In light of evolving global economic dynamics, an increasing number of MNCs are relocating key operational functions to Asia-Pacific, on February 17, 2025, the Shanghai government issued the Several Measures to Support the Upgrading of Regional Headquarters of Multinational Companies in Shanghai (hereinafter, the Measures), which was effective from March 1, 2025 to February 28, 2030. This article introduces the Measures and offers professional commentary from a legal and practical perspective.
I. Policy Context: From Functional Presence to High-Level Headquarters
The Measures aim to reinforce Shanghai’s competitiveness in this trend by encouraging regional headquarters (RHQs) to evolve into high-capability entities—such as Asia-Pacific headquarters or global divisional headquarters—with substantial decision-making and operational authority.
The strategic emphasis has shifted from sheer quantity of headquarters to the quality and functional depth of these entities, aligning with the global shift of MNCs from cost centers to value-creation hubs.
II. Key Policy Highlights
In terms of legal practice, the Measures have the following highlights:
1. Function-Based Incentives to Encourage UpgradingFor the first time, incentives are calibrated according to the actual functions carried out by the RHQ. For example:1) Upgrading a China RHQ to an Asia-Pacific HQ with two or more functional capabilities qualifies for a RMB 3 million one-time grant;2) Recognition as a global divisional HQ may be rewarded with up to RMB 10 million;3) Addition of R&D or treasury management functions may each attract an RMB 3 million incentive upon evaluation.
2. Comprehensive R&D Support EcosystemThe Measures offer robust support for RHQs engaged in R&D activities, including:1) Tax incentives (e.g., 15% corporate income tax for qualified high-tech enterprises);2) Government co-funding for basic research and collaborative innovation;3) Support for establishing municipal-level laboratories and innovation centers;4) Fast-track IP services, including prioritized patent examination.
3. Facilitation for Treasury Centers and Cross-Border FinanceThe Measures proactively support the creation of treasury centers, promoting:1) Establishment of RMB and foreign currency pooling mechanisms;2) Enhanced cross-border cash flow automation;3) Expanded use of Free Trade Accounts (FTAs);4) Preferential treatment in forex risk management tools and cost reduction.
4. Data Flows and Emerging Trade ModelsNotably, the Measures endorse cross-border data flow facilitation through "green channels," and encourage offshore trade, bonded maintenance, and remanufacturing pilots. Support is also extended to companies applying for AEO certification or engaging in cross-border e-commerce.
III. Institutional Support and Business Environment Optimization
In addition to direct incentives, the Measures include softer but equally important mechanisms to support MNC operations:1) APEC Business Travel Card and multiple-entry visa facilitation;2) Family residency support for senior foreign executives;3) Tailored “service packages” and designated government liaison officers;4) “One-firm-one-policy” upgrade roadmaps based on annual evaluations.
These measures demonstrate a maturing service philosophy in Shanghai’s foreign investment environment.
[Comment]
The Measures mentioned that Shanghai become a city of “high-capability headquarters” is not just about location—it’s about empowering substance over form. For MNCs, this presents not only policy opportunities but a call to deepen operational roots in China’s most internationalized city. However, several practical considerations deserve attention:1. Lack of Clarified Evaluation CriteriaWhile the functions qualifying for incentives are named, specific assessment standards for “treasury management” or “innovation platforms” remain pending in detailed guidelines.
2. Cross-Regulatory DependenciesMany measures rely on coordination with taxation, foreign exchange, and IP authorities. Policy effectiveness may vary based on regulatory interpretations and inter-agency execution.
3. Competitive and Selective AllocationMost grants and incentives are subject to application, evaluation, and ranking. Firms must present comprehensive and verifiable documentation to demonstrate function deployment and business substance.
We will continue to monitor the development of these policies and assist our clients in capitalizing on them through legally sound and commercially viable strategies.