Establishing a Regional Headquarters in Shanghai

By Yuping Wang, Davis Wright Tremaine, Shanghai

Last summer, the Shanghai municipal government issued the Encouraging the Establishment of Regional Headquarters by Foreign Multinational Corporations Tentative Provisions (the Tentative Provisions, issued July 20 2002). Shanghai has taken the lead among mainland cities in attempting to offer more attractive investment and corporate structures for multinationals that have multiple investment projects in China. The city is keen to set itself up as a viable and attractive competitor to Hong Kong and Singapore for the establishment of corporate headquarters. To further spell out the specifics of regional headquarters, the Shanghai government issued the Implementing Rules to the Tentative Provisions on March 1 2003 (the Implementing Rules).

According to the Tentative Provisions, a regional headquarters is an organization of a foreign multinational company that is the only organization conducting overall management and service functions over enterprises in a region consisting of more than one country, and the approval to conduct such functions may be obtained through investment or authorization (it is then a Regional Headquarters). Through such a definition it appears that the intention of the Shanghai government is to design Regional Headquarters as centres of management, consulting and related services to enterprises not only in China but also in neighbouring countries.