City leads pack as foreign-firm magnet

By Fu Chenghao  |   2008-12-30  |     NEWSPAPER EDITION

FOREIGN investment in Shanghai has exceeded US$10 billion so far this year - more than a tenth of the nation's total.

And the city boasts more regional bases of multinational companies than any other on the Chinese mainland, according to a new report released yesterday.

But even with such a strong performance, Shanghai should do more to improve its administrative efficiency, environmental quality and traffic flow so that even more multinational investors will come, a white paper released by the Shanghai Commerce Commission urged.

The US$10 billion in foreign investment received in the city through yesterday surpassed the US$7.92 billion won in 2007. Contracted foreign investment, an indicator of future inflows, reached US$17 billion, versus US$14.87 billion last year.

Despite its relatively high business costs, Shanghai has become one of the favorite choices for overseas investment thanks to its growing economy, sizable market and higher profit margins enjoyed by companies in the city, the white paper said.

For example, the net profit margin on sales by overseas-invested companies in Shanghai has reached 5.5 percent, 1 to 2 percentage points higher than foreign firms nationwide, the commission said.

As of the end of November, Shanghai was home to 223 regional headquarters of foreign companies in addition to 178 investment units and 270 research and development centers - tops on the mainland, the paper said.

Overseas-invested firms also played a key role in creating jobs for Shanghai. The sector employed more than 2.9 million people in 2007, up 11 percent year on year and almost a third of the city's total.

Among the 474 non-Chinese firms listed on the Fortune 500 for 2008, 227 have invested in Shanghai, with accumulated contracted investment of US$18.4 billion so far, or 12.9 percent of the city's total, according to the white paper.

Still, the city needs to raise efficiency in some government agencies, attract more talented people and improve the environment, traffic conditions and intellectual property rights protection to create an even better investment environment, said Gong Baihua, director of the Shanghai World Trade Organization Affairs Consultation Center, which was hired by the Shanghai Commerce Commission to evaluate the city's investment climate.