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Shanghai guideline to support foreign R&D centers to participate in the construction of a technological innovation center with global influence

Dec 1, 2017

The Shanghai Municipal Government’s Information Office held a press conference on October 16 on the city’s guideline to support foreign R&D centers to participate in the construction of a technological innovation center with global influence. Following are the highlights:


Shang Yuying, director, Shanghai Commission of Commerce

Yang Chao, deputy director, Shanghai Commission of Commerce

Qiu Wenjin, deputy inspector, Shanghai Development and Reform Commission;

Fu Guoqing, chief engineer, Shanghai Science and Technology Commission;

Ji Xiaoye, deputy director, Shanghai Intellectual Property Administration

Xinhua News Agency: My question is: Which articles of the guideline have been adopted across Shanghai from the Shanghai Free Trade Zone? In May, Shanghai introduced new polices to draw foreign investment, what has been achieved so far?

Yang Zhao: For the first question, in the process of drawing the guideline, we referred to measures of foreign capital research institutions. For example, in the support of foreign research institutions, we extended the usage of free trade accounts to include foreign research institutions, which enables them to enjoy policies regarding trans-border finance. We also introduced favorable talent policies, referred to the “linkage between technological innovation and policy innovation”; foreign researchers now can apply for work permit themselves. Also, we’ve extended the expiration time of their work visa, and the application process has been simplified.

For the second question, since the policies were introduced in May, the Shanghai Municipal Government released document No. 26, namely the Guideline on Further Deepening New Open Economic System; and document No. 5, the State Council’s Measures to Expand Opening-up to the Outside World and Active Resource Usage to push foreign investment to new heights. All municipal and district governmental units studied the documents in detail and took action. The achievements have manifested in three aspects:

The first is the speeding up of the opening-up to the outside world, and agglomeration of high-end elements. Since the beginning of 2017, Shanghai has been using foreign investment to get rid of the dependence on real estate, speeding up the upgrade to high value-added industries, and realizing positive growth of 2.9 percent and 84.6 percent, respectively, in headquarters economy-centered service industries and information service based on “Internet Plus”. Most of the foreign investment has gone to business service industries. As of the end of August this year, 610 international companies have set up their headquarters in Shanghai, 67 of which are from Asia-Pacific.

The second aspect is the optimization of the business environment, and the facilitation of foreign investment. Shanghai will maintain its efforts in the construction of a more legal, international, fair, and convenient market so as to protect the interests of foreign investors. The 13,800 foreign companies’ operation data will reflect the efforts we have made, from this January to July, the foreign companies’ operational revenue has seen a 14 percent year-on-year growth, their total tax payment amount has increased 19.3 percent, and their total profit has jumped by 28.6 percent. Meanwhile, 98 percent of new foreign companies have been established by filing and recording, the average filing period has been shortened to three working days.

The third aspect is the strengthening of the cooperation mechanism between government units, companies, society, and the government to establish systems to lure foreign investment. A number of Shanghai districts have introduced a series of policies to support the effort. For instance Pudong New Area and Jing’an District have introduced policies to support headquarters economy. The global investment network is close to completion, and more support will be given to foreign companies.

Jiefang Daily: I’d like to ask: What are the highlights of the guideline? What are Shanghai’s advantages in attracting foreign investment, and what are the challenges in doing so? Which industries will benefit from the implementation of the guideline?

Shang Yuying: On one hand, these new policies will boost the construction of the technology and innovation center, while on the other they will support the development of foreign research institutions. The highlights of the guideline lie in the distribution of global resources and cross-border capital flow, the protection and implementation of intellectual properties, and better service for the activities of foreign research institutions.

