Issue 38

Shanghai Weekly Bulletin

No. 1, April 2024

Shanghai Weekly Bulletin is an information service presented by the Foreign Affairs Office of Shanghai Municipal People's Government in collaboration with Wolters Kluwer to foreign-funded enterprises, foreign-related institutions as well as people from overseas living in Shanghai. Covering major national and Shanghai foreign-related news, event information, policy Q&A and interpretations in the past week, it keeps you up-to-date with the latest foreign-related policies and developments in Shanghai.

Laws and Regulations

【National】

1. China Issues Both National and FTZ Versions of Negative List for Cross-border Trade in Services

【Keywords: Cross-border Trade in Services; Negative List】

The Ministry of Commerce (MOFCOM) released on March 22, 2024 the Special Administrative Measures for Cross-border Trade in Services (Negative List) (2024 Edition) and the Special Administrative Measures for Cross-border Trade in Services in Free Trade Zones (Negative List) (2024 Edition), both of which will take effect on April 21, 2024. There are 71 measures specified in the national version of the negative list, and 68 in the FTZ version. 

Source: MOFCOM

http://fms.mofcom.gov.cn/article/a/ad/202403/20240303485197.shtml

 

2. China Issues Rules to Promote and Regulate Cross-border Data Flow

【Keywords: Data; Cross-border Data Flow】

The Cyberspace Administration of China (CAC) released on March 22, 2024 the Rules to Promote and Regulate Cross-border Data Flow, with immediate effect. Consisting of 14 articles, the rules clarify that a free trade zone may, under the national system framework for data classification and hierarchical protection, prepare its own list of data that shall be subject to security assessment for outbound transfer, the filing of the standard contract for outbound transfer of personal information and personal information protection certification.  

Source: CAC Website

https://www.cac.gov.cn/2024-03/22/c_1712776611775634.htm

 

【Shanghai】

1. Shanghai Issues Action Plan to Accelerate the Establishment of Product Carbon Footprint Management System

【Keyword: Green and Low-carbon】

Shanghai Municipal People's Government recently released the Action Plan of Shanghai on Accelerating the Establishment of the Product Carbon Footprint Management System. The document outlines 20 tasks in four aspects, including establishing a high-standard product carbon footprint management system, expanding the application scenarios of product carbon footprint, promoting the green and low-carbon transition of key processes along supply chains across the board, and adopting guarantee measures. 

Source: Shanghai Municipal People's Government

https://www.shanghai.gov.cn/nw12344/20240325/9ddcd99b89f14cb2a3c301ab8fc8c859.html

 

2. Shanghai Takes Measures to Reduce Burden for SMEs and Support Their Business Growth 

【Keyword: Small and Medium-sized Enterprises】

Shanghai Municipal Government Information Office held a press conference on March 29 to explain the Policy Measures on Reducing Corporate Burden and Supporting the Development of Small and Medium-sized Enterprises (SMEs) in Shanghai. The policy document made detailed provisions about reducing tax & fee cost, labor cost, energy cost and financing cost, and improving services for enterprises.

Source: Shanghai Release

 

3. Shanghai Makes Clarifications for the Implementation of Preferential Stamp Tax Policy on Offshore Trade 

【Keywords: Offshore Trade; Stamp Tax】

Shanghai Municipal Tax Service, State Taxation Administration and other three departments in Shanghai jointly released on March 25, 2024 the Announcement on Matters Concerning the Pilot Implementation of Preferential Stamp Tax Policy on Offshore Trade in China (Shanghai) Pilot Free Trade Zone and Lin-gang Special Area, which will take effect on April 1, 2024 and remain valid until March 31, 2025. According to the Announcement, taxpayers who enter into the contract of offshore resale business carried out by the enterprises registered in China (Shanghai) Pilot Free Trade Zone and Lin-gang Special Area are eligible for the exemption from stamp duties.  

Source: Shanghai Municipal Tax Service, State Taxation Administration

https://shanghai.chinatax.gov.cn/zcfw/zcfgk/yhs/202403/t471176.html

 

4. Shanghai to Build Institutional Opening-up Hub in Hongqiao CBD

【Keywords: Hongqiao; Institutional Opening-up Hub】

Shanghai Municipal Administration for Market Regulation and Shanghai Hongqiao International Central Business District (CBD) Administration recently signed the Cooperation Agreement on the Joint Building of a Hub for Institutional Opening-up. With a focus on the development of the Hongqiao International Opening-up Hub, the two parties will work together to improve the convenience for business registration to facilitate free business relocation from one province to another, implement "R&D plus production" model for food enterprises, and support Hongqiao CBD in shouldering more responsibilities for scientific and technological innovation.

