SHANGHAI, China's financial capital, is becoming a fine dining capital, as it attracts chefs honored by Michelin Guide opening their restaurants, and talented local chefs make their reputation. In addition, diners are increasingly sophisticated and local restaurant chains are growing.

"Shanghai is now qualified to compete with the traditional world food capitals such as New York and Paris due to its dynamic and mature dining market," says Jean-Georges Vongerichten, the world famous chef.

It features great food diversity, from China's famous Eight Cuisines to many international cuisines, says Alain Ducasse, the world's only chef overseeing three Michelin three-star restaurants.

So far, there are over 58,750 restaurants in the city covering at least 10 regional cuisines and more than 11 international cuisines. Of these, the most popular is benbang cuisine, which combines Shanghai cooking and Jiangsu and Zhejiang provincial cooking - it is featured in 6,860 restaurants, according to statistics from Dianping.com, China's the biggest restaurant review website.

Although the Michelin guide steadfastly refuses to cross from Hong Kong to the Chinese mainland, its star ratings for restaurants are considered by many Chinese to represent the highest quality dining.

However, there are restaurants opened by Michelin-starred chefs, mostly near the Bund and Shanghai is the best place on the Chinese mainland to experience Michelin flavor.

Jean-Georges Vongerichten has opened French restaurant Jean-Georges and the new Italian Mercato by Jean Georges, both in Three on the Bund.

Umberto Bombana, also awarded three stars, has opened an Italian restaurant 8 1/2 Otto e Mezzo Bombana on the Bund. Two-star Michelin chef Yau-Tim Lai chose Shanghai to open his first restaurant outside Hong Kong and Macao, named Tim's Kitchen. Two-star chef Mauro Colagreco has opened Colagreco, and twin-brother chefs Jacques and Laurent Pourcel, each with two stars, have opened a restaurant named Maison Pourcel.

Besides providing more dining options, these Michelin chefs are stimulating the development of the Shanghai dining scene. They train and encourage many young local chefs, who are part of the backbone of Shanghai's fine dining industry.

"I learned starting from scratch. Before working for Jean-Georges, I knew little about being precise and disciplined in the kitchen," says Mikko Wang, the pastry chef at Moonsha Japanese restaurant who once worked in the kitchen of Jean-Georges. "He taught me that the placement of each drop of chocolate sauce on the plate can be precise to the millimeter."

"I am deeply impressed and inspired by Jean-Georges who rigorously pursues the freshness of ingredients and balances in flavor," says Jacqueling Qiu, the former sous chef at Jean-Georges Shanghai and now the executive chef at Andaz Shanghai.

"Stefan Stiller (Michelin one-star chef) instilled in me that food is not only about the pursuit of flavor and consistency but about innovation and surprising people," says Steven Shi, the executive chef at Stiller's Restaurant. He is also the first Chinese chef short-listed last year for Bocuse D'or, the so-called Olympic Games of Gourmands.

Top-quality ingredients

Celebrity chefs play an indirect but important role in increasing the quality of local produce. They emphasize use of top-quality, organic ingredients and sustainably produced food, including greens and vegetables, truffle, Wagyu beef, foie gras and caviar. Their emphasis on local sourcing to ensure freshness and control costs has assisted in the emergence of local organic farms and high-end food companies.

So far, Shanghai is capable of producing excellent organic greens and top Wagyu beef, according to Trevor Macleod, chef de cuisine at the Fairmont Peace Hotel. And nearby Qiandao Lake in Hangzhou has become one of world's most important areas producing farmed caviar.

"Quality local produce is the key to Shanghai competing with other world food capitals," says chef Vongerichten.

However, chef Bombana cites a problem in sourcing high-quality imported ingredients as China places tight import restrictions. For example, there are strict restrictions on importing high-quality beef from the United States and truffles from Europe.

But stars aren't everything when it comes to quality and diversity. There are master chefs, both Chinese and foreign, gaining a widespread reputation and distinguishing themselves through their unique culinary styles.

Chinese chef Du Caiqing, the chef de cuisine at Hyatt on the Bund, is known for integrating innovative cooking techniques into traditional benbang cuisine. American chef Austin Hu uses classical Chinese ingredients such as caotou (a popular green in southeast China) and Jinhua (Zhejiang Province) prosciutto to make contemporary, Western-style dishes. Spanish chef Willy Trulas Morena reinterprets Spanish tapas for Chinese taste.

