Multinational companies will receive incentives to establish regional headquarters in Shanghai, according to new rules issued by the Shanghai Municipal Government.

“These companies will enjoy certain advantages and preferential treatment, while Shanghai will continue to cement its position as a preferred location for many multinationals,” said Elliot Papageorgiou, from Rouse & Co. International.

Shanghai’s promulgation of its own rules has been bought about by competition from cities such as Beijing, Tianjin, and Shenzhen which have been actively establishing themselves as an attractive location for regional headquarters in recent years.

The result has seen Shanghai “strengthen its advantages as a socio-economic environment for foreign investment,” said Roy Zou, counsel at Hogan & Hartson.

Zou said the new rules provide an increase in preferential policies, and follow-on from the 2002 provisions that were issued in order to attract multination corporations to Shanghai.

However not everyone agrees that the rules are a clear-cut measure for foreign companies. Brinton Scott, partner at Fredrikson & Byron, said that the provisions are still “vague and will require implementing rules before they can be properly assessed.”

The Provisions on Encouraging the Establishing the Establishment of Regional Headquarters by Multinational Corporations was promulgated and became effective on July 7, 2008.