The Shanghai Lawyer
Vol. 2 , No. 1 - January 7, 2003
Shanghai is one of the most dynamic and fastest growing mega-cities in the world. It is quickly establishing itself as the leading financial and economic center of the Far East, on par with the likes of Paris and New York. The Shanghai Lawyer is a bi-weekly publication providing up-to-date newsworthy articles and legal information to professional and business persons around the world. We hope you enjoy the newsletter and welcome your comments and feedback.
Letters from Shanghai
As a testament to how modernized or Westernized Shanghai is becoming, one need look no further than the way the locals are beginning to behave during the traditional Christian Christmas celebration during the past couple weeks. Shopping malls were full, sidewalks impassable and traffic was at a crawl through the major shopping and entertainment areas - even churches were filled to the rafters. On Christmas Eve, a friend and I had planned to go to a local church to listen to a choir. Before we had even arrived at the grounds, we could hear the music being pumped out by speakers outside the church and onto the street. As we got closer we understood why as the church was packed and their were literally hundreds of Shanghainese milling about outside and trying to get a peek inside one of the stain glassed windows. We managed to squeeze ourselves around the masses and slip round to the back of the church and up some stairs to the second and third floors to see if we could get a view of the choir downstairs. Both upper floors had large rooms packed with people sitting in rows of chairs listening to the music on speakers and watching the choir on large-sized video screens. I cannot say how many actual Christians were in the crowds, or even how many understood the words of the songs being sung, but they were definitely an attraction even if more from curiosity than Christian beliefs.
Along the popular bar street Maoming Nan Lu, Christmas revelers were again out in full force, with persons decked out red Santa hats and carrying glow sticks. Vendors and bar owners must love the locals embracing the new holiday as it puts on the calendar one more date to chock up sales. Still one has to wonder if all the hoopla and commercialism would sit well with the Great Helmsman, Chairman Mao, or whether it would have him turning in his grave. One thing is for sure, there is no turning back.
By - Blaine Turnacliff
You may contact Blaine directly at bturnacliff@lehmanlaw.com
Did you know?
Residential apartments price have increased on average 25 % in the past year in Shanghai. Shanghai does not levy capital gains taxes for gains on the sale of residential property. |
"Going Out" for Shanghai Companies
Local government is pushing companies from Shanghai to invest in projects abroad as part of a 'going out' strategy. Over the past few years, multinational companies have been encouraged to invest in Shanghai. Now it is time for local companies to start investing abroad, a trend that can be seen clearly as more and more local companies are going worldwide.
More than 400 local companies have participated in construction and labor export projects in more than 161 countries and regions. Local companies invested more than US$130 million abroad in 2002. This is a 115 percent increase from last year, according to the Shanghai Foreign Economic Relations and Trade Commission. "'Going out' is necessary for Shanghai's sustainable development and for companies to sharpen their competitive edge to face the challenges raised by China's entry into the World Trade Organization," said Shanghai Vice Mayor Jiang Yiren in Shanghai Daily.
Shanghai hopes to see 500 more projects, totaling a value of US$1 billion from 2003 to 2007. To fulfill these goals of increasing overseas investment, the city government said they have relaxed quotas on local companies wanting to buy foreign currencies for overseas investment. "Instead of only taking advantage of lower cost in some resource-rich developing countries, Shanghai companies should also tap markets in developed countries to promote their own brands and technologies," Shanghai Daily quoted Zhu Xiaoming, director of the city's trade and investment authority.
(Source: Shanghai Daily)
Shanghai Essentials
The import business is still an area that is off limits for foreign companies. The main exception to this restriction is for foreign companies to set up their operation is one of the free trade zones located up and down the east coast of China. The oldest and best established is the Waigaoqiao located in Pudong, in the east part of Shanghai. Foreign companies can establish 100 % owned trading companies in this free trade zone, which allows them the right to bring goods into China and distribute throughout China. The company can establish their own sales team and provide after sales servicing. It can receive payment in local RMB currency and remit after tax profits overseas. One of the greatest benefits is the extremely favorable tax incentives offered to these trading companies. |
Shanghai Sets New Record for Foreign Investment this Year
Shanghai attracted about 11 billion USD in foreign investment during 2002, up 37 percent from last year. Statistics show that, Shanghai municipality has approved contracts for 2,824 foreign-invested projects, an increase of 28.6 percent over the same period last year, involving overseas capital of about US$ 75 billion in foreign investment.
