Three New Features of Foreign Investment in Shanghai

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Foreign investment has demonstrated three new trends in Shanghai this year. (1) More and more businesses from developing countries have entered the city; (2) The number of large projects and additional investment launched by multinationals has kept on increasing; and (3) International financial institutions have participated in capital input and output.

Statistics from the Shanghai Municipal Commission for Foreign Investment show that there were 95 countries and regions investing in Shanghai by the end of last September, including investment from developing countries such as India, Sudan and Senegal. For example, the Metrobank of the Philippines opened its first branch in Shanghai, and the TEBA Group, Turkey’s largest manufacturer of kitchen, heating and ventilation equipment has launched its second project in Shanghai.

During the first three quarters of last year, Shanghai launched 127 projects, each with an investment exceeding US$10mn, with combined contractual foreign funds amounting to US$4.189bn. Foreign businesses, which already had stakes in Shanghai, made additional investment amounting to US$1.905bn in the nine months, accounting for one third of the total contractual foreign funds in the period. By the end of September, 256 of the top 500 companies in the world had made investment and 25 had set up Chinese regional headquarters in Shanghai. Intel has added investment of US$302mn to expand its core disc testing and sealing plant in Pudong, bringing the total investment of the plant to US$500mn. The Emerson Electric (China) Investment Co Ltd. has added US$650mn in funding.

At the same time, many multinationals have launched new investment projects in Shanghai. The handling centre of Federal Express Co at Pudong International Airport has become operational. HP has announced that it will build the highest level and largest software development base in the world in Shanghai, which is located in the Jinqiao Area of Pudong. The technological support centre set up by Microsoft in Shanghai had realised its three-step upgrading from the Chinese-based operations to Asia and then finally going global before Bill Gates’ Shanghai visit. Microsoft is expected to inject US$100mn into the centre, which has become Microsoft’s only global service technological support organisation outside the United States. The US Applied Materials Co., a well-known producer of semiconductors, has decided to set up an R&D fund in Shanghai, and establish its regional headquarters in the city.

At the same time, Hitachi of Japan has decided to increase its sales in China four fold by the year 2005 compared with that in 2000 to reach US$4.5bn, and its production and procurement are planned to grow eight and six times, respectively. To achieve the target, Hitachi will invest heavily in information communications, electronic element, indicators and household electrical appliances.

Not long ago, Shanghai introduced a new form of investment. It has joined with the United Nations Industrial Development Organization (UNIDO) to set up an investment promotion centre. They will co-operate in fund raising and investment overseas. The centre will become a core department of UNIDO in Shanghai, to help Shanghai in drafting, selecting and assessing investment plans and projects, and use its global network to help the implementation of the projects.