Briefing on Shanghai's Commerce and Investment Shang Yuying Chairwoman Shanghai Municipal Commission of Commerce

Reviewof2015 Presenting an economicly dynamic and inclusive metropolis to the world The international trade center's core functions of trade pooling, resource allocation and trade innovation has been basically established

Taxation generated by the commerce and trade industry: RMB 173bn, 17.5%of the city's total RMB tn Total Social Retailling Added value created by the commerce and trade industry: RMB bn, 16.8%of the city's total End consumption's contribution to economic growth was elevated to nearly 70% The Effect of Consumption as a Driving Force is Becoming More Evident

Steady Expansion of Market Circulation Total Commercial goods sales USD BN 6.4% growth y-o-y ， 13.9% average annual growth for the past five years % Platform economy transaction volume: RMB tn up by 11.4% from last year over 60% of the buyers and vendors were from Yangtze River Delta E-commerce transaction volume: RMB tn up by 21.4% from last year 3.9 times of that in 2009

Rising Level of Exhibition and Convention Industry million m The total floor area grew by 22% year on year 1.9 times of the number in 2010 Ranking among the top in world in terms of number and total floor area exhibition number total floor area 2015 ：

Exhibition area of international shows accounts for 74.3% of China's total Exhibition area of international shows amounted to million square meters, rising by 24.8% year on year, accounting for 74.3% of China's total and up by 5.5 percentage points compared with that of 2010.

Party Secretary Han Zheng paid a site tour to the 3rd CSITF.

Rising Share of Foreign Trade Comparison of Trade in Goods between the 11th and the 12th Five-year Plan Period USD “11th five-year”“12th five-year” 197bn bn Export USD “11th five-year”“12th five-year” 254.8bn bn Import USD “11th five-year” “12th five-year” 451.7bn bn Import and Export The import and export of goods take up as high as 11.4% of China's total, top-ranked among all the mainland cities.

Trade in services totaled USD 200bn, a year-on-year growth of over 12%, accounting for 30% of China's total. The share of trade in services in foreign trade exceeded 30% for the first time.

A Good Momentum of Foreign Investment Attraction and Outbound Investment Whole year contractual foreign investment grew by 86%, 3.8 times that of USD 58.9bn Outbound direct investment grew by 3.7 times year on year, leading the whole nation. It was 23.7 times that of USD 57.3bn Foreign Investment Attraction Outbound Investment

A Good Momentum of Foreign Investment Attraction and Outbound Investment Newly-signed overseas contracted projects valued at USD 11.1 billion, surpassing 100 billion threshold for 8 years in a row. Foreign capital in actual use reached USD 18.5 billion, a year-on-year rise of 1.6% and realizing growth for 16 consecutive years.

Vice Mayor Zhou Bo paid a field trip to foreign invested company.

community precision marketing service- related consumpt ion tax refund consumption environment Firstly, new consumption scenario has been formed with smart commercial areas, community precision marketing and service-related consumption as the driving forces. smart commercial area 上 海 市 商 务 委 员 会上 海 市 商 务 委 员 会 Shanghai Municipal Commission of Commerce

Smart Commercial Areas Leading the Transformation of Traditional Commercial Areas Sales Growth Rate % pilot projects on smart commercial areas have been rolled out. 65 commercial areas with unique characteristics have been selected. Downtown business centers, such as West Nanjing Road and Central Huaihai Road have seen positive growth of sales volume. The growth rate of sales in 2015 was 2.8 percentage points higher than that of Shanghai Shopping Festival successfully connected thousands of commercial areas and shopping malls.

Community Precision Marketing Driving the Upgrade of Domestic Consumption Community commercial sales volume accounted for over 50% of Shanghai's total. others Community commerce tended to be more sophisticated, integrated and platform-based. Its sales volume exceeded 50% of that of the whole city. Large e-businesses joined hands with brick-and-mortar stores and adopted new business model, such as "ordering online and picking up at physical stores" and "ordering online and distributed by physical stores". The number of smart vegetable market outlets exceeded 500.

New Driving Force: Service-related Consumption New models like "Internet +" and O2O have stimulated new demands. Numerous leading O2O companies emerged in catering, tourism, culture, education and other life-related service sectors. Online transaction volume of service-related consumption reached RMB billion in 2015, growing substantially by 51.2%. Online transaction volume of service- related consumption grew by 51.2%

Departure Tax Refund for Foreign Tourists Shanghai is the first city in China where departure tax refund for foreign tourists was realized stores are available to get tax refund foreign tourists have practiced tax refund in T he sales volume of tax refunded items was RMB million

Favorable Consumption Environment Shanghai Commercial Credit Public Service Platform was fully operational commercial cases related with IPR infringement and counterfeit products have been investigated in Trans-department mechanism on fighting infringement and counterfeit products has been established.

