Global enterprises still bullish about Shanghai

Investors and businesses adding new capital and facilities as economy recovers

Global enterprises remain positive about the development of Shanghai despite the resurgence of the pandemic dragging down the growth of the city in the first half of 2022. The optimism comes thanks to the city's long-term commitment to enhancing its business environment and creating trusting relationships with investors.

According to Fu Yue, head of corporate affairs of Chinese Mainland and Hong Kong at Haleon, a company 100 percent focused on consumer health which demerged from healthcare giant GSK in July, Shanghai is one of the most preferred cities by global consumer products enterprises for establishing their headquarters. The preference comes thanks to the city's continuous efforts to improve its business environment.

"It is obvious that the business environment in Shanghai has continued to improve in recent years," Fu said. "Officials in Shanghai are also willing to provide support to help companies to solve problems when necessary."

Shanghai is also seen as an ideal investment destination for the spirit of contract and order, a hub of global consumer brands and a place with unique geographical advantages, Fu said.

"Shanghai is home to a large number of middle-class people which means the city has a strong consumption capacity and high development potential due to rising needs for quality, diversity, and personality," Fu said. "The success in Shanghai will set a foundation for brands to expand their operations across other regions in China."

Fu said the cultivation of the debut economy in the city, which welcomes global brands to establish their first stores or to debut new products, also helps to create a culture that encourages people to experience new products and services.

"Shanghai is a great city. It is indeed difficult to describe this city in limited words. From the business side, I would say inclusivity, stability, ease and confidence, and orders," Fu said.

The company, which owns a world-class portfolio of brands including Sensodyne, Voltaren and Panadol, will continue to develop in Shanghai.

Haleon has registered a legal entity in the Lin-gang area, a promising land set for the Shanghai government to practice reform in recent years. Haleon said it will continue to explore ways to expand and upgrade its capabilities to better fit the regional headquarters role. Fu said Haleon's management team is working to enhance the organization capabilities and that more functions will be developed to support it to become a headquarters in upcoming years.

Haleon employs more than 600 people in Shanghai. Despite the effects of COVID, the company plans to recruit more employees, including fresh graduates, this year to support its growth.

Haleon has booked a 300-square-meter exhibition booth at the fifth China International Import Expo, which is scheduled to be held in Shanghai in November, to display its latest developments, Fu said.

Apart from consumer enterprises, global manufacturers are keen to add new facilities in Shanghai to better serve growing demand in China. They're also keen to seize business opportunities in China's new round of opening-up.

Materials manufacturer Covestro broke ground on two new plants in Shanghai in July to meet the rising demand for polyurethane dispersions and elastomers. These new facilities, which represent a combined investment of a mid-double-digit million euro amount, will be located within the Covestro Integrated Site Shanghai.

"These projects will contribute to the high-quality and sustainable development in China and beyond," said Holly Lei, president of Covestro China. "They will also add to the scale and strength of our Shanghai site, which will play a key role in the quest of Covestro to become operational climate neutral by 2035."

"With the new investment, we will be even better positioned to address the rising demand for more environmentally compatible coatings and adhesives across the globe," said Zhong Xiaobin, senior vice-president of the coatings and adhesives segment of Covestro in the Asia-Pacific region. "As a global leader in this segment, we will continue to tap into the trend where our customers turn to more sustainable waterborne systems with equally good properties to replace solvent-based products."

Since 2001, Covestro has been strengthening its commitment in Shanghai. So far, it has invested 3.6 billion euros ($3.68 billion) in building the Shanghai integrated site in Fengxian district, which comprises 11 plants and is the company's largest site in the world. In the past year, the Shanghai site obtained the ISCC PLUS mass balance certification, meaning it can supply customers with larger product volumes from renewably attributed raw materials, according to the company.

Multinational manufacturer 3M, which operates four manufacturing sites and one global research and development center, is building a new tape production line and a new converting center in its plant in Shanghai. The project, with investment totaling $50 million, will be finished in 2024. The company said the new investment will bring great value for its local customers in the electronic and automotive industries.

