Shanghai issues document to improve payment convenience (Issue 43)

Issue 43

Shanghai Weekly Bulletin

No. 1, May 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


1. China Issues New Version of Anti-monopoly Compliance Guidelines for Business Operators

【Keyword: Anti-monopoly】

The Anti-monopoly and Anti-unfair Competition Commission of the State Council released on April 25, 2024 the Anti-monopoly Compliance Guidelines for Business Operators, with immediate effect. Revisions to the document include improving the principles in the general provisions, adding a new chapter for compliance incentives, and setting 22 reference examples. It aims to provide more clear and definite guidelines for business operators. 


Source: State Administration for Market Regulation


2. MOFCOM Releases Three-year Action Plan for Digital Commerce

【Keyword: Digital Commerce】

The Ministry of Commerce (MOFCOM) issued on April 26, 2024 the Three-year Action Plan for Digital Commerce (2024-2026). The plan proposes five key actions, clarifying that by the end of 2026, the levels of digitalization, networking, intelligence, and integration in all areas of commerce will be significantly enhanced, the economies of scale of digital commerce will grow steadily, and the industrial ecosystem will be further improved. Moreover, application scenarios will continue to be enriched, international cooperation will be expanded, and a well-developed support system will take shape.


Source: MOFCOM



1. Shanghai Issues Document to Improve Payment Convenience

【Keywords: Payment; Convenience】

Shanghai Municipal People's Government recently issued the Shanghai Action Plan on Further Improving Payment Convenience. The plan deploys six major tasks, including increasing the acceptance of bank cards, optimizing cash services at multiple levels, improving mobile payment convenience, boosting banking services, establishing comprehensive foreign-related service centers, and increasing service publicity and promotion.


Source: Shanghai Municipal People's Government


2. Shanghai Unveils Measures to Expand Consumption 

【Keywords: Commerce, Tourism, Culture, Sports and Exhibitions; Consumption】

Shanghai Municipal Commission of Commerce and other seven departments of the city jointly released on April 26, 2024 the Several Measures of Shanghai on Promoting and Expanding Consumption Through the Integrated Development of the Commerce, Tourism, Culture, Sports and Exhibition Sectors, which took effect on May 1, 2024. The policy document proposes a total of 16 measures to support organizing large-scale concerts and music festivals, sponsoring high-quality cultural performances, hosting cultural and art exhibitions or major sports events with significant ticket sales, or holding high-level expositions.


Source: Shanghai Municipal Commission of Commerce


One Week in Shanghai

【Latest News】

1. UN-Habitat Releases 2023 Shanghai Manual in Three Languages

【Keyword: Shanghai Manual】

The United Nations Human Settlements Programme (UN-Habitat) recently released the Shanghai Manual: A Guide for Sustainable Urban Development in the 21st Century – 2023 Annual Report in three languages including English, Spanish and French. The manual is themed on “Integrating Resources to Secure a Sustainable Urban Future for All” and consists of nine chapters, including introduction, case studies in six different areas, and two special chapters. 


Source: Shanghai Municipal Commission of Housing and Urban-rural Development


2. International Services Shanghai Features Eight More Languages 

【Keyword: International Services Shanghai】

In addition to its English language edition, International Services Shanghai also features eight more languages including Japanese, Korean, German, French, Spanish, Portuguese, Russian and Arabic, which had all been launched by April 30, 2024. The portal has formed a "1+3" framework, which includes "one" multilingual website and "three" social media accounts including English accounts of WeChat, Facebook and X. It aims to provide policy information for foreign nationals visiting and staying in Shanghai, as well as one-stop service guide for investment, employment, study, travel and living.


SourceShanghai Release


3. Shanghai Receives 16.23 Million Tourists During Labor Day Holiday

【Keyword: Holiday Travel】

According to the Shanghai Municipal Administration of Culture and Tourism, the city received a total of 16.2394 million tourists during the Labor Day holiday, up 3.77% year on year. The number of tourists visiting art exhibitions and scenic spots saw a significant increase from a year ago.


Source: Shanghai Release


【Culture & Art】

1. UK Original Musical "Mamma Mia!" Back to Shanghai 

【Keyword: Mamma Mia】

The classic original musical "Mamma Mia!" kicked off a 4-month nationwide tour in China on May 1, with the first stop at Shanghai Culture Square. The 2024 China tour will feature the original version of the English classic musical in London's West End, and the performance in Shanghai will last until May 16.


Source: Show Life


2. 2024 Shanghai Lavender Exhibition Kicks off

【Keyword: Lavender Exhibition】

The month-long 2024 Shanghai Lavender Exhibition kicked off at the Shanghai Lavender Park on May 1. It features popular catering offerings, art exhibitions and fabulous performances from overseas artists.


Source: Shanghai Tourism


【Corporate Activities】

1. Shanghai Lists Model Enterprises of International Trade Distribution 

【Keywords: Shanghai International Trade Distribution Center; Model Enterprises】

Shanghai Municipal Commission of Commerce announced on April 29 the List of Model Enterprises of Shanghai International Trade Distribution Center in 2024. Several foreign-funded companies are on the List, including Intel Trade (Shanghai) Co., Ltd., Agilent Technologies Trading (Shanghai) Co., Ltd., KIOXIA (China) Co., Ltd., Panasonic Global Procurement (China) Co., Ltd., Mettler Toledo Measurement Instrument (Shanghai) Co., Ltd. and others. 


Source: Shanghai Municipal Commission of Commerce



Q1: Officials of the National Development and Reform Commission answered reporters' questions on the economic situation and macro policies in the first quarter - it was stressed at the Politburo meeting that we must unswervingly deepen reform and expand opening up, and build a unified national market. What are the next steps to build a unified national market?

