Shanghai's outbound investment push enters new era

Shanghai companies' outbound activities are transitioning from simply exporting products to a higher level of globalization in terms of capital, brands and services, He Dongbin, deputy director of the Shanghai Commission of Commerce, said during a news briefing on Friday.

In the metropolis, trade and investment have become more deeply integrated. In other words, companies are strategically coordinating outbound investment with trade in goods and services. Therefore, trade in intermediate goods has played an increasingly important role in boosting Shanghai's foreign trade, He said.

The shift toward asset-light investment has become more noticeable. Sectors such as technical services, the digital economy, and cultural creativity, which are asset-light yet high-value-added, have become key drivers of Shanghai's outbound investment.

For example, business development transactions made by companies based in Zhangjiang of Pudong New Area now account for nearly 10 percent of the global total. Meanwhile, Pudong has become a hub accommodating several leading Chinese short drama companies with a strong overseas presence.

To address this trend, Shanghai has introduced service packages to help these companies better protect their intellectual properties and understand the cultural norms of their target markets. This has facilitated the global expansion of the Shanghai-based professional service providers covering finance, law and accounting, He said.

Investment destinations have become more diversified. Apart from the mature European and US markets, Shanghai companies are extending to the Association of Southeast Asian Nations, the Middle East and Latin America. Countries and regions involved in the Belt and Road Initiative have emerged as new engines of incremental investment.

Proactive compliance management is another highlight of the companies' overseas expansion. In response to overseas regulations concerning ESG, cross-border data flows and anti-trust, enterprises are proactively engaging law firms and accounting firms for due diligence and compliance. The level of attention that Shanghai enterprises have attached to compliance management has increased by 20 percentage points compared with that of five years ago, He said.

Shanghai has established an overseas direct investment filing and management system since 2012. To date, the city has filed nearly 7,000 outbound investment projects, with a total planned investment exceeding $40 billion.

Over the past three years, Shanghai has processed about 800 filings annually, covering new establishments, capital increases, and acquisitions, with an average annual filing value of about $6 billion. In the first half of this year, Shanghai registered 383 newly established or acquired outbound projects, marking a 105 percent year-on-year increase in investment value.

The municipal government has established a "1+3+X" system to better facilitate companies' overseas expansion. Earlier this year, it launched the "Shanghai Desk" smart overseas service platform by using an artificial intelligence agent to integrate search, Q&A, and application assistance. Over the past seven months, the platform has attracted nearly 100,000 registered users and over 490,000 visits.

The city has also built three sub-platforms located in Pudong, Hongqiao and Lin-gang Special Area of the China (Shanghai) Pilot Free Trade Zone, with each performing specific roles. Pudong focuses on institutional innovation and corporate headquarters aggregation. Lin-gang pilots cross-border data flows and non-resident mergers and acquisition loans. Hongqiao strengthens the ties with the Yangtze River Delta region and empowers cross-border e-commerce.

Support networks formed by overseas institutions, industry associations, key enterprises, and agencies have also been built in the target markets to further complement the government services, according to He.