"We started our business in China in 1984 as the first wholly-owned foreign enterprise, and have built our tremendous teams and capabilities," said Henry Ding, senior vice-president of 3M and president of 3M China. "Shanghai, with its solid industrial foundation and profound resources, has almost full coverage of the entire industrial chain, which provides great convenience for us to find partners in the supply chain in the field of manufacturing, R&D and innovation. Those factors are tremendously valuable for a high-tech company like 3M."

Apart from building new production facilities in Shanghai, foreign investors are launching new R&D centers in the city to strengthen their commitment.

Mercedes-Benz opened an R&D center on July 25 in Shanghai. The center will be an important part of the global R&D system of Mercedes-Benz. It will focus on R&D and the innovation of autonomous driving and intelligent interconnections, while also facilitating Mercedes-Benz's electrification and intelligent transformation strategy in China.

Firm policy support

Data from the Shanghai bureau of statistics show the city recorded more than $12.47 billion in foreign investment in the first six months in 2022, up 0.2 percent year-on-year. A total of 26 multinational companies located their regional headquarters in Shanghai during the first half of the year, with another 10 foreign companies setting up regional R&D centers in the city.

Shanghai's government has been developing policies over the past few months to help enterprises in the city tackle challenges.

In late May, a 50-measure plan was released to bolster domestic and foreign enterprises, tackle challenges brought by COVID-19 and reboot the city's economic vitality.

These measures, covering tax rebates, rent reductions, financial subsidies, job market stabilization, promoting business operation resumption, and stabilizing foreign-funded companies' development.

Stabilizing foreign investment and trade as well as accelerating the recovery of consumption and investment is emphasized in the plan. Specialists were assigned to provide service to key foreign-funded enterprises to resume work and production. Multinational companies are allowed to apply for the special funds for the development of their regional headquarters in Shanghai, and the authority will further support such companies to set up regional headquarters and foreign R&D centers in the city to stabilize their expectations and confidence.

On July 15, the Shanghai government released a guideline to further promote the development of five types of economy to strengthen long-term economic development of the city. The five types are innovation economy, service economy, headquarters economy, opening-up economy and flux economy.

Shanghai also announced action plans in July to support four new identified growth sectors in the coming years: metaverse, smart terminals, digital development and low-carbon growth. The market value of the four sectors is expected to be more than 1.55 trillion yuan ($229 billion) by 2025. To reach the goal, Shanghai has updated its industrial layout and launched a batch of special industrial parks.

The city is showing strong signs of recovery. Shanghai Port, the world's busiest container port, has seen the volume of daily export declarations at Yangshan Deep Water Port, one of Shanghai Port's main units, soar more than 50 percent to 11,000 from the previous 7,000. That's according to the China Securities Journal, which cited data from Yangshan Customs. Transactions made at the various financial markets in Shanghai in the first half of the year totaled 1.362 trillion yuan, an increase of 16.8 percent year-on-year. Industrial throughput of integrated circuits and artificial intelligence industries in Shanghai reported 13.3 percent and 14.7 percent year-on-year growths respectively from January to June.

From Nov 5-10, the China International Import Expo will be held in Shanghai to strengthen communication among enterprises. About 85 percent of the planned business exhibition area has been booked. Fortune Global 500 companies including Rio Tinto, BHP Billiton, ThyssenKrupp and Gilead Sciences will be in attendance for the first time. More than 270 Fortune Global 500 companies and industry pacesetters have confirmed to participate in the annual import-themed fair.

From top: Haleon will continue to explore ways to expand and upgrade its capabilities in Shanghai to better fit the regional headquarters role. Covestro breaks ground on two plants in Shanghai to address the rising demand for more environmentally compatible coatings and adhesives in July. Multinational manufacturer 3M is building a tape production line and a converting center in Shanghai. CHINA DAILY

tangzhihao@chinadaily.com.cn