A1: Accelerating the building of a unified national market is an inevitable requirement for smoothing the domestic economic flows and building a new development pattern. It is also an important starting point for unleashing the potential of domestic demand and pushing for sustainable economic recovery. In accordance with the arrangements of the CPC Central Committee and the State Council, the National Development and Reform Commission has worked with relevant parties to establish and leverage the departmental coordination mechanism for building a unified national market, stepped up efforts to promote implementation of various tasks, and played a positive role in improving the market environment and social expectations. Tangible progress is reflected in the "five unifications" and "three norms".

The "five unifications" are to accelerate the unification of market systems, facilities and supervision by advancing the key tasks of efficient market connectivity. The first is to build a more unified and efficient market system. The number of items on the negative list for market access has been cut from 151 in the 2018 version to 117 now. Fair competition review rules in the field of bidding and tendering have been introduced, and institutional systems on property rights protection, market access, fair competition, and social credit are being established or optimized. The second is to develop more unified and smooth market facilities. We have introduced multi-modal transportation and public resource transactions, and optimized modern circulation networks and market information exchange channels. The proportion of total logistics costs to GDP has dropped to 14.4 percent. The third is to make greater efforts to unify the factor resource market. We have launched an online platform to facilitate transactions in the national secondary land market. Some regions have realized mutual recognition of professional titles. We have released opinions on building a data infrastructure system to better play the role of data elements, and the policy document will ensure smooth flow of land, labor, capital, technology and data resources. Fourth, the commodity service market has unified towards a higher level. The 12315 consumer complaint information disclosure platform has been launched, and quality standards and other systems have been continuously improved. Fifth, market supervision will be more fair and unified, and regulations will be introduced to prevent the abuse of administrative powers to eliminate or restrict competition. From 2022 to 2023, a total of 45 unreasonable fines in administrative regulations and departmental rules have been scrapped.

The "three norms" are meant to remove unfair market competitions and interventions by eliminating prominent issues such as local protectionism and market segmentation. The first is to establish a rectification and reporting system for typical cases of improper interventions attempting to disrupt efforts to build a unified national market. The second is to rectify wrongdoings that hinder the construction of a unified national market, promote special rectifications in key areas such as project construction and bidding, and solve a number of practical problems for business entities. The third is to promote relevant parties to review the currently effective regulations and policies involving the economic activities of business entities, and revise or abolish policy measures that hinder the unified market and fair competition.

Thanks to our joint efforts, the results of building a unified national market are gradually emerging. In the next stage, the National Development and Reform Commission will work with relevant parties to carry out a series of actions to build a unified national market and promote high-quality development. On one hand, we will redouble efforts to improve the system. We will formulate guidelines for the construction of a unified national market, apply for the promulgation and implementation of opinions on improving the market access system and the Social Credit Construction Law, and establish various systems and rules that are conducive to the construction of a unified national market. On the other hand, we would strive to break down obstacles. We plan to build a long-term mechanism for problem reporting, verification and rectification, carry out in-depth rectifications of prominent issues such as market segmentation and local protectionism in key areas, report typical cases, and remove various obstacles that are unhelpful to the construction of a unified national market.


Source: Xinhua News Agency


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]

Q11: Changes in shareholders' capital contribution obligations

The registered capital paid-in system has been replaced by a subscription system for ten years. It has played a positive role in lowering market access thresholds and improving shareholders' capital utilization efficiency. In particular, it has eased the financial pressure on start-ups, so that they can flexibly allocate funds, which greatly stimulates market vitality and enthusiasm for innovation and entrepreneurship. However, the disadvantages of the subscription system have become increasingly prominent. For example, many small companies have announced large-amount capital subscriptions. In addition, the paid-in period of registered capital is stretching for as long as 20 or 30 years. That means the company may not have sufficient working capital before shareholders make full capital contributions, and the interests of the company's creditors cannot be protected. Therefore, in many cases the amount of registered capital cannot accurately reflect a company's credit standing.

Under the current company law system, we find that the vast majority of foreign-funded companies maintain commercial rationality when setting the amount of registered capital, and set it based on considerations of capital expenditures, operating expenditures and a certain margin. A few foreign companies have set their registered capital at a relatively high level in order to avoid potential capital increases in the future (Under the filing system, capital increase applications do not require government approval, but it often takes one or two months to sign various documents).

A prominent revision to the New Company Law is that Article 47 stipulates that "the capital contribution subscribed by all shareholders shall be paid in full within five years from the date of the company's establishment in accordance with the provisions of the company's articles of association", tightening the capital contribution period to five years from the date of establishment, and the only exception is where laws, administrative regulations and decisions of the State Council provide otherwise. Moreover, Article 228 stipulates that in the case of capital increase, the additional capital contribution subscribed by shareholders shall also be paid in accordance with effective regulations at the time of establishment.

Under the current company law system, we find that sole proprietorships generally make the most flexible arrangement on the payment period of registered capital. It is common to stipulate that the registered capital be paid in full before the end of the company's operating period; in the articles of association of a joint venture, more stringent arrangements are often made for the payment period to ensure that simultaneous capital contributions from both parties can meet the company's operating needs. The New Company Law does not make transitional arrangements for the paid-in registered capital of existing enterprises. According to the official website of the Legal Affairs Committee of the Standing Committee of the National People's Congress, the State Council will formulate specific measures to "set up a transition period for companies that have been registered and established before the promulgation of the new law and whose capital contribution period exceeds the period specified in the law, requiring them to gradually adjust their capital contribution period to be consistent with this law within the prescribed time limit". For existing foreign-funded companies, after the New Company Law takes effect, they face two choices - modify the capital contribution period in the articles of association and make full payment of registered capital, or reduce capital contribution.