Chef Vongerichten says the increasingly mature dining market and more sophisticated tastes of Shanghai diners encouraged him to open his second restaurant, Mercato, in the city.

Diners have huge spending power and high expectations about the dining experience.

Shanghai has become the top dining city in China, with the biggest consumption, according to the China Hotel Association's 2011 research report on the nation's catering industry.

Most of the spending comes from the many expensive business dinners in the financial center, according to Johnson Zhu, the CTO/R&D director at Shanghai King Mang Jardin de Jade Catering Co Ltd, one of the biggest restaurant chains in China.

Business diners require high quality food, wine, service and ambience, so the first option is a fine dining restaurant where the average cost per person is 800 yuan (US$125.8), Zhu says.

"I usually choose a fine dining Chinese restaurant with a nice view and good location for business dinners because it helps demonstrate my sincerity to my clients and partners," says Linda Wang, a Shanghai business woman.

A diners' city

The general public also plays an important role in building Shanghai into a diners' city. Although Shanghainese dine out less frequently than people in Chinese food capitals such as Chengdu in Sichuan Province and Guangzhou in Guangdong Province, consumers spend 88 yuan on average per meal, much higher than in other cities.

"Unlike Cantonese and Chengdu people who consider dining out as part of their life, Shanghai people see it more as either a social occasion or way of improving their quality of life, which means locals have a higher expectation of the whole dining experience," Zhu says.

"I dine out because I hope to eat something I cannot cook at home, dishes that require complicated preparation and cooking," says Shanghai diner Alice Wang.

Research from dining website Dianping.com indicates that local diners are more sensitive to a restaurant's reputation than its price.

"The structure of Shanghai consumption is shaped like an olive, big in the middle for the middle class, small at both ends for wealthy and low-end diners," Zhu says. "But it's starting to have more at the top and middle and less at the bottom."

Shanghai locals are also interested in diversity and want to try new flavors, which gives international restaurants more opportunity to compete with Chinese restaurants, says Victoria Chou, group general manager of Simply Thai, a Shanghai-based Thai restaurant chain.

According to Dianping.com, the top click is benbang cuisine, followed by Japanese, Sichuan and Western foreign. Northwestern Chinese cooking, known for its use of staples, is becoming popular.

The picture is more complex. The users of Dianping.com are predominantly in the younger generations and are more open-minded about trying different foods. Middle-aged and older Shanghainese still stick with benbang and Cantonese cuisine.

Local restaurant chains have developed fast in recent years. There are two major kinds of chain restaurants in Shanghai, those founded and run by locals and featuring benbang cuisine, such as the King Mang Group and Shanghai Min, and those founded by expats and featuring international cuisine, such as Element Fresh and Simply Thai.

King Mang Group, which started in 1999 as a restaurant named Suzhehui, now owns 34 restaurants representing five brands in six cities. Its Hong Kong outlet was awarded one Michelin star.

Shanghai Min, started in 1987 with a four-table restaurant Xiaonanguo, owns 87 restaurants representing three brands in 10 cities.

Element Fresh opened its first restaurant in Shanghai in 2002 and is now operating 13 restaurants covering Shanghai, Beijing and Guangzhou.

Simply Thai, opened in 1999, has five outlets across Shanghai.

Local chains share common features, especially a focus on food consistency.

"We are probably the earliest one in Shanghai establishing a central kitchen, and now operate a 33,350-square-meter factory to maintain consistent quality," says Zhu from Shanghai King Mang Jardin de Jade Catering Co Ltd.

Chains featuring Chinese cuisine have a large, solid market base, which prompts them to focus on market segmentation. Thus, both King Mang and Shanghai Min both have more than three brands targeting customers with different age and spending power.

Groups featuring international cuisine remain a niche market since locals don't have a tradition of eating foreign food.

Both Element Fresh and Simply Thai told Shanghai Daily that they are benefitting from open-minded locals looking for a different dining experience. Their focus is increasing brand awareness, by choosing good locations and making the experience good enough to bring diners back for more.

"It's not hard to attract people. But making our place one of their regular dining choices is the greatest challenge," says Frank Rasche, co-owner of Element Fresh.