Shanghai updates regulations on setting up of regional HQs

The municipal government of Shanghai on Tuesday released a new version of a regulation regarding the setting up of regional headquarters of multinational companies, optimization of accreditation standards and provision of more supportive measures.

According to the revised version, a multinational company's Shanghai operations can be defined as a business headquarters when it meets four requirements.

Firstly, it should account for a minimum 10 percent of the parent company's annual sales revenue from major businesses, while the parent company should be based in overseas markets.

Second, the overseas parent company's stake in the Shanghai operation, whether direct or indirect, should be no less than 50 percent.

Third, the Shanghai operation's annual income should be above 1 billion yuan ($138 million).

Last, the headquarters should have operated in Shanghai for more than one year.

The definition of a business headquarters was also clarified in the revised regulation for the first time. The regulation also stipulates that foreign investment firms are allowed to set up both regional functional headquarters or business headquarters in Shanghai.

The local government has also optimized policies to help multinational companies set up their regional headquarters in Shanghai. These policies are related to investment, cross-border capital use, customs clearance, talent recruitment and intellectual property rights protection.

Specifically, the municipal government has been exploring ways to provide cross-border capital pool services and is working on a new customs credit certification model that can be extensively applied to companies throughout the industrial chain.

This is the fifth time the municipal government has revised the policies regarding the setting up of regional headquarters of multinational companies.

By the end of September, a total of 877 multinational companies had set up their regional headquarters in Shanghai.