Shanghai recently announced comprehensive measures to cement its position as a global business hub, offering substantial incentives for multinational corporations to establish and expand their regional headquarters in the city.

The announcement comes as Shanghai continues to demonstrate strong momentum in attracting foreign investment. "Altogether 60 regional headquarters of multinational corporations and 30 foreign-funded research and development centers were newly established in Shanghai in 2024, bringing the total of such institutions to 1,016 and 591, respectively," said Mayor Gong Zheng while delivering the Shanghai Municipal Government Work Report at the annual session of the Shanghai Municipal People's Congress, the city's legislative body.

The new policy framework, effective March 1 this year through Feb 28, 2030, sets targets including the establishment of 400 regional headquarters with over three major functions, and increase global business unit headquarters to over 20 in three years.

Under the new measures, companies elevating their China headquarters to Asia-Pacific regional headquarters with two or more functions will receive a one-time reward of 3 million yuan ($411,813). Global business unit headquarters may qualify for an even larger incentive of 10 million yuan.

Additional rewards of 3 million yuan are available for headquarters establishing new research and development or treasury management functions. The policy also supports high-level business activities such as global executive meetings and international training programs with categorized financial rewards.

The measures place a strong emphasis on innovation, offering a preferential 15 percent corporate income tax rate for qualified high-tech enterprises and advanced technology service enterprises. The policy also encourages headquarters to establish venture capital funds and nonprofit basic research funds.

The framework supports collaboration between corporate R&D centers and academic institutions, offering funding for qualifying collaborative innovation projects. Companies can also receive support for establishing municipal-level key laboratories, technology innovation centers, and technical service platforms.

To facilitate treasury operations, the policy supports the establishment of treasury centers and cash pools as needed. It promotes the optimization of free trade account functions and encourages banks to further improve the efficiency of cross-border payments at the headquarters.

The measures also support headquarters in managing exchange rate risks through access to the bank-enterprise foreign exchange trading service platform provided by China Foreign Exchange Trade System & National Interbank Funding Center.

Meanwhile, the policy framework includes provisions for offshore trade operations, bonded maintenance, and cross-border remanufacturing pilots for qualified headquarters. Companies can benefit from Authorized Economic Operator certification, enabling streamlined customs procedures.

In addition, investment expansion is encouraged through tax deferral policies for foreign investors reinvesting domestic profits. Manufacturing enterprises under headquarters management can receive up to 10 percent of total investment (capped at 100 million yuan) for qualifying technical transformation projects.

The measures include improvements in immigration procedures, offering conveniences for APEC Business Travel Card applications and multiyear, multiple-entry visas for overseas personnel. Simplified work permit and residence permit procedures are provided for foreign talents, with similar benefits extended to spouses and family members of senior management.

Shanghai will also establish a headquarters evaluation system with dynamic assessment procedures, creating customized enhancement plans for individual companies. A dedicated service team will facilitate communication between government bodies and corporations, providing targeted services and helping resolve cross-regional regulatory issues.

"Shanghai has become one of the most attractive destinations for foreign investment globally," said Liu Ping, deputy secretary-general of the Shanghai Municipal Government, at the 2024 Presentation Ceremony of Top 100 FIEs in Shanghai. "Foreign-invested enterprises in Shanghai are crucial drivers of industrial upgrading, scientific innovation, and enhanced urban functions."