European companies urged to back city’s ambitions

The second edition of the Shanghai Position Paper, published on Dec 13 by the European Union Chamber of Commerce in Shanghai, has sought to encourage more foreign-invested enterprises in the city to invest in research and development as well as attract more overseas talents to aid the city’s development into a global innovation hub.

The paper represents the views of almost 600 member companies of the European Union Chamber of Commerce in Shanghai. It contains their latest concerns, assessments and recommendations of European businesses operating in Shanghai.

“In order for it to succeed in its ambitious goal of becoming a global center, Shanghai will need the strong support and participation of foreign businesses, investment and talent,” said Michael Adams, chairman of European Chamber Shanghai Chapter.

As the paper pointed out, Shanghai is well-positioned to achieve this target as it is already host to more than 400 foreign-invested R&D centers and boasts a high annual number of graduate talents in the science, technology, engineering and mathematics fields.

According to the European Chamber’s Business Confidence Survey 2016, European companies remain interested in locating and maintaining key R&D activities in Shanghai — 54 percent of them see the city as an attractive location to establish local, regional or global R&D centers.

“Strong foreign R&D investment will also be needed if Shanghai is to meet its goal of increasing its research intensity to 3.7 percent of its gross domestic product by 2020,” said Adams.

To move forward and attract more investment from foreign companies, especially those from Europe, Adams also suggested that the local government should allow foreign-invested enterprises to participate in domestic, key-development projects.

The European Chamber Shanghai Chapter also stated that Shanghai’s ability to attract and retain global and domestic talent will be the key to it achieving its ambitious goals as a knowledgebased, international business center.

Shanghai had in July 2015 implemented new entry and exit regulations aimed at easing the visa requirements for skilled foreign talent in Pudong district before extending these regulations to the rest of the city in October 2015.

An additional series of relaxed policies regarding visa requirements and permanent residency for overseas talents has also been introduced in the past year.

“The recent improvement to the immigration system facilitates locally-invested companies to bring in the best talents at both senior and junior levels and was therefore a welcome development,” said Adams.

“However, Shanghai needs to continue to lead the way in further enhancing the regulations regarding visas and working permits for foreign employees and hukous for Chinese employees. If it does not, it will remain at a disadvantage to other global cities in the fight for talent.”

The chamber found that European companies in Shanghai are generally faring well. Despite a decrease in profit margins, most companies are still profitable.

In 2016, 71 percent of Shanghai-based European companies reported positive earnings before interest and tax, while 20 percent reported substantial increases in revenue, 3 percent lower than in 2014, according to the European Chamber’s Business Confidence Survey 2016. Among those companies, 57 percent of them declared themselves to be small- and medium-sized enterprises.

“We are looking forward to seeing more measures that can help foreign and domestic SMEs benefit equally and receive more accessible financing tools from the local government,” said Adams.