2014 Briefing on Shanghai’s Commerce and Investment Shang Yuying Chairwoman Shanghai Municipal Commission of Commerce

Ⅰ Ⅰ Shanghai's Commerce Development in 2013 Ⅱ Ⅱ Outlook on Shanghai's Commerce in 2014

Ⅰ Ⅰ Shanghai's Commerce Development in Unveiled China (Shanghai) Pilot Free Trade Zone. ▪ A new foreign investment management model with pre- establishment national treatment and negative list. 2. Launched China Exhibition Complex. 3. Held 1 st China (Shanghai) International Technology Fair. ▪ The first professional exhibition with technological trade as theme. Nearly 1000 enterprises from 31 countries attended the exhibition. 183 projects were either achieved or had LOI prepared. 1.Unveiled China (Shanghai) Pilot Free Trade Zone. ▪ A new foreign investment management model with pre- establishment national treatment and negative list. 2. Launched China Exhibition Complex. 3. Held 1 st China (Shanghai) International Technology Fair. ▪ The first professional exhibition with technological trade as theme. Nearly 1000 enterprises from 31 countries attended the exhibition. 183 projects were either achieved or had LOI prepared. Deepened international trade center construction 1 1

Ⅰ Ⅰ Shanghai's Commerce Development in Promoted national modern service industry development. ▪ 105 pilot projects with government fund of RMB 500 mn, drew RMB 12.5 bn social capital. 5. Accelerated government function transformation and administrative approval reform. ▪ Streamlined administration approval. Reduced approval items from 56 to 35, a streamlined rate of 37.5%. 4. Promoted national modern service industry development. ▪ 105 pilot projects with government fund of RMB 500 mn, drew RMB 12.5 bn social capital. 5. Accelerated government function transformation and administrative approval reform. ▪ Streamlined administration approval. Reduced approval items from 56 to 35, a streamlined rate of 37.5%. Deepened international trade center construction 1 1

Ⅰ Ⅰ Shanghai's Commerce Development in 2013 <Implementation on Accelerating Circulation Industry Development by Deepening Circulation Industry Reform On Accelerating Circulation Industry in Shanghai > ( ) ( ) <Implementation on Accelerating Circulation Industry Development by Deepening Circulation Industry Reform On Accelerating Circulation Industry in Shanghai > ( ) ( ) Improved market circulation system 2 2

Four breakthroughs in commerce Over RMB 6000 bn up by 12.5% YoYMerchandise Sales Over RMB 800 bn up by 8.6% YoY Retail sales of social consumer goods Over RMB 1000 bn up by 35% YoY E-business Transaction Over RMB 200 bn up by 8.4% YoY Tax Revenue >Bulk commodities Over RMB 2.5 tn up by 8.1% >Jewelery >Household appliance >Communication appliance RMB bn up by 41% RMB bn up by 13% RMB bn up by 35.2% >online shopping Nearly RMB 200 bn

Ⅰ Ⅰ Shanghai's Commerce Development in 2013 First, FDI attraction hit record high. Contractual and paid-in foreign capital both grew by over 10% YoY. Paid-in foreign capital was over 16.7 billion USD, occupying one- seventh of China, increasing for 14 years consecutively. First, FDI attraction hit record high. Contractual and paid-in foreign capital both grew by over 10% YoY. Paid-in foreign capital was over 16.7 billion USD, occupying one- seventh of China, increasing for 14 years consecutively. Optimized foreign capital utilization 3 3

Ⅰ Ⅰ Shanghai's Commerce Development in 2013 Second, optimized industrial structure. Paid-in foreign capital of service industry was billion USD, accounting for 80% of the total, growth rate of commerce & trade, leasing and logistics was 29.4%, 23.3% & and 37.6%. Paid-in foreign capital of manufacturing was billion USD, up by 29.8% YoY. Growth rate of paid-in capital in civil aviation, high-end manufacturing, electronic information, new material was higher. Second, optimized industrial structure. Paid-in foreign capital of service industry was billion USD, accounting for 80% of the total, growth rate of commerce & trade, leasing and logistics was 29.4%, 23.3% & and 37.6%. Paid-in foreign capital of manufacturing was billion USD, up by 29.8% YoY. Growth rate of paid-in capital in civil aviation, high-end manufacturing, electronic information, new material was higher. Optimized foreign capital utilization billion USD, 81%

