Provisions on Encouraging the Establishment of Regional Headquarters by Multinational Corporations

In 2002, the Shanghai Municipal Government instituted rules designed to encourage foreign multinationals to locate their regional (Asia) headquarters in Shanghai. With passage of the Provisions on Encouraging the Establishment of Regional Headquarters by Multinational Corporations, the municipal government has increased its efforts to attract and encourage multinational corporations to establish their regional headquarters in Shanghai. The rules were enacted and took effect on July 7, 2008.

Compared with the 2002 rules, these new provisions make a number of changes designed to make it easier and more appealing for corporations to locate their headquarters in Shanghai:

• The approval process has been shortened (to ten business days).
• The minimum required investment has been decreased (from US$30 million to US$10 million).
• The provisions expand the scope of activities that a multinational corporation's regional headquarters can engage in. Headquarters personnel can now engage in domestic distribution, import and export, logistics, outsourcing and finance management for enterprises that come under the umbrella of regional headquarters.
• The process for hiring foreign citizens and individuals who are not residents of Shanghai has been simplified.
• Customs clearance procedures are more convenient.

In addition, under these Provisions on Encouraging the Establishment of Regional Headquarters by Multinational Corporations, an existing entity that qualifies as an investment or management company may apply for regional headquarters status in order to take advantage of the preferential treatment available for regional headquarters.