FDI Series | Attention Multinational Companies in Shanghai: These Development Funds are Available for Application
Background
Shanghai has long encouraged the development of headquarters economies. In February 2024, the Shanghai Municipal Commission of Commerce and the Shanghai Municipal Finance Bureau issued a revised version of the "Management Measures for the Development Funds of Regional Headquarters of Multinational Companies in Shanghai" (Shanghai Business Regulation [2024] No. 2) (hereinafter referred to as the "Fund Management Measures"). Following this, in April 2024, the Shanghai Municipal Commission of Commerce released the "Notice on the Application for the 2024 Annual Development Funds for Regional Headquarters of Multinational Companies" (Shanghai Business Promotion [2024] No. 65) (hereinafter referred to as the "Notice").
The "Fund Management Measures" comprehensively upgraded the incentives introduced in 2018 to encourage the development of regional headquarters of multinational companies in Shanghai and came into effect on February 1, 2024. The "Notice" serves as the first application guide following the revision of the "Fund Management Measures," making it worth close attention.
This article highlights the key points of the "Fund Management Measures," details on how different types of multinational companies can apply for funding support, and the impact of the new policies on multinational enterprises, providing a comprehensive reference.
Key Points of the "Fund Management Measures"
Building on the 2018 policy, the "Fund Management Measures" further increase support, targeting regional headquarters of multinational companies, business unit headquarters of multinational companies, and global R&D centers, expanding the scope of funding support in three main areas:
Highlight 1: New Support Target— "Business Unit Headquarters of Multinational Companies"
Compared to the previous regulation, the new "Fund Management Measures" include business unit headquarters of multinational companies as eligible recipients. They offer a matching set of establishment subsidies, rental subsidies, high-level rewards, operational rewards, and capital increase rewards, thus extending funding support to more enterprises.
Highlight 2: New Support Area— "Capital Increase Rewards"
The new "Fund Management Measures" introduce a capital increase reward policy, applicable to regional headquarters of multinational companies and business unit headquarters investing in foreign-funded projects in line with Shanghai's industrial development direction (excluding real estate, finance, and quasi-financial projects).
Highlight 3: Relaxed Requirements for "Establishment Subsidies"
The new "Fund Management Measures" no longer restrict establishment subsidies to investment companies, instead requiring the managing of at least one domestic or foreign enterprise authorized by the parent company. For R&D centers applying for establishment and rental subsidies, the criteria have been adjusted to "global R&D centers recognized in Shanghai after December 1, 2020, with no fewer than 50 full-time R&D personnel."
How to Apply for Development Funds According to the "Notice"
For multinational companies in Shanghai, the new "Fund Management Measures" undoubtedly provide significant policy benefits, offering substantial financial support for their development. With the release of the "Notice," detailed guidance on arranging fund applications is now available, making it a priority on the agenda. Here’s what you need to know:
(A) Eligible Applicants
Three types of enterprises can apply:
Regional Headquarters of Multinational Companies
Business Unit Headquarters of Multinational Companies
Global R&D Centers
(B) Application Deadline and Required Materials
The legal representative of the company must sign and stamp the "Application Form for Development Funds for Regional Headquarters of Multinational Companies in Shanghai" (in quintuplicate). Other materials should be printed on A4 paper, bound in sequence (in duplicate), with copies stamped by the company, and an electronic version on a CD (consistent with the paper version). These must be submitted to the local commerce authority by May 10, 2024. The initial review by districts should be submitted to the Municipal Commission of Commerce by June 7, 2024.
Sinobravo Reminder: As this is the first application following the revision of the "Fund Management Measures," some localities may allow flexible submission deadlines. Besides paper and CD formats, some areas may also accept USB formats. For specific details, please communicate with your local commerce authority.
(C) Funding Support Scope
Applicants must meet the following basic conditions:
Legally registered in Shanghai, recognized by the Municipal Commission of Commerce as regional headquarters of multinational companies, business unit headquarters, or global R&D centers, with normal continuous operation for over a year, demonstrating certain economic and social benefits.
Good financial and tax credit, sound financial management, not listed as a seriously dishonest entity by national, provincial, or municipal authorities, and with no serious dishonesty records in the public credit information service platform within three years.
Submitting foreign-invested enterprise information reports as required.
Sinobravo Reminder: Applicants must not repeatedly or multiply apply for financial subsidies for the same matter and are responsible for the authenticity, accuracy, and completeness of application materials.
(D) Support Objects, Standards, and Subsidies
Multinational companies can apply for the following five types of funding support based on their circumstances:
Establishment Subsidies
Rental Subsidies
High-Level Rewards
Operational Rewards
Capital Increase Rewards
Different types of funding support have varying conditions and standards to be met.
Summary
By the end of 2023, Shanghai had established 956 regional headquarters of multinational companies and 561 foreign R&D centers, maintaining its leading position as the city with the highest concentration of regional headquarters of multinational companies in mainland China. This success is closely linked to the strong policy and financial support provided by the Shanghai government.
The recent series of new policies aim to accelerate the development of the headquarters economy, increase support for multinational companies, and encourage the establishment of regional headquarters in Shanghai, further enhancing the quality of foreign investment. Eligible multinational companies should seize the opportunity to apply and timely obtain financial support.
It is understood that while the funding application for regional headquarters, business unit headquarters, and global R&D centers is generally valid for three years upon approval, enterprises are required to submit relevant materials for dynamic evaluation in the second and third years. For more information on applying for recognition and financial support for multinational company headquarters, and for assistance in preparing and submitting application materials, please contact Sinobravo professional advisors.
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