Burned chinese money

Shanghai’s new investment fund to attract MNCs to the city

With the idea of attracting more foreign multinational companies (MNCs) to Shanghai, the local Municipal Finance Bureau and Municipal Commission of Commerce jointly developed a management fund to support MNCs wanting to setup their regional headquarters in the city. The new initiative aims to attract more foreign organizations to the region and encourage existing shanghai-based regional headquarters of MNCs to bring more substantive business to the city.

Local FDI & law practice Dezan Shira & Associates recently published the subsidy standards and how to apply for them. Here’s a quick overview:

Subsidy Standards for Entity Establishment

For any regional headquarters that has been registered in (or has moved to) Shanghai in the form of an investment company after July 7, 2008, and has at least 10 employees, it shall be granted RMB5 million as an establishment subsidy. Such subsidies shall be disbursed over a three-year period at 40 percent, 30 percent and 30 percent, respectively, starting from the year after the regional headquarters registers in (or moves to) the city.

Subsidy Standards for Office Renting

For the regional headquarters of an MNC that has been registered in (or has moved to) Shanghai after July 7, 2008 and has at least 10 employees, if it leases the office for its own use, it shall be subsidized for a three-year period at 30 percent of the rent. However, the office should not be bigger than 1,000 square meters and the rental rate per square meter per day cannot be higher than RMB8.

Where such headquarters purchases or builds the office premises for its own use, it shall be granted a one-off subsidy that is equal to the total amount of the subsidy for renting the office for three years.

One-off Rewards to MNCs

A one-off reward at RMB10 million shall be given to a regional headquarters that satisfies the following requirements:

  • The entity is an investment company that is recognized as the national-level regional headquarters of an MNC after July 7, 2008 and generates over RMB1 billion in annual turnover for the first time since the year of its official recognition; and
  • The entity is an investment company that is recognized as the national-level regional headquarters of an MNC before July 7, 2008 and generates over RMB1 billion in annual turnover for the first time since 2008.

A one-off reward at RMB5 million shall be given to a regional headquarters that satisfies the following requirements:

  • The entity is a management company that is recognized as the regional headquarters of an MNC after July 7, 2008 and generates over RMB500 million in annual turnover for the first time since the year of its official recognition; and
  • The entity is a management company that is recognized as the regional headquarters of an MNC before July 7, 2008 and generates over RMB500 million annual turnover for the first time since 2008.
  • A one-off reward at RMB5 million shall also be given to a regional headquarters that satisfies the following requirements:
  • The entity is an investment company that is recognized as the regional headquarters of an MNC after January 1, 2012 and generates over RMB1 billion in annual turnover for the first time since the year of its official recognition;
  • The entity is an investment company that is recognized as the regional headquarters of an MNC before January 1, 2012 and generates over RMB1 billion in annual turnover for the first time since 2012.

Such rewards shall be disbursed over a three-year period at 40 percent, 30 percent and 30 percent, respectively.

Moreover, a subsidy of RMB8 million may be given to any Asia regional headquarters, Asia-Pacific regional headquarters, or larger regional headquarters recently established by an MNC in Shanghai after January 1, 2012. A subsidy of RMB3 million may be given to the existing Shanghai-based regional headquarters of an MNC which is subsequently upgraded to an Asia regional headquarters, Asia Pacific regional headquarters or larger regional headquarters.

Application Materials

  • The regional headquarters of an MNC that applies for the establishment subsidy shall submit the following materials to the competent local commerce department:
  • Application Form for the Special Fund of Shanghai Municipality Used for Encouraging the Development of Regional Headquarters of Multinational Companies (original copy);
  • Approval certificate and business license (photocopy);
  • Staff list and labor contract samples;
  • Letter of appointment for the person in charge of the regional headquarters issued by the parent company; and
  • Approvals issued by the Shanghai Municipal Commission of Commerce on recognizing the headquarters as a regional headquarters (photocopy).
  • The regional headquarters of an MNC that applies for the office renting subsidy shall submit the following materials to the competent local commerce department:
  • Application Form for the Special Fund of Shanghai Municipality Used for Encouraging the Development of Regional Headquarters of Multinational Companies (original copy);
  • Approval certificate and business license (photocopy);
  • Staff list and labor contract samples;
  • Letter of appointment for the person in charge of the regional headquarters issued by the parent company;
  • Approvals issued by the Shanghai Municipal Commission of Commerce on recognizing the headquarters as a regional headquarters (photocopy); and
  • Renting agreements of the self-use office, the property purchase contracts of the self-use office, or the property ownership certificates for a self-built office (photocopy).
  • The regional headquarters of an MNC that applies for the one-off reward shall submit the following materials to the competent local commerce department:
  • Application Form for the Special Fund of Shanghai Municipality Used for Encouraging the Development of Regional Headquarters of Multinational Companies (original copy);
  • Approval certificate and business license (photocopy);
  • Approvals issued by the competent commerce department on recognizing the applicant as a regional headquarters or a national-level regional headquarters (photocopy); and
  • The headquarter’s annual accounting statements and financial auditor’s reports (photocopy) of the year when the headquarters reaches the thresholds for enjoying rewards, and those of the preceding year.

For more detailed information, please contact Dezan Shira & Associates or get in contact with the local government agency responsible for handing out the above described subsidies. Have you succeeded in attracting subsidies from the local Chinese government? If so, let us know!

Duco van Breemen

Duco van Breemen

Duco is project & marketing manager at Launch Factory 88. He has lived in China since 2008 and has worked with both state-owned and private Chinese and foreign enterprises.
Duco van Breemen