Ⅰ Ⅰ Shanghai's Commerce Development in 2013 Third, concentrated & upgraded headquarters economy. Newly accredited 42 MNCs’ regional headquarters, 18 holding companies and 15 foreign-invested R&D centers. Altogether 445 MNC’s regional headquarters, 283 holding companies and 366 foreign-invested R & D centers. Third, concentrated & upgraded headquarters economy. Newly accredited 42 MNCs’ regional headquarters, 18 holding companies and 15 foreign-invested R&D centers. Altogether 445 MNC’s regional headquarters, 283 holding companies and 366 foreign-invested R & D centers. Optimized foreign capital utilization 3 3 General Mills R & D center Shells R & D center Evonik R & D center Corning R & D center ……

Ⅰ Ⅰ Shanghai's Commerce Development in 2013 Fourth, areas that can utilize foreign capital will be expanded. By 2013, Shanghai has played host to 17 foreign commercial factoring enterprises and 219 foreign financing and leasing enterprises. New financial service sectors are flourishing, such as equity investment, venture capital investment, insurance brokerage, currency exchange and third party payment. Fourth, areas that can utilize foreign capital will be expanded. By 2013, Shanghai has played host to 17 foreign commercial factoring enterprises and 219 foreign financing and leasing enterprises. New financial service sectors are flourishing, such as equity investment, venture capital investment, insurance brokerage, currency exchange and third party payment. Improved Efficiency in Utilizing Foreign Capital 3 3 US "DreamWorks" Shanghai Oriental DreamWorks Culture Communication CO ， LTD Shanghai Oriental DreamWorks Technology Company HCA (Hospital Corporation of America) Shanghai Weizhan Hospital Management

Ⅰ Ⅰ Shanghai's Commerce Development in 2013 First, annual trade in goods witnessed slight increase. Total import and export volume reached $ billion, up by 1.1% year on year, accounting for 1/10 of China's total; among which, export volume was $ billion, down by 1.2% year on year, while import was $ billion, up by 3.1% year on year; export of mechanical and electrical products and labor-intensive products remained steady, while import of consumer goods grew fast. First, annual trade in goods witnessed slight increase. Total import and export volume reached $ billion, up by 1.1% year on year, accounting for 1/10 of China's total; among which, export volume was $ billion, down by 1.2% year on year, while import was $ billion, up by 3.1% year on year; export of mechanical and electrical products and labor-intensive products remained steady, while import of consumer goods grew fast. Optimized Structure for Foreign Trade 4 4 T otal import and export (billion) 3.1% 1.2% Shanghai other provinces and municipalities Proportion of Import and Export import export

Ⅰ Ⅰ Shanghai's Commerce Development in 2013 Second, proportion of general trade grew steadily Last year, the import and export of general trade amounted to $ billion, up by 9.5% year on year, faster than processing trade by 16.4 percentage point, accounting for 45.7% of Shanghai's trade in goods, a 3.3 percentage point increase compared with last year. The import and export of processing trade was $ billion, a 6.9% drop on year-on-year basis, accounting for 29.3% of Shanghai's total trade in goods. Second, proportion of general trade grew steadily Last year, the import and export of general trade amounted to $ billion, up by 9.5% year on year, faster than processing trade by 16.4 percentage point, accounting for 45.7% of Shanghai's trade in goods, a 3.3 percentage point increase compared with last year. The import and export of processing trade was $ billion, a 6.9% drop on year-on-year basis, accounting for 29.3% of Shanghai's total trade in goods. Optimized Structure for Foreign Trade 4 4 export of general trade export of processing trade

Ⅰ Ⅰ Shanghai's Commerce Development in 2013 Third, the trade market was more diversified. The EU remains Shanghai's largest trading partner, with bilateral trade exceeding $91.5 billion, accounting for 20.7% of Shanghai's total; the bilateral trade volume with the US surpassed $73.3 billion, accounting for 16.6%; the bilateral trade volume with Japan was more than $55 billion, down by 3.9%, accounting for 12.5%; the bilateral trade volume with ASEAN nations, HK, Australia and Russia exceeded $ 53.9 billion, $17.4 billion, $14.2 billion and $4.5 billion respectively. Third, the trade market was more diversified. The EU remains Shanghai's largest trading partner, with bilateral trade exceeding $91.5 billion, accounting for 20.7% of Shanghai's total; the bilateral trade volume with the US surpassed $73.3 billion, accounting for 16.6%; the bilateral trade volume with Japan was more than $55 billion, down by 3.9%, accounting for 12.5%; the bilateral trade volume with ASEAN nations, HK, Australia and Russia exceeded $ 53.9 billion, $17.4 billion, $14.2 billion and $4.5 billion respectively. Optimized Structure for Foreign Trade % 4.6% 3.9% EU US Japan

