DEZAN SHIRA & ASSOCIATES

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Produced in association with Dezan Shira & Associates
Te Practical Application of China Business
Shanghai
Shanghai
JIANGXI
SHANXI
NINGXIA
HUI A. R.
SHAANXI
JIANG-
SU HENAN
HUBEI
SICHUAN
YUNNAN
HAINAN
GUIZHOU
HUNAN
ANHUI
ZHE-
JIANG
FUJIAN
GUANGDONG
GUANGXI
ZHUANG A. R.
QINGHAI
GANSU
XINJIANG UYGHUR A. R.
TIBET A.R.
IN
N
E
R
M
O
N
G
O
L
IA
A
. R
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C
H
O
N
G
Q
IN
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SHANGHAI
Hohhot
Taiyuan
Xi'an
Lanzhou
Xining
Urumqi
Nan-
jing
Zhengzhou
Wuhan
Nanchang
Fuzhou
Taiwan
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Haikou
HONG KONG
MACAU
Changsha
Guiyang
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Lhasa
Kunming
Nanning
Hefei
Hangzhou
TIANJIN HEBEI
Jinan
HEILONGJIANG
Harbin
JILIN
LIAONING
Shenyang
BEIJING
SHAN-
DONG
Changchun
Shijiazhuang
Yinchuan

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DEZAN SHIRA & ASSOCIATES
Welcome to Shanghai
A former fshing village, Shanghai never served as a dynastic capital and it was not until the 19th century that
foreign trade took of for the city. Sustaining double digit growth since 1992, Shanghai has been Chinas premiere
city for international investment, modernization, industry, commerce and tourism. Focusing on modern service
industries and advanced manufacturing, the mainlands most modern, cosmopolitan city will surely be part of
Chinas efort to become an innovation-driven economy.
Dezan Shira & Associates has been advising international clients in Shanghai since 1992. Our frm has been
instrumental in helping foreign investors set up businesses in the city and its development zones and handle the
local economic and legal conditions. Tis guide is our overview of the city, including demographic and economic
details that our practice has compiled from our own local resources and experience. We hope that you fnd it
useful.

An on-the-ground presence and years of business experience in a given city are essential to giving sound advice
on foreign investment. At Dezan Shira & Associates, we can provide you and your organization with an in-
depth understanding of local policies, regulations, costs and incentives. If you need assistance with corporate
establishment, tax, accounting and payroll, or general business advisory work in the city or nearby, contact us.
We look forward to hearing from you.

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Shanghai is Chinas commercial and nancial center, as well as the center
of the countrys ourishing Yangtze River Delta.
SHANGHAI
Fast facts
Initially ignored by the government when
creating Special Economic Zones in the early
1980s, only in 1989 with the help of Maos
successor Deng Xiaoping did the city begin
to fourish fnancially
During the development period that turned
Pudong from farmland into towering
skyscrapers, it was said that over half the
worlds cranes were working in Shanghai
Shanghai hosted the 2010 World Exposition,
for which the government made heavy
investments into city infrastructure
Shanghai by numbers
Item Unit 2002 2003 2004 2005 2006 2007 2008 2009 2010
Population m people
16.25 17 17.4 17.78 18.15 18.58 18.8 19.21 23.02
GDP RMBbn 540.9 625.8 745 914.4 1,029.70 1,200.12 1,369.81 1,490.10 1,687.2
Proportion: primary industry %
1.4 1.2 1 1 0.9 N/A 0.81 0.8 0.7
: secondary industry %
45.7 47.9 48.2 48.6 48.5 N/A 45.5 39.9 42.3
: tertiary industry % 52.9 50.9 50.8 50.4 50.6 21.9 53.6 59.3 57
GDP growth year on year %
10.9 11.8 13.6 11.1 12 13.3 11.4 8.2 9.9
Per capita GDP (all residents) RMB
40,646 46,718 55,306 59,600 59,710 60,158 73,126 77,569 73,294
Fixed asset investment RMBbn 215.84 245.2 308.5 354.3 392.51 445.86 482.31 527.33 531.77
Growth year on year %
8.2 12.1 25.8 14.8 10.8 13.6 9.3 9.2 0.8
Industrial production value RMBbn
231.3 286.59 349.3 415.5 464.16 529.6 578.5 540.9 645.7
Growth year on year % 12.7 17.6 16.1 12.5 13 12.3 9.2 -6.5 17.5
Per capita disposable income of
urban residents RMB
13,250 14,687 16,683 18,645 20,668 23,623 26,690 28,838 31,838
Growth year on year %
11.5 12.2 12.2 11.8 10.8 14.3 12 8.1 10.4
Retail sales RMBbn
203.5 222 245 297.3 336 384.8 453.7 517.29 603.69
Growth year on year %
9.3 9.1 10.5 11.9 13 14.5 14.5 14 17.5
Exports US$bn
