Shanghai Municipality, Several Implementing Opinions on the «Shanghai Municipality, Provisions on Encouraging the Establishment of Regional Headquarters by Multinational Corporations»

(Issued by the General Office of the Shanghai Municipal People's Government on December 3 2008.)

Hu Fu Ban Fa [2008] No.50

With a view to better implementing the Shanghai Municipality, Provisions on Encouraging the Establishment of Regional Headquarters by Multinational Corporations (Hu Fu Fa [2008] No.28) and putting in place the relevant encouragement policies, we hereby formulate several implementing opinions as follows:

I. Financial Assistance and Incentives

1. Financial Assistance and Incentive Rates

(1) Startup assistance: regional headquarters that are newly registered in, or newly relocate to, Shanghai and are established in the form of companies with an investment nature shall be granted Rmb5 million in startup assistance, which shall be disbursed in tranches of 40%, 30% and 30% over three years from the year of registration in, or relocation to, Shanghai.

(2) Premises lease assistance: regional headquarters of multinational corporations that are newly registered in, or newly relocate to, Shanghai and that lease office premises for their own use shall be granted premises lease assistance for three years at the rate of 30% of a daily rent of Rmb8/square metre based on an office area of 1,000 square metres. If such regional headquarters constructs office premises for its own use, it shall be granted funding assistance in one lump sum equivalent to the total three year amount for premises lease assistance.

During the term of assistance, the regional headquarters of a multinational corporation may not let out or sublet such office space, or change the purpose thereof. If the foregoing provisions are violated by letting out or subletting the office space or changing its purpose, the assistance given shall be returned.

(3) Incentives for regional headquarters of multinational corporations: if a company with an investment nature in Shanghai is recognised by the Ministry of Commerce as a state-level regional headquarters of a multinational corporation, it shall be granted a one-time incentive of Rmb10 million the first time its annual business turnover exceeds Rmb1 billion after the year of recognition, or, in the case of a regional headquarters in the form of a management company, it shall be granted a one-time incentive of Rmb5 million the first time its annual business turnover exceeds Rmb500 million after the year of recognition. The incentive shall be disbursed in tranches of 40%, 30% and 30% over three years.

(4) Incentives for the senior management personnel of regional headquarters of multinational corporations: such incentives shall be determined separately by the municipal human resources and social security bureau in concert with the relevant departments when formulating the incentive policies of Shanghai Municipality for skilled personnel.

2. Source of Funds

The Fund of Shanghai Municipality for Encouraging the Development of Regional Headquarters of Multinational Corporations (the Fund) shall be established, and it shall be borne by the financial authorities at the two levels of municipality and district/county. The Measures for the Administration of the Fund of Shanghai Municipality for Encouraging the Development of Regional Headquarters of Multinational Corporations shall be formulated separately by the municipal finance bureau and the municipal commerce commission.

II. Management of Funds

Companies with an investment nature are encouraged to established finance companies in accordance with the Measures for the Administration of the Finance Companies of Enterprise Groups to provide centralised financial management services to their investee enterprises in China.

A regional headquarters that exercises the function of investment management may establish a unified internal fund management system to carry out centralised management of its own funds. Commercial banks in Shanghai are encouraged to actively provide settlement, exchange and other such financial services required by the regional headquarters of multinational corporations in accordance with the regulatory requirements of the People's Bank of China and the China Banking Regulatory Commission. A regional headquarters, the enterprises under its control and a commercial bank may execute a tripartite agreement to conduct transactions through the bank settlement accounts opened with the commercial bank and its (sub-)branches. Commercial banks shall, in accordance with the Tentative Provisions on Commercial Bank Intermediary Services promulgated by the People's Bank of China, actively explore intermediary services that satisfy the fund management requirements of regional headquarters, strengthen the management and control of such business and establish information management systems for monitoring and reporting that are suited to such intermediary services, and that accurately and comprehensively reflect the carrying on and the risk position of such business in a timely manner.

The foreign exchange fund operation of the regional headquarters of multinational corporations shall be handled in accordance with relevant foreign exchange control provisions. Qualified regional headquarters of multinational corporations may participate in pilot projects for the centralised management of foreign exchange funds of multinational corporations, overseas disbursement of funds, etc. in accordance with provisions.