Secondly, new foreign trade structure has been formed with trade in service, general trade and consumption goods import as the driving forces. trade in service general trade consumption goods impor t trade facilitation 上 海 市 商 务 委 员 会上 海 市 商 务 委 员 会 Shanghai Municipal Commission of Commerce

New Growth Point: Trade in Services 货物进出口 import and export of technology offshore service outsourcing 2.9 times of that of times of that of 2010 USD 11.3 bn USD 6 bn The average annual growth rate of trade in services was 9.3 percentage points faster than that of trade in goods. The import and export of technology and offshore service outsourcing reached USD 11.3 bn and USD 6 bn, respectively. The import and export of new types of services, such as finance and insurance, kept double digit growth annually.

General Trade’s Driving Force on trade competitiveness General Trade of High Value-added Products 47.4% 7.2% higher than that of % higher than national average Export of High and New-tech Products 43.7% New Advantages: technology, brand, quality and services as core competitiveness.

No.1 in China in terms of consumer goods imports Annual growth of consumer goods imports: 20.8% Total imports of consumer goods in2015: USD 42.4 bn, 30% of China's total Fast development of Cross- border e-commerce has cleared the channel from import to the counter and is influencing the whole country.

Improving Trade facilitation Law enforcement list is launched and one district's registration allows company to operate in 4 districts 40 Innovative measure for trade regulation The Launch of international trade single service window 1.0 and 2.0 Over 1200 companies Further expansion of characterized supervision system based on the status of goods Handling, moving and warehousing fees are waived 1382 businesses Further reduce administrative fees in imports and exports

Thirdly, Service Economy, Headquarters Economy and R&D Economy Have Become the Underpinning Forces that Are Driving the Upgrading of Foreign Investment Increasing contribution by headquarters economy Growth spearheaded by Foreign investment in the service sector Innovation in foreign investment administration has triggered new enthusiasm among foreign investors Establishment of international science and innovation center assisted by Foreign invested R&D centers 上 海 市 商 务 委 员 会上 海 市 商 务 委 员 会 Shanghai Municipal Commission of Commerce

Spearheading Growth of Foreign investment in the service sector service industry others Contractual foreign investment in service sector and paid-in capital in service sector shot up by 34.4% and 12.5% respectively higher than that of the manufacturing sector 41.7% and 9.6% Telecom and old age care industry have made breakthroughs in terms of paid-in foreign capital, which propelled the service oriented industrial restructuring

Greater Contribution of the Economy by Headquarters Economy Newly certified MNC's regional headquarters within the past 5 years: 230 By 2015 年， there were altogether 535 MNC's regional headquarters certified in Shanghai, 41 of which were at Asian Pacific level and above ， making Shanghai the most regional headquarters potent city in mainland China 1% 9% 15% share in the total number of enterprises in the city share in the city's business revenue share in the city's total profit contribution of MNC's regional headquarters

Science and Innovation Center Initiative Supported by Foreign Invested R&D Facilities 75 newly registered foreign R&D centers in the past five years, which add up to a total of global fortune 500 companies have established R&D centers here accounting for 1/3 of the nation's total These R&D centers serve as critical platforms for Shanghai to participate in global technology R&D

New Enthusiasm among Foreign Investors by Innovation in Foreign Investment Administration Last year almost half of the newly established FIEs were registered in FTZ 256,642 Total FIEs established in the FTZ by the end of ， 15.3% 256,642 Total number of FTZ registered enterprises FIEs The negative list method was fully implemented in the FTZ. If the investing area is not specified by the negative list, foreign investors would only have to file the investment at relevant authorities. There is now greater transparency in foreign investment access. Last year almost half of the newly established FIEs were registered in FTZ 256, ， 15.3% 256,642 FIEs

Fourthly, a new overseas investment cooperation landscape has come into shape and is driven by industrial chain, innovation chain and value Chain 上 海 市 商 务 委 员 会上 海 市 商 务 委 员 会 Shanghai Municipal Commission of Commerce investment in global industries overseas investment 'Belt and Road' FTZ

