Funky, Italian deli

ITALIAN STYLE: Fabs holds up the menu at Funkadeli. [Photo by Matt Hodges/Shanghai Star]

Yongkang life

Although Funkadelino has one Chinese partner, it’s fairly easy to get government approval for a wholly-owned foreign enterprise (WOFE) these days providing its registered capital exceeds $140,000, according to wfoe.org.

China prefers to see foreign businesses enter the market as part of a joint venture with a local company, but since joining the World Trade Organization in 2001 the country has increasingly opened the door to WOFEs.

This changing attitude paved the way for Yongkang Road, a hip but intimate hangout spot for expats who appreciate its spilling-onto-the-street vibe. About 40 small bars fill both sides of a 100-meter-long stretch. Ninety percent are foreign-owned, including French outfit Café des Stagiaires, which opened there first in 2011.

"We initially imagined our bar as a deli, a place to get your groceries and have a bite and drink, but that didn’t work out so we went through two overhauls," says Testi. He refuses to disclose the "buy-out" fee demanded by the previous leaser, a DVD shop. But when the group approached the tiny hardstore next to Funkadelino about taking over its lease, the owner asked for 1 million yuan.

"We wouldn’t pay anything over 50,000 or 100,000 yuan," says a bemused Farinati. Current tenants on Yongkang Road enjoy privileged leases of 10-20 yuan per day per square meter, but the rent has since risen to 25 yuan, according to Chi Zhihui, general manager of Paifeng Yongkang Business Management Co., which manages the street in coordination with the local sub-district-level government.

"The rent is still very cheap compared to Tianzifang, which is twice as high as this," she says, referring to a bohemian cluster of boutiques, eateries and handicraft shops 1-2 km southeast that draws hordes of tourists. She says the company can explain how to obtain a food and beverage license, but it doesn’t handle the paperwork.

"A long line of foreigners are waiting to rent but there are no vacancies because the original bar owners don’t want to leave," she says. "They make a lot of money here."

The government is considering developing another "bar street" on adjacent Jiashan Road but cannot meet terms with the current tenants, she adds.