In the words of a Shanghai official, the municipality "has a magnetic attraction" to big multinational corporations.

Statistics show that, through September, 153 Fortune 500 enterprises have invested in 513 projects in Shanghai, and the contracted funds amounted to US$8.6 billion.

Pudong New District, the most popular place for foreign investors in Shanghai, attracted US$7.5 billion from 1996 to 1999.

General Motors and Kodak (China), two other multinational corporations, have found homes in Pudong, and each has invested more than US$1 billion in industrial projects.

In its new plan for attracting foreign funds, the Shanghai municipal government has pointed out that more attention must be paid to quality rather than quantity, a China Central Television (CCTV) report says.

The municipal government encourages foreign firms to invest in large-scale and technology-intensive industrial projects and, through these investments, promotes the development of pillar industries and industries using new and high technology.

To encourage investment in Shanghai, the government has spent 150 billion yuan (US$18.12 billion) in the past five years to improve basic facilities such as public transportation, communications, water supply, power and gas and also the environment.

Hu Wei, head of the Pudong New District government, said that new foreign-funded projects in his district have a large amount of technological contents, with 80 percent of the manufacturing projects utilizing technological advances commonly used in the 1990s.

Hu said that foreign firms have invested in a broad spectrum of businesses, including automobiles, communications, bio-medicine, new materials, finance, trade, securities, insurance, services, education, health and agriculture.

The world's top 100 multinational corporations have invested in about 200 enterprises in Pudong, and the average amount of investment made was US$3.2 million, Hu said.

He also mentioned that 22 multinational corporations have already located their regional headquarters in Pudong.

Some, like IBM and Intel, have also moved their research and development centres there.

In Hu's opinion, these multinational corporations have already viewed Pudong as an important arena for entering the Chinese market and for conducting international competition.

Zhu Xiaoming, chairman of Shanghai Municipal Foreign Economic and Trade Commission, said that the scale of the investments made by foreign firms in Shanghai has apparently expanded.

During the ninth Five-Year Plan period (1996-2000), Shanghai attracted US$25.6 billion of contracted funds, a 150 percent increase compared with the eighth Five-Year Plan period (1991-95).

Zhu said the average amount of investment made in projects also increased from US$1.3 million to US$3.5 million, adding that the four foreign-funded investment projects, each exceeding US$1 billion, were also made in the ninth Five-Year Plan period.

According to Hu, the structure of projects receiving foreign funds has become sound, with US$11.7 billion going to industrial projects from 1996 through 1999. That figure represented 55.6 per cent of all the foreign funds received by Shanghai. The rest was used in the service sector.

In the past five years, besides industrial projects, foreign investments were made in fields such as commerce, trade, consultation services and real estate.

Shanghai has 54 foreign-funded financial companies, and 24 of them are allowed to handle the Chinese currency, Hu said, adding that three Sino-foreign joint venture trading companies have also been allowed to operate in a pilot project.

Hu noted an increase in the technological contents of these projects, pointing to information technology, biological engineering and new materials.

Shanghai's success in attracting foreign funds had been attributed to its efficiency, minimum bureaucracy and its adherence to prevailing norms in the international business community.

During the 10th Five-Year Plan period (2001-05), Hu said, Pudong will work to persuade more multinational corporations to relocate their regional headquarters to Pudong.

And Zhu added that a new intermediary agency, the Shanghai Investment Promotion Centre, has just been founded to negotiate with foreign-funded firms, because such an agency can act more flexibly than a government agency.

(China Daily 12/08/2000)