cooperation and home-grown technological innovation.

And it is principally high-tech companies that have pushed up foreign investment in manufacturing. The 128 new foreign-funded manufacturing projects in 2018 were almost double the number of the year before.

Real foreign investment in the sector grew by 20 percent to US$1.9 billion, with nearly 60 percent finding its way to high-tech manufacturers.

Among the 100 new opening-up policies, around a third were designed to attract overseas investors into China’s US$40 trillion financial space. To that end, local regulators have relaxed caps on foreign ownership in the banking, securities and insurance industries and widened the scope of their potential business. Results of this move materialized quickly. In March, US banking giant JPMorgan Chase and Nomura Holdings, Japan’s biggest brokerage and investment bank, were approved to set up securities joint ventures, each 51 percent foreign-owned.

In the services sector, ceaseless policy initiatives have strengthened the city’s hand, creating more leeway for authorities to create a comfortable environment for overseas providers. The contribution of services to overall actual foreign investment has soared from 50 percent in 2005 to 89 percent in 2018.

Day by day, week by week, year by year, Shanghai has developed into the modern megacity we see today. Seventy years old this year, the People’s Republic of China is still a young nation; the powerhouse of innovation and commerce in Shanghai is just one result of 40 years of reform and opening up.

This energetic and vibrant city is still a place of great potential but, above all, remains as accommodating and congenial as ever. Shanghai’s doors and Shanghai’s arms remain open, as they always will, ready to welcome and embrace businesses from wherever they may come.

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