Pacing Up of Investment in Global Industrial Sector Companies of all kinds have actively adopting strategies for transnational operation and deploying business around the world 01 Through acquiring overseas brands and channels, companies are expanding their coverage on both the upstream and downstream of the industrial chain 02 A supply chain system that encompasses the world has been established 03 the 'Going Global' network now covers 178 countries and regions

259 investment projects within 5 years R&D related overseas investment by Shanghai Companies USD7.5bn More Focus on Innovative Cooperation by Overseas investment Through acquiring companies with globally competitive technologies, setting up overseas R&D facilities and carrying out coordinated innovation, Shanghai enterprises are using multiple channels and means to participate in the global innovation network

The 'Belt and Road' Development Becoming the Hot-spot for Cooperation on Global Value Chain Trade volume USD 87bn Direct investment USD 9.5 bn USD 5.4 bn contractual value of newly signed overseas construction projects share in the city's total 23.7% 19.3 % 48.2 % Shanghai's economic cooperation and trade with 'Belt and Road' countries The focus has shifted from exporting goods and labor to simultaneous mainstreaming of goods, service and capital export

Signing MOU with Line Ministries and Key Cities in the 'Belt and Road', Such as Singapore, Czech Republic and the U.A.E.

The FTZ Becoming a Gateway for Overseas Investment Proportion of overseas investment coming from the FTZ 49% Number of overseas investment projects in the FTZ 636 Funding committed by the Chinese side was 5.5 times of that in 2014 USD22.9 bn

Leveraging Implementation of FTZ, "Belt & Road" Strategy and etc. Benchmarking International trade and investment rules with high standard Expediting Implementation of reforms in areas of commerce Cultivation of new trend of open economy Creation of a better andconvenient business environment that is based on the law and faced towards the world An innovated, coordinated, green, open and sharing development Prospect of 2016 上 海 市 商 务 委 员 会上 海 市 商 务 委 员 会 Shanghai Municipal Commission of Commerce

Commercial goods sales growth in 2016: around 7% Social consumer goods retailing growth: over 8% E-commerce transaction volume growth: around 20% Actively Promoting Consumption To focus on both the supply side and the demand side so as to ecncourage service consumption to drive consumption expansion

To Expand the Consumption 1 To build an international consumption city To develop emerging consumption ; to build a group of commercial blocks with special features To increase direct sales channels ; to trigger the demand for cross-border consumption To expand the functions of the Boon Boom Pass; a synergetic development of the commerce, convention, exhibition, tourism, culture and sports To expand the coverage of the departure tax refund for the overseas tourists service consumption information consumption green consumption fashion consumption

2 To Build a Global E-commerce Hub To deepen the inauguration of the e-commerce demonstration parks and enterprises; to accelerate the construction of the smart commerce area To dwell on the support to the companies in the circulation industry to invest in innovation Certify and cultivate a group of leading companies for big data in commerce, technology advanced companies in circulation industry, model companies in internet of things and supply chain technology application Foster a batch of world-oriented bulk commodity transaction platforms with the value over RMB 100 bn

3 One List formulating a market access negative list for domestic trade circulation One Catalog creating an administrative management catalog for the operation of domestic trade enterprises One Network weaving a three- dimensional “1+X+N” network of industry discipline and government regulation One Platform launching Shanghai public service platform of commerce credit To Promote the Upgrade of Domestic Trade Circulation To launch the comprehensive pilot programs of domestic trade circulation reform To establish a three-in-one operation model of integrating the market decision, government governance and social coordination

4 To Make Life-facilitating Service sectors More Specific with Better Quality implementing upgrade catering, housekeeping, and wedding services Upgrading life- facilitating service sectors starting a group of brand companies in life-oriented service sectors Brand enterprises put in place the plan of “service to the home” More specific, better quality

More international trade in goods in 2016； 12% growth of international trade in service； Trade show floor area:16 million square meters Stablizing Foreign Trade Growth A coordinated development of trade in goods and services; an integrated development of trade & investment and service for the goods; upgrade foreign trade with good quality and price

To Keep Steady Growth of Foreign Trade 1 To maintain steady growth of trade in goods Efforts will be made to establish a set of exhibition and trading platforms for import and export products and increase the proportion of advanced technologies, key parts and equipment, domestic scarce resource and environmental products in the mix of import goods. Efforts will be made to scale up the policies of global maintenance in FTZ to other parts of China. Shanghai Lingang Pilot Re-manufacturing Park of Imported high- end Equipment will be set up. advanced technology key parts key equipment domestic scarce resource environmental Protection