Ⅰ Ⅰ Shanghai's Commerce Development in 2013 Fourth, trade in service kept fast growth. It is estimated that total import and export of trade in services last year surpassed $165 billion, up by about 18%, accounting for 1/3 of nation‘s total and 27% of Shanghai’s total international trade. The contracted value of service outsourcing reached $6.618 billion, up by 27.32% year on year ， of which the executed value was $4.379 billion, a 20.73% year-on-year increase. Fourth, trade in service kept fast growth. It is estimated that total import and export of trade in services last year surpassed $165 billion, up by about 18%, accounting for 1/3 of nation‘s total and 27% of Shanghai’s total international trade. The contracted value of service outsourcing reached $6.618 billion, up by 27.32% year on year ， of which the executed value was $4.379 billion, a 20.73% year-on-year increase. Optimized Structure for Foreign Trade 4 4 Import and Export of Trade in Service

Ⅰ Shanghai's Commerce Development in 2013 Shanghai's ODI last year was $4.3 billion, up by 32.8% year on year, accounting for 4.8% of the nation's total According to the data of, by the end of 2012, Shanghai enterprises accumulatively had ￥ billion overseas assets under management, generating ￥ billion in revenue. Improved Quality and Level of "Go Global " 5

Ⅰ Shanghai's Commerce Development in features of Shanghai's overseas investment ： 1. In terms of investment destination 8 advanced economies including USA, Australia, Germany, Japan, UK, France, Canada and Hong Kong, attracted 82.8% of Shanghai's overseas investment, up by 6.5% year on year 2. In terms of the nature of investment In the form of M&A and increased investment accounted for 71.1% of the total, up by 30.7% year on year Improved Quality and Level of "Go Global" 5

Ⅰ Shanghai's Commerce Development in In terms of investors Private companies accounted for 48.6% of the investment, a 9.1% increase year on year 4. In terms of the fields being invested Service industries like Real estate, commercial services, wholesaling and retailing, information service took up 80.5% of the investment, a 1% increase year on year Improved Quality and Level of "Go Global" 5

Ⅱ Ⅱ Ⅰ Ⅰ Shanghai's Commerce Development in 2013 Outlook on Shanghai's Commerce in 2014

Ⅱ Outlook on Shanghai’s Commerce in 2014 We will continue to seek progress while maintaining stability, carry out reforms and innovation, pursue innovation-driven development and economic transformation, as well as gear towards a case-and-demand oriented model. we will take the historic opportunity of China (Shanghai) Pilot Free Trade Zone to create a openness oriented new economic system and a modernized market system, with a greater focus on improving quality and efficiency, having long-term vision, and insuring stability. we will put more emphasis on key issues and spare no effort to realize speed acceleration on 6 fronts and quality improvement on 6 fronts, aiming to build an "upgraded" International Trade Center.

Ⅱ Outlook on Shanghai’s Commerce in 2014  Retail sales will be up by around 10%, Social Consumer Goods sales up by around 8%  E-commerce Transaction Volume will be up by around 25% ；  The structure of Trade in Goods will be further optimized on the basis of positive growth; Trade in Services will be up by around 15%;  Foreign Capital Utilization will increase by around 10%, with 45 newly established MNCs' regional headquarters;  ODI will increase by around 20%, Contractual value of newly undertaken overseas projects will amount to around $10 billion Expectation for major commercial development indicators in 2014

Ⅱ Outlook on Shanghai’s Commerce in steady implementation of international trade center initiative ▪ Enrich the Ministry-Municipality Cooperation Framework and set new targets for International Trade Center Initiative 2. Push forward the reforms and innovations in the Free Trade Zone ▪ Formulate 2014's version of negative list; deepen the reform of Foreign Investment Administration System; expand the functions of trade; develop new kinds of trade 3. attract more trade companies' headquarters ▪ Formulate and release Accelerated implementation of the international trade center initiative 1

