Shanghai Free Trade Zone and Guangdong Free Trade Zone have caught the attention of foreign investors seeking to enter a more liberalized Chinese market. Shanghai FTZ and Guangdong FTZ are regulated by similar policies, important distinctions exist between the two zones, and foreign investors must be careful to select the location best suited for business needs.
I. Different Composition between Shanghai and Guanggong FTZs
The Shanghai FTZ recently expanded to include larger portions of the city and is currently divided into three sections: Lujiazui, Jinqiao and Zhangjiang. The financial leasing industry is one of the most popular and promising industries in the Shanghai FTZ. To date, more than 400 financial leasing companies have been established within the zone with a total registered capital of more than RMB 30 billion.
Similarly, the Guangdong FTZ is split into three subdivisions: Guangzhou Nansha New District, Shenzhen Qianhai Shekou, and Zhuhai Hengqin New District. The Guangzhou Nansha New District was established to allow for liberalized foreign investment in finance, shipping, logistics, and international trade. The Zhuhai Hengqin New District focuses on tourism, recreation, and technology.
II. Different Policy Benefits between Shanghai and Guanggong FTZs
1. Shanghai Free Trade Zone
In order to attract more foreign investment, Shanghai has sought to lessen restrictions for foreigners seeking visa or residence permits, particularly within the Free Trade Zone. Starting in the end of September, foreign qualified individuals may receive employment offers by Shanghai FTZ companies via electronic invitation, and will be provided port visas upon arrival. Under the new regulations, companies based in the Shanghai FTZ may also arrange exit and entry proceedings directly with China’s Exit and Entry Bureau.
To keep its leading position, the following preferential policies have been implemented exclusively in the Shanghai FTZ:
(1) Financial leasing companies are allowed to conduct commercial factoring businesses that are relevant to their main business.
(2) Support overseas financial leasing, encourage different types of financial leasing companies to expand the cross-border use of RMB.
(3) Financial leasing companies may open a special account for cross-border RMB and are free to borrow money overseas.
(4) Financial leasing companies seeking to provide external guarantees are no longer required to obtain the pre-approval with the State Administration of Foreign Exchange.
(5) The Shanghai FTZ is charged with handling the approval procedures for the establishment of foreign-invested financial leasing companies whose registered capital is less than US$ 300 million.
2. Guangdong Free Trade Zone
One of the greatest differences between the Shanghai FTZ and Guangdong FTZ lies with the policy regulating investment from Hong Kong and Macau. As the Guangdong FTZ aims to strengthen integration between Hong Kong, Macau and Guangdong, which is directly adjacent to the two territories, investment from these two jurisdictions is liberalized to a larger extent.
Special policies for Hong Kong and Macau Investors include:
(1) Hong Kong and Macau service providers are allowed to set up wholly foreign-owned international shipping enterprise within the FTZ;
(2) Hong Kong and Macau service providers may set up intermediary service institutions for studying abroad at one’s own expenses within the FTZ;
(3) Guangdong FTZ’s Nansha New District or Hengqin New District may borrow RMB funds from Hong Kong or Macau, compared to the previous restriction of borrowing RMB only from within mainland China.
Contact Us
If you have further inquires, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website english.tannet-group.com, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to tannet-solution@hotmail.com. You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020,Dongmen Rd South, Luohu , Shenzhen, China.
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