Shanghai Enhances Business Environment to Attract Multinational Companies
Shanghai is taking significant steps to improve its business climate, aiming to solidify its status as a prime location for multinational companies. The city announced its “2026 Action Plan for Creating a World-Class Business Environment,” which includes 26 new measures to simplify government processes, promote fair competition, and align local regulations with global standards.
According to recent data from the World Bank, released in late 2025, Shanghai has achieved top ratings in 22 specific areas of business assessment. The city outperformed other major financial centers like Singapore, New York, London, and Hong Kong in terms of efficiency.
The 2026 plan focuses on reducing administrative hurdles and features an innovative system of “application-free incentives.” By utilizing data sharing across departments, the government can identify businesses that qualify for subsidies and tax incentives, automatically depositing funds into their accounts without the need for paperwork.
For instance, Black Lake Technologies, a Shanghai-based industrial software firm, received 3.85 million yuan (about US$550,496) in subsidies through this new automated system. CEO Zhou Yuxiang expressed gratitude for the system, saying it allows his company to prioritize innovation over administrative challenges.
Foreign Investment on the Rise
Multinational corporations are increasingly investing in Shanghai due to its reliable regulations and strong supply chain efficiency. French automotive supplier Valeo is expanding production at its new manufacturing site in Jiading District. Valeo Group’s CEO, Christophe Périllat, highlighted the city’s favorable business environment as a major factor in their increased investment.
Germany’s Krohne Shanghai has also made significant investments, dedicating US$5 million to build a new factory in the Songjiang District. This facility will serve as the Asian manufacturing hub for their electromagnetic flowmeters. Chen Jianlong, the head of Krohne’s Songjiang location, mentioned that new tax policies on profit reinvestment were beneficial, allowing them to qualify for tax credits exceeding 3 million yuan.
To address market stability, the 2026 action plan introduces stronger regulations against unfair low-price bidding. It includes measures to optimize bid evaluations and tackle “professional profiteering” in compliance reporting, ensuring a fair market for all companies.
Domestic tech companies are also leveraging Shanghai’s improved regulatory framework to grow internationally. Westwell Technology, a firm specializing in autonomous logistics, is now active in 30 countries. Chairman Tan Limin shared that the government reached out to them early on to offer support related to talent and industry development.
The Shanghai Development and Reform Commission indicated that the new plan consolidates over 1,000 previous objectives into 26 streamlined goals. One of the main focuses is the digitization of government services. For example, changing corporate registration can now be done online in under 10 minutes, with information automatically updated across different departments.
Experts believe the new plan signals Shanghai’s commitment to high-quality development and is crucial for attracting more foreign investment. Bertrand Régnier, leader of EY China’s Inbound Platform, stated that these initiatives will foster a mindset of “invest with confidence” as China embarks on its 15th Five-Year Plan for economic and social advancement from 2026 to 2030.