In support of the distribution of global resources and cross-border capital flow, the best highlight is policy support for the regional headquarters of foreign research institutions with independent legal entity. The guideline also points out the trend and support to the open innovations of multinational corporations. For example, Intel Corp’s internal technological innovation revolves around access to external technologies, also known as internalization of external technologies. For such reason, Intel has set up research institutes in many universities, acquiring technologies from universities at their primitive stage. Intel has also set up foundations to make technology investment in start-ups, which has become the usual practice for multinational corporations. Because Shanghai has attracted so many foreign research institutes, another highlight of the guideline are the supporting policies.

The highlights of intellectual property protection are patent examination, speedy confirmation of the patents’ ownership, and protection of the patent owners’ legal rights; especially the seamless combining of administrative enforcement of law and judicial protection.

In supporting the scientific research activities of foreign institutes, preferential policies for talents were introduced, such as granting them employment autonomy in hiring foreign researchers to work in China. Also, the guideline specifies that foreign institutes and foreign researchers can participate in governmental projects.

Shanghai’s advantages of attracting foreign research institutes lie in its openness to the outside world and its various economic and financial policies, preferential talent policies, and its international outlook.

Foreign companies and institutes can easily hire talents, the accessibility of Shanghai’s talent pool is considered the best in China and neighboring countries.

The Shanghai Municipal Government has a rather high awareness of and implementation capability of law, and intellectual property protection. It’s an assurance for foreign companies and research institutes in Shanghai. So the advantages are not only reflected in the support of foreign companies’ development, but also in concrete policies to support foreign research institutes.

Shanghai is working hard to build a technology and innovation center, the success lies in its global influence, vision, talent, and technological achievements. Shanghai has top talents, laboratories, globally influential technological innovations, and experience in innovation-driven development, which forms part of our competitiveness. The policies to support foreign research institutes are actually an indication to the outside world that they will represent Shanghai to take part in global competition, help Shanghai to build the technology and innovation center, and will be a major competing force in building the technology and innovation center.

STV: How will Shanghai use its advantages, such as foreign research institutes, to build the open cooperation mechanism, and how will you support the technology and innovation center?

Qiu Wenjin: It’s a national strategy to build a globally influential technology and innovation center. During this year’s plenary sessions of the National People’s Congress and the CPPCC, President Xi Jinping’s direction was to build the center, and Shanghai should also build the Zhangjiang Comprehensive National Science Center with global vision and standard to centralize scientific technologies and increase its global visibility. In line with Xi’s direction, Shanghai is working hard to accelerate the construction of the center. Internationalization is Shanghai’s characteristic as well as its advantage, and foreign companies and research institutes are its major force for building the center. Shanghai is also building a more open, efficient, and convenient mechanism for supporting all sorts of innovations, and integrating global innovative resources, and incorporating itself into the global innovative network. It’s manifested in four aspects:

The first is to introduce more enticing policies to attract foreign talents and entrepreneurs, further optimize and simplify the background checks for permanent residence permits; we have canceled the requirement for their job titles. We have also introduced policies to make it really convenient for foreign talents’ spouse and children to get permanent residence permits. Since the introduction of the foreign talent attracting policies in 2015, we have received eight times more applications than before. Not only do we need them for various industries, but we also need top global scientists and teams to come to Shanghai for scientific researches.

The second aspect is that we have incorporated global innovation elements into Shanghai’s own innovation system, promoting domestic and foreign companies to work together. We encourage multinational corporations to set up high-level research centers. In recent years, many foreign companies have set up their research centers here. We will also encourage existing foreign research institutes in the Asia-Pacific region or global research institutes, and we want them to cooperate with local universities and scientific research institutes to build laboratories together, jointly cultivate scientific talents. It’s greatly beneficial to Shanghai’s technological innovation for them to work together, both technology and talent wise.

The third aspect is to cultivate a free and open scientific and research environment. For example, we introduced a new inspection and quarantine management system, exempting companies with good credit records from inspection, as well as optimized the monitoring system and inspection policies for scientific research materials, making it more convenient to import and export such materials for research institutes.

