Shanghai offers financial incentives for multinational HQs

The Shanghai government has issued new implementing rules to encourage multinational corporations (MNCs) to establish their regional headquarters in the city. The new implementing opinions, issued in December 2008, include favourable financing and rewards for MNCs.

In a significant move, the new implementing rules provide the actual amounts of financing and incentives to be given to MNCs; these figures were missing in the original Provisions issued in July 2008. The Several Implementing Opinions on the «Shanghai Municipality, Provisions on Encouraging the Establishment of Regional Headquarters by Multinational Corporations» state that the government will, among other things, finance Rmb5 billion (US$730.2 million) to foreign-invested companies that select Shanghai as their regional headquarters.

Hubert Tse, head of Yuan Tai PRC Attorneys, said that the rules are good for Shanghai as they further facilitate and encourage more MNCs to set up offices there.

“For MNCs that are eager to make their presence in China, it is a must for them to sell their products or services to Chinese consumers and not to just use China as a manufacturing base or as a R&D centre,” Tse said.

He added that the latest Implementing Opinions in Shanghai provide comparatively more incentives to MNCs than in other provinces such as Guangdong. The total investment requirement for the establishment of regional headquarters in Shanghai, for example, is US$20 million lower than that of Guangzhou.