Since 2000, the scale of foreign capital in Shanghai has been growing steadily and the structure of foreign capital has been continuously optimized. The regional headquarters have been agglomerated and enhanced. The R&D advantages have been obvious. Shanghai's actually utilized foreign capital maintained sustained growth for 17 years. As of the end of September this year, Shanghai introduced a total of 90,600 foreign investment projects, with a contractual foreign investment of US$411.947 billion. The foreign investment absorbed that was actually in place reached US$218.81 billion, ranking the third in the country. The quality and efficiency of foreign-funded enterprises in Shanghai have always been at the highest level in China. 

"The superior business environment is the core competitiveness of Shanghai," Yang Chao, deputy director of the Shanghai Municipal Commission of Commerce said during the interview. He said that Shanghai in recent years has been committed to providing investors with the best investment environment.

Openness is Shanghai's biggest advantage

"We will further promote openness and work out new measures to expand opening up. We will also continue to optimize our business environment, one measure among which is to introduce a negative list for foreign investors. And we will further support the gathering of regional headquarters and R&D centers. Finally, we will further strengthen our investment promotion work, including building a global investment promotion network," Yang Chao said.

This year, Shanghai has successively issued The Opinions on Further Opening up and Accelerating the Construction of the Open Economy, The Opinions on Further Encouraging Foreign-funded Research and Development Centers to Participate in Building of Globally-influential Scientific and Technological Innovation Centers, Shanghai Municipality's Three-year Action Plan for Utilizing Foreign Capital in Manufacturing Industries, and has revised Opinions on the Provisions of Shanghai Municipality on Encouraging Transnational Corporations to Establish Regional Headquarters in Shanghai. Relevant departments are also stepping up efforts to formulate measures and opinions on improving the business environment. Shanghai will benchmark the highest international standards and continue to create a business environment conducive for the development of all types of enterprises.

Foreign R&D centers help form global innovation network

"Shanghai is faced with many opportunities, the establishment of a free trade area, a scientific and technological center, a free trade port, the Belt and Road Initiative, and so on. The most important of these opportunities is the current high level of consensus on a new system of building an open economy," said Yang Chao. According to Yang, there are four distinctive features for Shanghai's foreign investment: steady growth of foreign investment scale, continuous optimization of foreign investment structure, ever-increasing number of regional headquarters, and obvious R&D advantage.

Yang pointed out that over the years, Shanghai has attracted many multinational companies to set up R&D centers by virtue of its talent, industrial facilities and high degree of internationalization. By the end of September 2017, a total of 418 foreign R&D centers have settled down in Shanghai, 40 of which are global R&D centers. "These R&D centers are gradually upgrading their position and energy level in the global R&D system. They are promoting technological innovation and product development for the Asia Pacific region and even the world, and setting up international laboratories jointly with domestic research institutions. Thanks to them, many local research institutes are now able to take part in international exchanges and cooperation in innovation. Shanghai has forged closer links with the global innovation network."

Foreign R&D center has brought together global high-end innovation elements and has gathered a large amount of innovative capital and innovative talents for Shanghai. Shanghai now has more than 40,000 R&D developers.

"In the past, Shanghai's foreign investment mainly came from introducing foreign funds and introducing foreign technologies. Now it has gradually developed into the introduction of talents. It is necessary to introduce world-class talents and promote first-class projects. The importance of attracting foreign-funded global R&D centers is now even more prominent," Yang said. 

He believes that these R&D centers have greatly enhanced Shanghai's international recognition. For example, Novart is invested in 2016 US$1 billion in the construction of its Shanghai R&D center, one of the company's top three R&D centers, following its Basel center in Switzerland, Cambridge center in Massachusetts. And Johnson & Johnson has set its fourth Global Innovation Center in Shanghai in 2014. The company is now setting up a global Jlabs biomedical incubator project in Shanghai, the first outside of North America. The project is expected to inject new vitality to Shanghai in its biotechnology innovative cooperation.

Yang praised that the scientific innovation centers "have taken a new road in the field of science and technology, and have realized their value through transforming the achievements of start-ups and research institutes, and shortening the R&D cycle of multinational corporations.”

Foreign investment development to enter new phase

Yang pointed out that the 19th CPC National Congress has pointed out a new direction and has put forward higher requirements for foreign investment-related work. The development of foreign investment will enter a new phase.

First, there are fewer restrictions on market access. In particular, the opening up of the service sector will help introduce new technologies, new business formats, new business models and new products so as to give full play to the role of foreign investment in the development of the real economy. Second, with the deepening of the reform, we will implement the system of pre-establishment national treatment plus a negative list across the board while implement the national treatment after admission and treat all enterprises registered in our country equally. Third, support for innovation has been upgraded. System innovation in the pilot free trade zones pays more attention to giving greater autonomy to these zones. And more efforts have been made to explore the establishment of a free trade port so as to further demonstrate the piloting effect of foreign investment-related work in deepening the reform in an all-round way and opening up.

"Many aspects can be replicated. Different regions can compete with each other with more favorable policies, with more and better land. However, it takes a very high price to replicate business environment. It is not easy to replicate," said Yang. He introduce that there are many such examples that companies moved out from Shanghai for lower-cost land and manpower, but later found that it is difficult to recruit high-caliber people. Even if they recruited the people they need, it is difficult to retain them because of the lack of good schools, good hospitals and good business districts.

Shanghai has already done a great deal of work in urban construction and livable areas. Take the PM2.5 indicator for example. Shanghai has seen remarkable improvement over last year. Despite skyrocketing prices of land in Shanghai's downtown area, the government built many green spaces rather than tall buildings. Shanghai is determined to be built into a city of innovation, a city of humanities, and a city of green.

Yang expressed his hope that the Shanghai Investment Promotion Organization (SIPP) will play a bigger role in promoting two-way investment in Shanghai. "First is policy-orientated and deliver policy information timely; second is demand-orientated and improve the effectiveness of investment promotion work; third is service-oriented and effectively serve the member institutions. The SIPP will present to the world a good story of China, of Shanghai, and let more foreign investors to understand Shanghai and to invest in Shanghai."

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