81.8 112.13 161.27 212.43 266.57 328.48 169.2 141.91 180.79
Growth year on year %
20.3 37.1 43.8 31.7 6.7 23.2 -48 -16.2 27.4
Imports US$bn
60.7 88.9 121.31 138.25 162.89 192.43 152.6 135.82 188.1
Growth year on year %
15.7 46.5 36.5 14 17.8 18.1 -21 -11.1 38.5
Contracted FDI US$bn
10.6 11.1 11.7 13.8 14.574 14.87 17.1 13.3 15.31
Growth year on year %
0.434 0.235 0.126 0.183 0.054 0.02 15.1 -22.3 15.1
Used FDI US$bn
5.03 5.9 6.5 6.85 7.11 7.92 10.1 10.54 11.12
Growth year on year %
14.5 30.1 11.8 4..7 3.8 11.4 27.4 4.5 5.5
New FIEs No
3,012 4,321 4,334 4,091 4,061 4,206 3,748 3,090 3,906
Growth year on year %
22.5 43.5 0.8 -5.6 -0.7 3.6 -10.9 -17.6 26.4
Sources: National Bureau of Statistics China Statistical Yearbooks, city government publications, media sourc-
es deemed reliable. N/A is data not announced in the city governments annual economic and social report and
growth data is calculated based on in house data for the previous year. May be available from other sources.
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DEZAN SHIRA & ASSOCIATES
A
n international metropolis that has
witnessed breathtaking economic de-
velopment over the last ffeen years,
Shanghai shows no signs of slowing down.
Moreover, the 2010 World Expo brought a
massive upgrade to the citys infrastructure
with US$2.7 billion spent on infrastructure
development, the city now has a more expansive
subway system, larger international airports and
improved international ports with larger han-
dling capacity. Te city is administratively equal
to a province and is divided into 19 county-level
divisions. To the north and south are Jiangsu
and Zhejiang provinces, while the East China
Sea lies to the east, Hangzhou Bay to the south
and the Yangtze River to the north.
Partially to reduce population density, Shanghai
will focus on developing seven new satellite cities
and developing links with neighboring cities in
the Yangtze River Delta as key goals in the citys
12th Five-Year Plan (2011-2015). Te seven new
cities, including Lingang New City in Pudong
New Area, Qingpu New City and Jinshan New
City, will be developed to be the main industrial
bases for advanced manufacturing, emerging
industries and the modern services industry,
according to the Plan. Te Songjiang New City,
the biggest among the seven new satellite cities
with an area of 120 sq km, is planning to have as
many as 1.1 million residents by 2020.
Infrastructure
Shanghai's transportation infrastructure is
constantly pressed to keep up with the city's ever
expanding urban population.
Road
Shanghai has six elevated roads, including two
ring roads and eighteen expressways. Te two
main areas, Pudong and Puxi, are linked both by
bridges and underground tunnels. Tere are six
national expressways that connect Shanghai to
Beijing and the surrounding region, with plans
for an extension to connect Chongming Island
to the city center. Te recent rise in disposable
income means more and more people own cars,
especially after the government banned cycling on
many main roads in order to ease congestion. Te
number of cars in the city is limited to the amount
of number plates available at public auction.
Shanghai is also home to the worlds largest
bus system, with over 1,000 diferent bus lines.
Railways
The worlds first commercial Maglev railway
was opened in Shanghai in 2003. It connects
Pudong International Airport with the Longyang
Road metro station (also in Pudong) in less than
eight minutes and reaches a maximum speed
of 433 kilometers per hour. Two major railway
lines intersect in the city: the Jinghu railway
(connecting Shanghai with Beijing) and the Hu
Hang railway (running to Hangzhou). Both of
these routes are currently being developed for
high-speed travel, although another Maglev
railway from Shanghai to Hangzhou has been
canceled due to the projects expense.
Shanghai is also famed for its massive metro
system, which transports an average 4.7 million
people per day. As of 2011, there are eleven metro
lines (excluding the Shanghai Maglev Train) and
over 434 kilometers of track in operation, making
it the longest network in the world. Te ultimate
aim is to have 20 routes by 2020.
Air
Shanghai has two airports: Hongqiao International
and Pudong International. Te latter is the fourth
busiest airport in China following Beijing Capital,
Hong Kong Chek Lap Kok and Guangzhou
Baiyun.