2 To promote new trade model 2 Efforts will be made to promote facilitation of container transit and LCL in Yangshan and Waigaoqiao and develop the third party supply chain management. Cross-border E-commerce T o implement policies designed for the National Cross-border E- commerce Comprehensive Pilot Zone T o set up public service platform for the development of cross-border e- commerce T o build cross-border e-commerce demonstration parks Efforts will be made to improve certification standard and management methods of foreign trade and service companies and expand their business scale and diversify functions. 1 3

3 To create new advantages of trade in services service outsourcing, TCM, international education, health care, tourism and etc. To accelerate service platforms for trade in services To facilitate national pilot projects on innovation of trade in services To implement 3-year action plan of trade in services Culture-related trade, financial trade, technology trade, and etc. To increase the proportion of trade in services in the mix of export

4 To optimize environment for foreign trade To streamline import and export-related charges and decrease operation cost of foreign trade company To enhance synergy among port regulatory authorities, fully establish international trade "single window" that covers the whole process of trade and improve regulatory efficiency of customs declaration, application for I&Q, settlement of exchange and tax refund.

5 To build international hub for exhibition and convention To formulate exhibition and convention industry standards and evaluation criterion and to build and attract brand exhibitions of global and industrial influence. To successfully host UFI 2016 annual congress and promote regional headquarters of UFI to be based in Shanghai To attract advanced technology and products from home and abroad to participate in the 4th China(Shanghai) International Technology Fair

Paid-in capital in 2016: USD 17 bn MNC's regional HQ: 45 Non-financial ODI: USD 30 bn Promotion of Two-way Investment Attraction of foreign investment is an effective approach to participate in the global value chain. Outbound investment is key to global value chain. Efforts will be made to facilitate the cross-border flow of capital, human resources and technology.

Cultivate new driving force for foreign investment 1 To Promote Two-way Investment To explore the practice of pre-establishment national treatment, negative list and liberalization measures for service industry across the whole city To revise policies regarding headquarters economy, gather more MNCs' headquarters and functional agencies and support the efforts of existing foreign R&D centers to upgrade into global R&D centers To build global investment promotion networks, implement "10 plans to promote investment" and business attraction plan featuring " one district, one industry" and to attract a batch of advanced manufacturing projects, such as smart manufacturing and new materials

2 To Reinvent the Landscape of Overseas Investment Support companies' acquisition of overseas R&D centers, sales network and energy projects Support companies to undertake overseas infrastructure construction projects through models like international investment+construction contracting, ppp, BOT and BT To launch policy measures that support qualified investors to set up offshore private equity funds To compel investment guide covering 7 key sectors and 14 countries, as well as overseas safety risks prevention guide To establish a number of offshore economic cooperation zones and industrial parks To implement the talent training program for transnational operation

3 Continue to improve our communication with consulates general in Shanghai as well as with trade and investment promotion agencies To attract more trade and investment natured international organization, associations, trade dispute settlement and adjudication agencies to establish presence in Shanghai To deepen Shanghai's cooperation with other countries in economy and trade To forge more economic and trade partnerships with 'Belt and Road' countries and their key cities To ensure the successful organization of the G20 Trade Minister Meeting in July To Support and Participate in the Development of National Free Trade Zone support participate

Optimization of Business Environment Efforts will be made to expedite government administrative reform, streamline administration, delegate power to the lower level, optimize services, and let the market play a decisive role of resources allocation.

To Optimize The Business Environment To establish Comprehensive market regulation system To implement the Yangtze River Delta coordinated working mechanism to crack down on infringement and counterfeiting, thus promoting coordination on law enforcement of infringement and counterfeiting cases in the region 01 A series of actions will be launched to protect trademark rights, discipline the market and preserve China's image overseas, an implementation opinion will be drafted to enhance the crack-down on online counterfeiting 02 To optimize regulatory framework for key areas like e-commerce, alcohol circulation and exhibition 03 Improve the development of commerce credit system Establish Shanghai Public Commerce Credit Platform and Public- Market Credit Information Sharing Mechanism Establish sub-platforms for public credit information regarding areas like commodities, household industry and online retailing

To optimize the industrial safety warning system that serves the whole country To establish monitoring and alarming system for 12 key industries To pilot Trade Adjustment Assistance (TAA) mechanism in Pudong New Area To attract and cultivate a group of legal service institutes specializes in business related cases To Optimize the Environment for Fair Trade

In 2016, Shanghai will expand its open advantages. The demand in China and Shanghai will keep a rapid and steady growth. The structural reform of the supply side will instill new driving force for Shanghai's economic development. Shanghai's commerce prospect is still promising!

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