Doing Business in Shanghai

One of the main economic hubs in China, Shanghai leads many Chinese cities in economic performance, foreign trade growth and infrastructural development. With the availability of more sectors to foreign investors and business people, a rapidly increasing amount of foreign funds are streaming into this dynamic city.

During the past two decades, the Chinese government has made enormous strides toward attracting foreign investments and developing an export-oriented economy. By 1997, close to 250,000 Foreign Invested Enterprises had been established, with a total of more $177 billion foreign direct investment. To further encourage the investment environment, the country’s government introduced numerous constructive policies for foreign investment and assigned several special regions, including five Special Economic Zones.

The advantageous policies largely cover the hi-tech industry, agriculture, forestry, telecommunication, energy, and export-oriented sectors.

The five Special Economic Zones are:

The Special Economic Zones are development zones established by the Chinese government to encourage foreign investment in the country, attracting new jobs, technical knowledge, and future tax revenues in exchange for significant tax concessions at the start-up of the operations and over a number of years.

Though the specific benefits vary according to the individual investment, a typical example of tax concessions for a new start-up would be:

• No tax during start-up years before making a profit.
• The first year that the company turns a profit starts the ‘tax clock’ and is year one.
• For the first and second year after the tax clock starts, there is no tax.
• For years three and four, there is half of the normal tax rate.

In the fifth year, the company pays the full normal tax rate. The five Special Economic Zones are:

• Shenzhen: Home to some of China's most successful high-tech companies, such as Huawei and ZTE. Many foreign IT companies also have facilities in the city, including Apple Computers.
• Zhuhai: Among the top 500 enterprises worldwide, 19 of them have investment projects in Zhuhai such as EssoMobil, British Petroleum, Siemen, Carrefour and Matsushita.
• Xiamen: A coastal sub-provincial city in the southeastern Fujian province, and borders the cities of Quanzhou and Zhangzhou.
• Shantou: One of the original Special Economic Zones, established in the 1980s, Shantou failed to flourish like other cities such as Shenzhen, Xiamen and Zhuhai.
• Hainan: Located at the southern end of the country, Hainan consists of several islands, and has a reputation for being a ‘wild west’ area.

The Zones provide overseas investors a more advantageous environment in many respects in addition to tax breaks, including advanced infrastructures and qualified human resources.

Shanghai

Through the late 1990’s Shanghai was the world’s boom location, rebuilding itself and growing faster than any other city. In fact, the city required so many construction cranes that there was a regional shortage in the rest of Asia. It has become a city of 3,000 high-rise buildings and it is still growing!

Shanghai is one of the most extensive cities in the world and one of the most dynamic. The metropolitan area covers 6,000 square kilometres - five times the size of Los Angeles.

Shanghai’s population is China’s most worldly. It is known for consisting of fashionable and open people, who are very individualistic, speaking a dialect that nobody else can understand, and eating a different cuisine than the rest of the country. The Shanghai populace, in general, consider themselves to be light years ahead of their nearest competitor, Beijing.

Shanghai’s higher living standard, pulsating night life and cosmopolitan air can make the capital seem rather dowdy by comparison. Shanghai is deemed by many as the most colourful city in China – and by others as the most colourful in the world!

Whether sipping tea in a traditional tea-house on a late afternoon, meeting new travellers and locals in one of the bars, or dancing the night away after midnight, Shanghai has plenty to offer.

Encapsulating this wonderful city is Lujiazui. On the eastern bank of the Huangpu River, this is considered ‘China’s Manhattan’ – with a forest of skyscrapers, all built in the last ten years. The 468-metre-high Oriental Pearl Tower and the 420-metre Jinmao Tower are the tallest of the mega-structures and are both worth climbing.

Opposite Lujiazui is The Bund, Shanghai’s brick and marble monument to early 20th Century Western colonialism. Of all the former banks, trading houses and hotels, the Peace Hotel and the old HSBC building both merit a visit. For more of old Shanghai take a walk around. You’ll be awestruck by the astonishing array of architecture, both foreign and Chinese, all over the city.

If people-watching is your thing, drag yourself out of bed early one morning and get down to the nearest park, where you will be met by thousands of Chinese pensioners doing their morning workout. It’s a truly special – and decidedly Chinese – spectacle.

If you are excited by a new culture and you want to make a fantastic income, Shanghai may well be the place for you!!!