Overseas investment in the manufacturing and service industries has risen steadily, according to statistics. The drastic increase in foreign investment can be attributed to the rewarding profits and good performances of the foreign enterprises in Shanghai.
(Source: Chinabiz.org)
Hong Kong Developers Surge into Shanghai With New Projects
With Hong Kong's real-estate market in rough shape, a growing number of developers from the city are increasing their investments in Shanghai to take advantage of the booming local market. Real-estate prices in Shanghai have risen by about 20 percent over each of the last two years and still show no sign of retreating, a strong contrast to Hong Kong, where property prices have plunged by nearly 50 percent since the Asian financial crisis began in 1997.
In 2002, housing sales in Hong Kong declined for the fifth consecutive year, making Shanghai a popular place for developers from the special administrative region to invest. Starting next month, Hong Kong real-estate conglomerate Hang Lung Group Ltd will start work on a 2-billion-yuan project to construct twin-tower office buildings on top of the Grand Gateway Plaza in Shanghai's Xujiahui area.
In mid-March, a subsidiary of Hang Lung will start construction on a sister tower for the office building atop Plaza 66, currently the tallest building in Puxi. The company is so bullish on the Shanghai market that it has adjusted its plans for the building, making it 60 stories tall instead of 46, as originally proposed.
Among the other heavyweight investors, New World China Land Ltd. plans to start building 3 billion Yuan (US$362 million) worth of commercial and residential developments in Shanghai this year.
"The office market in Shanghai is still on an upward trend," said Jeff Yau, an analyst at South China Research Ltd. "The property market should be generally positive in the coming decade." There is a lot of confidence in the Shanghai real estate market, despite fears the industry could be developing a bubble.
(Source: South China Morning Post)
Shanghai legal problem? Tell us about it. . . Mergers & Acquisitions * Incorporations * Commercial Contracts Contact Blaine Turnacliff at bturnacliff@lehmanlaw.com |
Shanghai - Into the Big Leagues
After almost a decade of witnessing Shanghai's double-digit growth, it is still surprising to hear the new plans to propel this city into the top-league of world-class cities. The endless comparisons between Hong Kong and Shanghai are over. Hong Kong can - if it is lucky - retain its position of a financial center, like Zurich. Singapore will only be a regional center, but Shanghai is in a different league. From now on it will take New York and London as its benchmarks.
Shanghai set some firm criteria for entering this top-league. The city will host an international conference twice a week, half of its population will enter universities and 40 percent will speak English. Those who think it is not possible should think back a mere decade ago, when the TV-tower in Pudong was under construction and apart from the Union Building and the Shanghai Center, the city had no office space on an internationally acceptable level. Lu Jia Zui, Shanghai's financial center in Pudong, was little more than a dream. We all admired the city's ambitions, but had severe doubts about their feasibility. A few years later though Lu Jia Zui was a fact. The empty office buildings during the financial crisis are now all packed and there is a need to build more skyscrapers.
Of course China used some regulatory arm-twisting to force the international banks to move to Pudong, followed by law firms and other service providers. But it worked. The next phase is going to be tougher though, because much of what makes a metropolis a real international city cannot be ordered top down. The major hurdle is still a regulatory one: the convertibility of the Renminbi. But other hurdles involve greater degrees of freedom than China has seen up to now. A cultural climate that is no longer hindered by ignorant bureaucrats; financial information to enable a better grasp of what is really going on; and transparency so that media are no longer curtailed by petty short-term interests of listed companies.
(Source: Chinabiz.org)
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Private Firms Doing Foreign Trade Increases Over 500 Percent
Shanghai's privately-owned companies engaging in export business huge increased 5.2 times over last year, according to the General Administration of Customs.
At the end of July last year, only 68 privately-owned companies in Shanghai were entitled to transact foreign trade, a number which surged to 1,602 by the end of October this year, an average increase of 100 a month. A customs officer attributed the fast-growing share of private firms in the foreign trade sector to new policies adopted by the Shanghai municipal government offering fair and open market competition for businesses with all types of ownership.
Under a policy introduced last August, all Chinese companies set up in Pudong a year before with a registered capital of more than 3 million Yuan (361,445 US dollars) are eligible to conduct import and export transactions. An amendment announced this March reduced the amount of required capital to 1 million Yuan (120,480 US dollars) for commercial and trading companies and to 500,000 Yuan (60,240 US dollars) for manufacturing businesses. At the time China first permitted private firms to do foreign trade in 1999, only five companies in Shanghai were involved.
(Source:Xinhua News Agency)
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