Ports and waterways
It only took Shanghai fve years to double its cargo
handling capacity from 200 to 400 million tons
and in terms of container handling, it is currently
ranked second after Singapore.
Shanghai Port is actually an amalgamation
of three sites: Wusong Port, Waigaoqiao Port
and Yangshan Deepwater Port. Wusong Port
is the oldest of the group, but was surpassed
in by Waigaoqiao Port and the more recently
constructed Yangshan Deepwater Port, which
handles approximately 35 percent of Shanghai
Ports total container throughput (2010).
Yangshan Port is located south of Shanghai in
DEZAN SHIRA & ASSOCIATES
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Hangzhou Bay and allows depths up to 15 meters.
When fully completed in 2012, Yangshan Port
will have four phases in operation with 30 berths
capable of handling 15 million TEUs annually.
Despite the addition of Yangshan Port, the
throughput of Waigaoqiao Port also continues
to rise and it remains a large hub for inter-Asia
shipping routes. Te older Wusong Port, located
on the north end of the Bund, and handles
primarily domestic container service. Te area
around the port has most recently been slated
for redevelopment to serve cruise liners and
possibly yachts.
Economy and investment climate
Shanghai is Chinas largest and greatest
commercial and industrial city. With only 0.1
percent of the land area of the country, it supplies
over 12 percent of municipal revenue and handles
more than a quarter of total trade passing through
Chinas ports. In 2010, Shanghais GDP reached
RMB1.687 trillion and per capita GDP was
RMB73,294. Exports reached US$180 billion, an
increase of 27.4 percent, while imports amounted
to US$188 billion in 2010. Now the city wants
to develop itself as a mainland fnancial center
rivaling Hong Kong and London although this
ambition is hampered by regulatory issues.
The Shanghai Economic Committee has
recently cited the manufacturing industry as the
key driving force for economic development in
Shanghai. Te committee has also prioritized the
expansion of the modern service industry and the
advanced manufacturing industry with the goal
of turning Shanghai into one of the four major
central business districts by 2020.
In recent years, the Chinese government has
stepped up its eforts to move Chinas economy up
the value chain from a low cost production base,
to an innovation-oriented economy and has taken
various measures to encourage foreign investors
to set up R&D facilities in China. In terms of
tax incentives, Shanghais Pudong New District
benefts from a tax reform designed for the local
services sector. In another example, integrated
circuit design companies in Shanghai Zhangjiang
Hi-Tech Park are currently able to beneft from
the refund upon collection tax arrangement.
Shanghai Stock Exchange
The Shanghai Stock Exchange was founded
in 1990 and is the largest stock market on the
mainland. In terms of market capitalization, it
ranks ffth in the world. Tere are three main
categories of securities listed on the Shanghai
Stock Exchange: stocks, bonds and funds. Bonds
traded on the exchange include treasury bonds,
corporate bonds and convertible corporate
bonds. Te Shanghai Stock Exchange issues two
types of stocks: A shares (priced in RMB) and B
shares (priced in USD). A shares have historically
only been available to domestic investors, while
B shares were available for both foreign and
domestic investors. Since 2002, however, foreign
investors have been able, with limitations, to trade
A shares under the Qualifed Foreign Institutional
Investor system. Te exchange plans to eventually
merge the two types of shares.
Shanghai also plays host to the Shanghai Futures
Exchange. Te Shanghai Futures Exchange began
operations in May 1999 and was an amalgamation
of three exchanges: the Shanghai Metal Exchange,
the Shanghai Commodity Exchange and the
Shanghai Cereals and Oils Exchange. Contracts
are traded for copper, aluminum, zinc, gold,
natural rubber and fuel oil.
Retail
As one of the frst few sectors opened to foreign
investment after Chinas WTO accession, the
retail sector has witnessed booming growth.
More than half of the worlds top 50 retailers have
entered the market with most of them having
stores in Beijing, Shanghai and other coastal cities.
Total revenue for Shanghais retail industry
reached RMB603.7 billion in 2010, with year on
year growth of 17.5 percent. Many retailers use
Shanghai as an entry point and gateway before
moving into other mainland retail markets.
Shanghais mature retail environment and
comprehensive municipal infrastructure make
it an ideal place to launch a retail enterprise or
introduce a brand to China. Te 2010 Shanghai
World Expo brought a new burst of retail
development and generated RMB4.5 billion in
the Expo site alone.
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DEZAN SHIRA & ASSOCIATES
Development zones
With its large port and increasing areas with
favorable economic environments for heavy
foreign investment, Shanghai could be described
as one constantly expanding development zone.