Source: Shanghai Municipal Administration for Market Regulation

 

One Week in Shanghai

【Latest News】 

1. Shanghai Releases First Legal Guide for Foreigners' Life

【Keyword: Legal Guide for Life】

The "Rule of Law in Pudong" recently issued Shanghai's first Legal Guide for Foreigners' Life. With vivid, intuitive, concise and easy-to-understand comics and Q&As in both Chinese and English languages, the guide explain the Chinese laws and regulations that foreign nationals need to understand and comply with when they work and live in China.

Source：Rule of Law Pudong

 

2. Shanghai FTZ Global Hub Welcomes Four New National Pavilions

【Keywords: Silk Road E-commerce; Pilot Zone for Cooperation】

The Global Hub within the bonded area of the Shanghai Free Trade Zone (FTZ) witnessed on March 26, 2024 another grand opening ceremony of four new national pavilions, namely the Pakistan Center, Hungary Center, Mongolia Center and Armenia Center. So far, the Global Hub has attracted 12 Silk Road e-commerce partner countries. It has become a comprehensive platform for two-way exchanges between China and foreign countries by staying committed to "cooperation, sharing, and win-win results". 

Source: Pudong Release

 

3. China UMS Improves Payment Services for Foreign Visitors

【Keyword: Payment】

China UMS has accelerated the installation of digital RMB acceptance terminals in and around the Pudong Airport, and has opened digital RMB acceptance services for more than 80 merchants such as Sunrise Duty Free, Hope Star and Xiangxuehai, so that overseas tourists can use digital RMB to pay for shopping and dining in the airport business district. 

Source: China UMS Shanghai Branch

 

【Competitive Event】

1. 2024 Archery World Cup Shanghai to Take Place This Month

【Keyword: Archery World Cup】

The 2024 Archery World Cup Shanghai will be held in Pudong from April 23 to April 28. According to the schedule, the qualifying and knockout rounds will be held at the Yuanshen Stadium in Pudong on April 23-26, and the final competition will take place at the Pudong Binjiang Financial Plaza on April 27-28.

Source: Shanghai Sports

 

【Forum & Exhibition】

1. Shanghai Global Investment Promotion Conference 2024 Held

【Keyword: Investment】

The Shanghai Global Investment Promotion Conference 2024 was held on March 29 at the Grand Halls. As part of its global investment promotions, the conference aims to demonstrate Shanghai's economic vitality, innovation momentum, glamorous charm and investment potential. It invites domestic and foreign companies to invest and take root in Shanghai. At the conference, a number of key industrial chain projects were signed together, including 21 large projects each with estimated investment of more than 1 billion yuan.

Source: Shanghai Release

 

【Culture & Art】

1. 2024 Shanghai Modern Drama Valley to Be Held in Jing'an 

【Keywords: Jing'an; Modern Drama Valley】

The 2024 Shanghai Modern Drama Valley will be held in Jing'an District from April 26 until May 13. A record-breaking 24 Chinese and foreign classic plays in 104 showings will be staged at nine venues, and some 83 percent will be Shanghai debuts. In addition, the "Drama in the City" stage will be brought to 14 sub-districts and towns along with some 300 cultural activities. "Drama Training Map" and "Drama Book Drifting" will be launched for the first time.

Source:Shanghai Release

 

【Corporate Activities】 

1. Inteva Renews Lease Agreement to Expand Presence in Waigaoqiao

【Keyword: Inteva】

Shanghai Inteva Automotive Door Systems Co., Ltd. (Shanghai Inteva) and Shanghai Waigaoqiao Free Trade Zone United Development Co., Ltd. recently signed an agreement to renew their lease contract. According to the agreement, Shanghai Inteva will increase its logistics property area by 10,000 square meters to expand its production capacity of new products, and integrate warehousing resources and inject fresh momentum to drive regional development. 

Source:Pudong Release

 

2. Ebmpapst's "One Shanghai" Complex Put into Operation

【Keyword: Ebmpapst】

The commissioning ceremony of the "One Shanghai" project, the regional headquarters of Ebmpapst Motors (Shanghai) Co., Ltd. in China, was held at the Shanghai Jingu Intelligent Terminal Manufacturing Base on March 26. The "One Shanghai" base covers a total area of 33,000 square meters and will be built into a corporate headquarters integrating office, R&D, warehousing and production functions to provide customers in China, Asia Pacific, Africa and the Middle East with fan products that can be used in intelligent terminals, new energy vehicles and energy storage cabinets. 