III. Personnel Movements

1. Simplified Entry-Exit Procedures

(1) Temporary entry

Expatriate personnel of regional headquarters established in Shanghai by multinational corporations who are frequently required to enter China for temporary stays may apply for one-year multiple-entry visitor visas. Expatriate senior management personnel and senior technical personnel who are frequently required to enter the PRC for temporary stays may apply for two- to five-year multiple-entry visitor visas under which any stay may not exceed one year.

(2) Long-term residence

(i) The legal representative, general manager, deputy general managers and chief financial officer of the regional headquarters established in Shanghai by a multinational corporation may apply for a five-year foreign residence permit; department managers may apply for a four-year foreign residence permit; and general expatriate personnel may apply for a three-year foreign residence permit.

The legal representative, general manager, deputy general managers and chief financial officer of an enterprise in Shanghai with registered capital of at least US$30 million that is subordinate to the regional headquarters established in Shanghai by a multinational corporation may apply for a five-year foreign residence permit; department managers may apply for a four-year foreign residence permit; and general expatriate personnel may apply for a three-year foreign residence permit.

(ii) The expatriate spouses, parents and children under 18 years of age of the aforementioned expatriate personnel may apply for foreign resident permits of the same length as those of the aforementioned persons.

(3) Permanent residence

The legal representative and other such senior management personnel of the regional headquarters established in Shanghai by a multinational corporation may, in accordance with the Measures for the Administration of the Examination and Approval of the Permanent Residence in China of Foreign Nationals, be recommended on a priority basis for an Alien Permanent Residence Permit.

(4) Coming to Shanghai under urgent circumstances

If an expatriate invited to Shanghai by the regional headquarters of a multinational corporation for a temporary stay is unable to apply for a visa in a timely manner at a Chinese embassy or consulate due to urgent circumstances, he/she may, in accordance with provisions, apply to the Port-of-Entry Visa Department of the Entry-Exit Administration of the Shanghai Municipal Public Security Bureau for a port-of-entry visa.

(5) Travel to Hong Kong or Macao

Chinese employees of the regional headquarters of a multinational corporation who need to travel to Hong Kong or Macao on business may apply for a multiple exit-entry Hong Kong and Macao Travel Permit.

(6) Travel to Taiwan

Employees with Shanghai residence of the regional headquarters of a multinational corporation who need to travel to Taiwan on business may apply on a preferential basis for a Taiwan Travel Permit for Mainland Residents if they provide a Taiwan entry travel document and an approval document from the Taiwan Affairs Office of the State Council.

(7) Foreign Travel

Employees with Shanghai residence of the regional headquarters of a multinational corporation who need to travel to a foreign country on business may apply for a passport on the strength of their Shanghai residence booklet and identity card.

2. Simplified employment permit procedures for expatriate personnel

For an expatriate employee of the regional headquarters established in Shanghai by a multinational corporation who enters China on an L, F or X visa and takes up employment in Shanghai, the regional headquarters of the multinational corporation may apply to the municipal human resources and social security bureau simultaneously for a foreigner employment permit and Foreigner Employment Certificate.

3. Facilitating attraction of capable skilled personnel in China

The competent human resources department and public security department shall facilitate the procedures for a Shanghai Residence Permit for personnel from other provinces or cities engaged by the regional headquarters established in Shanghai by multinational corporations.

The application for residence in Shanghai by capable skilled personnel from other provinces and cities who satisfy the industrial development orientation of Shanghai and are engaged by regional headquarters established in Shanghai by multinational corporations or by research and development centres with independent legal personality invested in and established by regional headquarters shall be handled with reference to relevant policies for hi-tech enterprises.

IV. Facilitation of Customs Clearance Procedures

Customs and the entry-exit inspection and quarantine department shall facilitate the customs clearance procedures for the imports and exports of qualified regional headquarters established in Shanghai by multinational corporations and research and development centres with independent legal personality invested in and established by regional headquarters.

Multinational corporations are encouraged to establish logistics and distribution centres to promote the integration of the logistics of the enterprises forming part of the multinational corporation's group. Customs, foreign exchange control, entry-exit inspection and quarantine and other such departments shall continuously explore reform and innovation in regulatory models in line with the newest developments in, and requirements of, the logistics operation models of regional headquarters of multinational corporations so as to adjust to the business development of regional headquarters of multinational corporations.