Shanghai Jinqiao Export
Processing Zone
Shanghai Jinqiao Export Processing Zone
(JEPZ) was approved in 1990 and enjoys the
same preferential policies as state-level economic
and technological development zones. Its main
objectives include attracting FDI and seeking
joint development. Te zone is located in the
middle of the Shanghai Pudong New Area.
Te four pillar industries in the zone include
information electronics, automobiles, modern
household electrical appliances, and biological
medicines. Of the worlds top 500 companies,
21 have business operations in Jinqiao, and by
2010 the zone had reached RMB209.7 billion in
industrial output. Major investors include NEC,
Shanghai General Motors and Volkswagen.
Caohejing New Technology
Development Zone
Tis zone is one of the frst state-level economic
and technological development areas to focus on
introducing advanced technology from abroad
and developing high and new technologies.
More than twenty universities and colleges
and over 120 R&D institutions are located
nearby. Te zone also boasts more than 30 of
the worlds top 500 companies including 3M,
Dupont and Lucent. Te pillar industries include
microelectronics, photo-electronics, computer
and software, new materials, and spacefight and
aviation.
Shanghai Chemical Industry Park
Fengxian Sub Zone
Te Fenxian Zone was built into the chemical
industry park due to the industrys growing
importance in Shanghai. Tere are also plans
for a one-stop service center, which will provide
efficient administrative service to investors
both at home and abroad. Main investors are
petrochemical and utilities companies, which in
2010 had invested RMB150 billion into the Phase
One program. BP, BASF, Bayer, Degussa, SUEZ
and Air Liquide all have investment projects here.
Shanghai Minhang Economic and
Technological Development Zone
The zone was among the first 14 state-level
development zones in China designated by the
State Council in 1986. Te zone emphasizes the
development of the mechanical and electrical
equipment industry within rail transportation,
the modern biological and pharmaceutical
industry through blood products, the beverage
industry and the leisure food industries. Te
establishment of R&D units and high-tech
enterprises are also encouraged. Around 45 major
global companies have investments in the zone,
among them Mitsubishi Elevator, Johnson &
Johnson, Siemens, Pepsi, Coca-Cola Bottling
and Fuji Xerox, each generating over RMB1
billion per year.
Shanghai Hongqiao Economic and
Technological Development Zone
Established in the 1990s with a total area of 65.2
hectares, the zone is situated in an excellent central
location west of Shanghai. Te Hongqiao zone is
the sole commercial and trade development zone
in China to integrate exhibition space, ofce
and residential services, catering and shopping.
Tere are also several plots allocated for foreign
consulates in Shanghai to build their respective
premises. Te zone is due to be extended with
construction of 300,000 more square meters
that will be able to accommodate exhibitions,
commercial space, hotels, restaurants and other
facilities.

Shanghai Waigaoqiao Free Trade Zone
Development Zone
Situated in Pudong, the WFTZ covers an area
of ten square kilometers, making it the largest
free trade zone in China. Te number of foreign
enterprises set up in this zone account for a third
of Shanghais total, including 135 Fortune 500
companies. In terms of GDP, import/export value
DEZAN SHIRA & ASSOCIATES
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and investment, it accounts for over 60 percent of
the total investment of Chinas ffteen FTZs. Over
the last decade, the company has devoted itself
to land development, real estate management,
carrying trade, bonded storage and international
forwarding in the free trade zone.
Shanghai Baoshan Industrial Zone
Baoshan City Industrial Park is a municipality-
class industrial zone that covers a four kilometer
area in southwest Baoshan district. Main
industries include auto parts, machinery and
electricity, electronics, instruments, computers,
light industry, glass products, food processing,
storage and transport, as well as shipbuilding.
Shanghai Jiading Industrial Zone
Located in the transportation hub of northwest
Shanghai, Jiading Industrial Zone is made up of
the north and south zone. In 2010, the zone has
more than 400 investors from over 30 countries
with total project investments worth over US$10
billion.
Other major zones
Shanghai Zhangiang High-Tech Park
Key industries: IT, biotechnology, pharmaceuticals
and information security
Songjiang Export Processing Zone
Key industries: electronics, IT manufacturing
Major investors: 28 Fortune 500 companies

Jinshanzhui Industrial Zone
Key industries: textiles, electronics, plastics, new
building materials
Resources
Government organizations
Shanghai City Government
Website: www.shanghai.gov.cn
Shanghai Foreign Economic and Trade
Commission
Website: www.smert.gov.cn
Shanghai Foreign Investment Service Center
Website: www.ssc.com
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