Ⅱ Ⅱ Outlook on Shanghai’s Commerce in 2014 Accelerate the transformation of commerce Accelerate the transformation of commerce 2 2 Accelerate the transformation of traditional business district Accelerate the transformation of traditional commercial enterprises Accelerate the transformation of business models a well-connected circulation center a cluster of all kinds of trade activities a prosperous consumption destination a Eco-friendly place to live and work to create

Ⅱ Outlook on Shanghai’s Commerce in 2014 Accelerate the cultivation of new business models 3 1. Comprehensively develop platform economy ▪ Establish a group of commodity trade and resource allocation platforms in areas like steel, non-ferrous metal, chemicals, oil and gas to double the trade volume 2. Speed up the development of e-commerce ▪ Focus on areas like big data application, mobile internet and internet finance to attract as well as cultivate industry leaders. 3. Accelerate the implementation of cross-border e-commerce ▪ optimize supervision and service provision to expand import and export volumn

Ⅱ Outlook on Shanghai’s Commerce in 2014 Accelerate the pace of local companies "Go global" 4 1. Proactively build a policy framework that cultivate local multinational companies ▪ Continue to implement the, set force Shanghai version's "code of conduct for cross-border operation of companies" 2. Focus on expanding outbound investment ▪ Streamline application procedures, adopt filing system, guide and encourage international M&A and equity investment 3. Further optimize the service system for companies going global

Ⅱ Outlook on Shanghai’s Commerce in 2014 Accelerate the optimization of foreign trade structure 5 1. Optimize the structure of traditional foreign trade with a focus on enhancing core competitiveness ▪ combining trade with industries: key areas include strategic emerging industries and advanced manufacturing industries like civil aviation, maritime engineering equipment, alternative energy, high-end equipment, etc. The aim is to enhance export capacity ▪ coordinate development between import and export: well utilize professional trade platforms, strengthen Shanghai ports' distribution function and expand import and export 2. Optimize the structure of trade in services with a focus on service export capacity ▪ : transportation, tourism, professional services, culture, Chinese medicine, education, high-tech, etc. 3. optimize the development environment for trade ▪ Implement all the reform measures and innovative policies to facilitate trade

Ⅱ Outlook on Shanghai’s Commerce in 2014 Accelerate interactive development of MICE, Commerce, Tourism and Culture industries 6 1. Elevate the overall competitiveness of MICE industry ▪ Revision of 2. Formulate the "Plan of Interactive Development of MICE, Commerce, Tourism and Culture industries" ▪ Comprehensively collect information about recent shows, sales promotions, cultural activities, sport events, travel routes, scenic spots, etc.

Ⅱ Outlook on Shanghai’s Commerce in 2014 Improve the quality of market system 7 1. Complete the mercandise market system ▪ Improve the layout of markets' space and improve services in finance, logistics, information, etc. 2. Comprehensively develop modern logistic industry ▪ Develop a multi-layered logistic service system with standardized, informatized and organized industry operation 3. Establish order in the market ▪ Protect IPR and crack down on IPR infringement

28 Ⅱ Outlook on Shanghai’s Commerce in 2014 Improve the development quality of livelihood related service industry 8 1. Continue to promote industrialization ▪ : industrialization, commercialization, informatization and branding 2. Deep implementation of key projects ▪ Encourage the development of commercial services, health services, senior care services, domestic services, cultural services, tourism services, sports services, etc. Promote People's Wellbeing Projects like "Breakfast Project", "Household Management Project" and "House Appliances Repairing Project"

Ⅱ Outlook on Shanghai’s Commerce in 2014 Improve the quality of utilizing foreign capital 9 1. Optimize the investment environment for foreign investors ▪ introduce the administrative model of "letter of commitment plus standardized approval procedures" 2. Elevate the functions of foreign-invested headquarters ▪ Focus on core functions like R&D, investment, clearing, etc. 3. Engage foreign companies in the build-up of modern industrial system ▪ Further open up the service sector, support foreign investor to enter strategic emerging industries

Ⅱ Ⅱ Outlook on Shanghai’s Commerce in 2014 Further strengthen service-oriented function Use marketized, socialized and informatized supervision Let market, society and agency play their roles Strengthen supervision during and after the registration to activate market

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