Provisions of Shanghai Municipality on Encouraging the Establishment of Foreign-Invested R&D Centers

Article 1 (Purpose and Basis)

With a view to further opening up, enhancing Shanghai's functions in global resource allocation and technology innovation origin, and encouraging foreign investors to establish R&D centers in Shanghai, these Provisions are formulated in accordance with the Foreign Investment Law of the People's Republic of China, the Regulations on Implementing the Foreign Investment Law of the People's Republic of China, the Regulations of Shanghai Municipality on Foreign Investment, the Regulations of Shanghai Municipality on Advancing the Construction of a Science and Technology Innovation Center, and other relevant laws and regulations.

Article 2 (Definitions)

A foreign-invested R&D center refers to an institution established by a foreign investor to engage in research and development (R&D) and experimental development in the natural sciences and related scientific and technological fields (including pilot-scale activities serving R&D activities). R&D activities include basic research, product application research, and high-tech research.

A global R&D center refers to a foreign-invested R&D center that possesses unique R&D technology platforms, undertakes the key steps and the majority of processes of global R&D projects or the global R&D projects of a particular business division, and keeps its R&D project progress synchronized with global efforts. It represents a global-level R&D center established by a foreign investor. A business division is generally set by a foreign-invested enterprise based on specific business fields, product lines, or market segments.

A foreign-invested open innovation platform refers to an innovative model of a foreign-invested R&D center, promoting collaborative innovation with small and medium-sized enterprises and innovation teams by providing facilities, equipment, R&D premises, and professional guidance, while leveraging its resources in technology, talent, capital, and data.

Article 3 (Scope of Application)

These Provisions shall apply to the establishment and development of foreign-invested R&D centers, global R&D centers, and foreign-invested open innovation platforms within the administrative area of this Municipality.

Article 4 (Department Responsibilities)

The municipal commerce department shall be responsible for the recognition, management, and services matters related to foreign-invested R&D centers. All relevant departments shall, within their respective scopes of responsibility, perform their duties concerning the management and services of foreign-invested R&D centers. The Administrative Committee of the Lin-gang Special Area, the Administrative Committee of the Hongqiao International Central Business District, the Pudong New Area Commission of Commerce, and the Zhangjiang Science City Construction Management Office are authorized by the municipal commerce department to carry out the designation of foreign-invested R&D centers within their respective jurisdictions.

Article 5 (Recognition Conditions)

1. To apply for recognition as a foreign-invested R&D center, an applicant shall meet the following conditions:

(1) It is a foreign-invested enterprise lawfully established in this Municipality, and it conforms to the national and municipal industrial development directions;

(2) It has a clear R&D field and specific R&D projects, fixed premises, necessary R&D instruments and equipment, and other essential R&D conditions; And

(3) Its cumulative R&D investment over the past three years shall be no less than 2 million US dollars.

2. To apply for recognition as a global R&D center, an applicant shall, in addition to meeting the conditions set in the preceding paragraph, meet the following conditions:

(1) It has been authorized by its parent company as the highest-level R&D center globally, undertaking global R&D projects or global R&D projects of a specific business division;

(2) Its cumulative R&D investment over the past three years shall be no less than 20 million US dollars;

(3) It shall have no less than 50 full-time R&D personnel; And

(4)The annual R&D investment of the applying entity shall account for no less than 10% of the parent company's global R&D investment. If the annual R&D investment exceeds 20 million US dollars, this percentage may be reduced to 8%; if the annual R&D investment exceeds 100 million US dollars, this percentage may be reduced to 5%. For an application based on a specific business division, the annual R&D investment of that business division shall account for no less than 20% of the business division's global annual R&D investment.

3. To apply for recognition as a foreign-invested open innovation platform, an applicant shall meet the following conditions:

(1) Total investment shall be no less than 2 million US dollars;

(2) It shall have R&D premises of no less than 1,000 square meters;

(3) It shall have no less than 10 signed R&D innovation projects; And

(4) It shall have proof-of-concept capabilities, necessary facilities and equipment for collaborative innovation, and guidance from international experts; it shall possess international resources in technology and talent, and conform to the national and municipal industrial development directions.

Article 6 (Application Materials)

1. To apply for recognition as a foreign-invested R&D center, the following materials shall be submitted:

(1) an application signed by the legal representative;

(2) a resolution of the shareholders or the board of directors; and

(3) special audit materials on R&D investment.

2. To apply for recognition as a global R&D center, in addition to the materials set in the preceding paragraph, the following shall be submitted: an authorization document for the global R&D center signed by the authorized signatory of the parent company.

3. To apply for designation as an open innovation platform, in addition to the materials set in the preceding paragraph, the following shall be submitted:

(1) proof of ownership or lease agreement for the R&D premises; and

(2) texts of contracts for the projects entering the platform.

The above applications may be processed through this Municipality's "Government Online-Offline Shanghai" platform. The government department responsible for recognition shall decide whether to grant or deny recognition within five working days from the date of receipt of the application materials.

Article 7 (Dynamic Assessment)

The Municipal Commerce Commission shall, together with relevant departments, conduct comprehensive dynamic assessments of recognized foreign-invested R&D centers and global R&D centers. If conditions are no longer met, the recognition shall be revoked.

In case of any change such as a name change, the foreign-invested R&D center, global R&D center, or open innovation platform shall, within seven working days after completing the change registration with the market regulation department, report the relevant information to the Municipal Commerce Commission for review and approval. The Municipal Commerce Commission shall, upon approval, indicate the date of change and notify the relevant departments accordingly by official letter.

Article 8 (Financial Support)

Global R&D centers and open innovation platforms may, in accordance with the relevant provisions on development funds for multinational corporate regional headquarters, receive corresponding financial support.

Article 9 (Reference Implementation)

Investors from Hong Kong, Macao, or Taiwan establishing foreign-invested R&D centers in Shanghai shall follow these Provisions by reference.

Article 10 (Effective Date and Validity Period)

These Provisions shall be effective as of December 1, 2025, and shall remain valid until November 30, 2030.