Source: Pudong Release

 

Q&A

Q1: Shanghai municipal leaders answered reporters' questions at a press conference held by the State Council Information Office on "Focusing on the 'Five Centers' to Accelerate the Development of a Socialist Modern International Metropolis with World Influence" - Shanghai has always been a hub for foreign investment. Shanghai plans to become the first choice place for global investment. May I ask what sincere measures Shanghai has taken to attract foreign investment?

A1: Shanghai has always attached great importance to attracting and utilizing foreign investment. In recent years, we have revised the headquarters subsidy policy for multinational companies, formulated and implemented a plan to upgrade foreign-invested R&D centers, and introduced a series of policy measures to stabilize foreign investment. The actual use of foreign investment in Shanghai has exceeded US$20 billion a year for four consecutive years. The figure topped US$24 billion last year to reach all-time high. And we are particularly pleased that multinational companies set up 65 regional headquarters and 30 R&D centers in Shanghai last year Last year, bringing the total to 956 and 561 respectively. Shanghai has also become the top city in Chinese Mainland with the highest number of regional headquarters of multinational companies. The cumulative actual use of foreign capital in Shanghai has exceeded US$350 billion, and more than 70,000 foreign-funded enterprises have flourished here. These data prove that Shanghai has always been one of the most popular investment destinations for foreign companies and one of the first choice destinations for multinational companies to build their global industrial chains.

We feel that foreign investors' optimism in Shanghai is largely based on their anticipations for Shanghai's continuous improvement in business environment and expanding opening-up. I also have an example here. Last year, the world-renowned pharmaceutical company Moderna settled in Shanghai. It only took more than three months from signing the project contract to starting construction, establishing a new benchmark for the construction of key foreign-invested projects in Shanghai. In accordance with the State Council's policy directive of making greater efforts to attract and utilize foreign investment, we will implement the national version of the negative list for cross-border trade in services and the new version of the negative list for foreign investment access, so that more foreign-invested projects will be approved and served. Our efforts will target three improvements:

The first is to improve the level of opening up to the outside world. Shanghai will align with international high-standard economic and trade rules, steadily expand institutional opening-up, implement the lifting of foreign investment access restrictions in the manufacturing sector, further implement the comprehensive pilot program for expanding opening-up in the service industry, and embrace global enterprises and talents with an open mind.

The second is to redouble efforts on investment promotion. We encourage our global partners to play their roles, organize a series of overseas roadshows under the theme of "Invest in Shanghai, Share the Future", and support foreign-invested enterprises to invest more in key areas such as green development, digital transformation, and technological innovation.

The third is to improve services to enterprises. We will optimize the specialist service mechanism for foreign-invested projects, improve the service package system for key enterprises, organize government-enterprise roundtable meetings for foreign-invested enterprises, solve practical difficulties and problems for foreign investors, implement various measures to optimize business environment, and further enhance the sense of gain for foreign-invested enterprises with targeted and high-quality services.

Source: State Council Information Office

http://www.scio.gov.cn/live/2024/33596/tw/

 

Expert Perspective

Several Issues to Be Watched and Addressed by Foreign Businesses under New Company Law

By: He Kan, Chen Leyi, Gao Fangjiao, Liu Zijing, Yang Yanhua (Junhe Law Firm)

[Continuing from the Last Issue] 

Q6: Employee Director

According to the New Company Law, for a limited liability company with more than 300 employees, in addition to a board of supervisors and employee representatives, there should be employee representatives on the board of directors. 

For companies with a board of supervisors, according to the new law, members of the board of supervisors should have some employee representatives (employee representatives on the board of directors and the board of supervisors are democratically elected by employees through employee meetings or other forms of democratic elections). That is to say, if a company has set up a board of supervisors, it must have employee supervisors. In this case, there is no need to have employee directors on the board of directors.

Therefore, for companies with more than 300 employees, they need to consider setting up employee directors or employee supervisors in advance. For non-state-owned enterprises, introducing employee directors and employee supervisors may cause some concerns among shareholders. On one hand, having employee directors or employee supervisors participate in decision-making on some matters involving the interests of employees can protect the interests of employees; but on the other hand, a large majority of matters decided by the board of directors are not directly related to the interests of employees. There are legitimate concerns about whether employee directors or employee supervisors have sufficient knowledge and ability to make decisions and whether they can fulfill their confidentiality obligations. In the short term, it's appropriate to appoint executives (like managers) to the board of directors, or set up a board of supervisors with employee representation, so as to avert any substantial adjustment to the structure of the board of directors.

[To Be Continued]