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Shanghai Free Trade Zone Introduction

Updated:2018-7-12 16:47:47    Source:www.tannet-group.comViews:339

Shanghai Free Trade Zone (FTZ) is a free trade area in Shanghai, China. The zone integrates four existing bonded zones in the district of Pudong - Waigaoqiao Free Trade Zone, Waigaoqiao Free Trade Logistics Park, Yangshan Free Trade Port Area and Pudong Airport Comprehensive Free Trade Zone. It is the first Hong Kong-like free trade area in mainland China. The zone cancels out a number of financial requirements for setting up a company in China. Therefore, foreigners who are going to set up businesses in Shanghai are advised take this free trade zone into consideration.

Foreign Investment in Shanghai FTZ
The zone introduces a number of reforms designed to create a preferential environment for foreign investment. On 18 September 2013, the State Council of China published a list of 18 service industries to receive more relaxed policies in the zone, including medical services, value-added telecommunications, ocean freight & international ship management and banking. Another important feature of the zone is found in its "negative list" approach to foreign investment, which is permitted in all sectors unless explicitly prohibited by the inclusion of a given sector on the Negative List published by the Shanghai Municipal Government. The 16 sectors thus named as restricted or prohibited for foreign investment are organized as follows:

Agriculture, forestry, animal husbandry and fishery
Production and supply of power, gas and water
Wholesale and retail
Transportation, warehousing and postal services
Information transmission, computer services and software
Real estate
Leasing and commercial services
Scientific research and technical services
Water conservancy, environmental, and public facilities management
Health and Social Industries
Cultural, sports and entertainment industries

Corporate Establishment
The zone cancels out a number of financial requirements for setting up a company in China, including the minimum registration capital of RMB30,000 for limited liability companies, the RMB100,000 minimum for single shareholder companies, and the RMB5 million minimum for joint stock companies. Moreover, under the FTZ's new capital registration system, foreign investors are no longer required to contribute 15-percent capital within three months and full capital within two years of the establishment of a foreign invested enterprise (FIE).

Instead, shareholders of companies established in the zone may agree upon the contribution amount, form, and period of contribution at their own discretion. However, shareholders are still liable for the authenticity and legality of capital contributions and will be held accountable to the company within the limits of their respective subscribed capital or shares.

In addition to these financial reforms, the FTZ also introduces a simplified procedure for foreign investors to establish a company in China. The "one-stop application processing platform" unique to the zone requires that all application materials be submitted to and handled by the Industry and Commerce Authority (AIC) in the zone. The relevant approval and filing procedures are then conducted via inter-departmental circulation, after which the various licenses and certificates are issued to the applicant(s) by the AIC.

This means that applicants may obtain all the necessary documents for company establishment in one place, in contrast with outside the zone where applicants must run around between different authorities for the issuance of various certificates.

Advantages of Shanghai Free Trade Zone
Benefit from China’s latest innovation on encouraging foreign investment, now foreign entities can open a limited company in Shanghai’s Free Trade Zone with no real capital requirements. This enables foreign companies to have an easy, low-risk and fast setup into to the Chinese market. The following are the major advanyages for register a company in the free trade zone.

(1) Taxes: Mainly for import and export companies, zero customs, tariff reduction and circulation taxes are lower , particularly lower transportation costs.
(2) Time-frame: The registration will complete in 1 week, except for import and export license takes 2 weeks
(3) Scope of Business:There are no limits on the scope of business
(4) No Registered Capital: Low registered capital with no requirement to specify when it needs to be injected. Basically no need for any registered capital;
(5) Currency Exchange: Free currency exchange with no Limitations.

Contact Us
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