The fourth aspect is to deploy an innovative network to promote Shanghai’s local companies, cultivate a batch of local-based international companies, strengthen their global resource integration capability, and support them to work together with foreign companies and research institutes to explore the overseas market.

Youth Daily: The guideline has introduced many policies regarding technological innovation, what are the key measures of supporting the construction of the technology and innovation center?

Fu Guoqing: In support of the foreign companies, especially foreign research institutes, to help build Shanghai’s economy, the guideline’s policies will better serve them in four major aspects:

The first is to keep attracting foreign companies and foreign research institutes to undertake Shanghai’s fiscal and technological projects. We will see domestic and foreign companies alike in their capabilities and qualifications in undertaking these projects according to China’s law.

Since the introduction of the 22 policies in 2015, the Shanghai Municipal Government has integrated the 19 key technological projects served by nine commission offices in Shanghai into one governmental service platform, through which foreign companies will learn all the information they need about the projects. For example, 120 foreign companies had undertaken 150 governmental technological projects from 2013 to 2015. Roche Pharma Research and Early Development Co received 9 million yuan government grant in developing anti-carcinogen. Its 7 billion yuan in sales ranked No.1 among foreign biological medicine companies in 2015.

In addition, in terms of preferential policies for additional deduction, hi-tech industries, and hi-tech little giant companies’ preferential tax policies, domestic and foreign companies are treated alike. As of the end of 2016, more than one thousand foreign companies have enjoyed tax exemption for science and technology policies and support from innovation grants, 800 of which have enjoyed preferential income tax policies, saving them more than 6 billion yuan in taxes.

Secondly, we will build platforms to serve and promote exchanges among foreign institutes. At the beginning of this year, we co-hosted seminars with the Shanghai Municipal Commission of Commerce and we invited some of the foreign institutes, briefed them on Shanghai’s policies regarding technological innovation and plans for the innovations, and we took advice and suggestions from them, then tried to work them out with the Shanghai Customs and the Shanghai Municipal Bureau of Local Taxation. Next we will support the foreign research institutes to dock with medium-sized companies, universities, and local research institutes, organize exchanges, and further improve the platform.

Thirdly, in support of the foreign research institutes’ industrialization bases to settle in Shanghai, we will also give them governmental grants and preferential policies to industrialize their scientific research findings patented in Shanghai.

Fourthly, we will invite foreign research institutes to build R&D conversion platforms and professional incubators. Multinational companies have been a major force of foreign research institutes. In recent years, Fortune 500 companies such as Intel, Google, and Roche Pharmaceutical, have started to work with local companies in establishing group innovation spaces and technologies, promoting local innovation and research finding conversion. We will make full use of foreign companies’ resource advantage, further integrate projects, technologies, talents, and capital. We will stimulate local companies’ innovations, help them to transform from depending on the real economy to technological innovation.

East Finance and Economics: What are the measures introduced in the guideline to protect intellectual property? What’s the main goal of the measures?

Ji Xiaoye: The practice of protecting patents, trademarks, and intellectual properties is a crucial part of a society’s business environment, a key consideration for foreign research institutes before they decide on investing. The guideline has introduced the following major measures regarding IP protection:

The first is to establish new mechanisms to help foreign research institutes get speedy patent ownership rights. The existing ways of achieving this is to apply to China’s State Intellectual Property Office. The second is to go through Shanghai Pudong New Area, this route is mainly for companies registered in Pudong, and those companies in biological medicine and high-end industrial manufacturing can apply for speedy patent ownership confirmation to protect their lawful rights in time. The second is to impose more severe punishment over intellectual property law violation, and introduce diversified solution to IP disputes.                                                                                                                                                                                                                                                                                                                     

The purpose of introducing the policies is two-fold: The first is to create a better business and IP protection environment; the second is to invite foreign research institutes to help and build Shanghai’s technology and innovation center, and patent their IPs and commercialize them in Shanghai.