1. Development Zones, Foreign Investment, and Global City Formation in Shanghai - YEHUA DENNIS WEI AND CHI KIN LEUNG - International Cooperation 200876165 HEE-JEONG KIM

2. Introduction Developing countries established varied forms of foreign investment or development zones such as export processing zones, duty-free districts, high- tech parks, and offshore financial havens to attract foreign direct investment and capitalize on globalization. Despite the concerns of economic dependence and cultural imperialism, why developing countries seek to attract foreign investment? What are the benefits of FDI for developing countries?

3. The benefits of FDI  Economic growth  Trade  Employment and skill levels  Linkages and spillover to domestic firms

4. China has changed the policy from self-reliance to an open door policy since the reform of the late 1970s. Establishment of a large number of development zones for FDI China has become the largest recipient of FDI Shanghai has attracted a large number of foreign ventures. By 2001, the Pudong District alone had attracted FDI of US$35 billion.

5. The structure, performance, and underlying factors of development zones in Shanghai The implications for global city-formation

6. Research Background and Context The infusion of foreign investment The globalization of economic activities China’s efforts toward globalization and modernization  Preferential tax treatment  Improved urban infrastructure  Easier access to international markets  Professional government services

7. Changing the self-reliance policy to an open door policy in 1979 Designation as a coastal open city in 1984 Establishing the Pudong New Area in 1990 State Policies and Foreign Investment in Shanghai : An overview

8. During the first decade of the reform era, Shanghai fell behind other major coastal cities in attracting FDI. Why?  China government maintained tight control over the inflow of foreign capital & revenue remittance.

9. State Policies and Foreign Investment in Shanghai : An overview The preferences  The right to open more tertiary industries to foreign investors  An amended law on Sino-foreign joint ventures  The Shanghai Stock Exchange  The transfer of the usage rights of state-owned land for land development by investors

10. State Policies and Foreign Investment in Shanghai : An overview The diversity of countries or places of origin of FDI (2002)  Hongkong (24.3%)  Japan (12.3%)  United States (9.6%)  Taiwan (8.3%)  Singapore (4.2%)  United Kingdom (3.3%)  Germany (2.0%)  Others (36.1%)  Reflecting the greater integration of Shanghai to the global economy.

11. Develoment Zones and Foreign Investment in Pudong Four national level zones in Pudong - Financial institutions and regional headquarters of foreign firms  Lujianzui Finance & Trade Zone - Manufacturing activities with different focuses  Jinqiao Export Processing Zone  Waigaoqiao Free Trade Zone  Zhangjiang High-Tech Development Zone (HTDZ)

12. Develoment Zones and Foreign Investment in Pudong FDI in Pudong 1990’7.3% 1992’19.8% 1995’39.4% 1998’42.2% 2002’36.7%

15. Develoment Zones and Foreign Investment in Pudong Lujianzui Finance & Trade Zone  The eastern side of the Pujiang River  No manufacturing activity Jinqiao Export Processing Zone  For major foreign manufacturing  The largest both in terms of developed area & total foreign investment  Relative proximity to Puxi  Telecom Equipment : Siemens, Shanghai Bell Automobiles : General Motors Elctronics : NEC, Sharp, Matsushita, Hitach

16. Develoment Zones and Foreign Investment in Pudong Waigaoqiao Free Trade Zone  Export activities  Merger into Jinqiao in 1999  IBM, Intel, Hewlett Packard, Philips Electronics Zhangjiang High-Tech Development Zone (HTDZ)  High-technology activities  Small planning area and poor accessibility  Establishing new policies and extending subway No.2 to rise FDI in 2000  Matsushita, Motorola

17. Develoment Zones and Foreign Investment in Puxi and Suburban Districts Puxi’s advantages  Close to the Hongqiao International Airport  Concentration of research and educational institutions  Close to Shanghai’s traditional core areas Downtown Districts  Huangpu, Jingan, Luwan  Finance, real estate, services Suburban Districts  Minhang, Jiading, Songjiang, Qingpu, Baoshan, Chongming

18. Develoment Zones and Foreign Investment in Puxi and Suburban Districts Downtown Districts  Huangpu the core of Shanghai Finance, trade and service firms International trade and commerce activities  Xuhui - Caohejing Technology-intensive industries Intel, GE, DuPont, 3M, Hewlett Packard, Nortel, Toshiba, Philips and Alcatel

19. Develoment Zones and Foreign Investment in Puxi and Suburban Districts Suburban Districts  Songjiang Food and garments  Jiading Machinery and transport equipment Volkswagen  Minhang Large zone & closest to city center Sony  Baoshan Poor access to the city center Toshiba

20. Develoment Zones and Foreign Investment in Puxi and Suburban Districts The reasons that the suburban districts are more attractive to investors recently?  With the rise of production cost, the city began to limit certain types of investments such as those consuming more energy and raw materials in city districts.  The rise of land cost in Pudong makes investment in suburban districts attractive to investors.

22. What are the reasons for the concentration of MNEs in the core areas of developing countries, such as Pudong?

23.  Close to the Pudong International Airport that is the primary airport of Shanghai.  More open space available, while Puxi lacks land and space for future development  The layout of the new trasportation systems  Well-developted infrastructure and professional services  Strong government support

24. Transforming Shanghai into a Global City  The second-largest trading region after Guangdong.  The most important financial center in China  The leading stock exchange center  A major foreign exchange center in the nation

25. Transforming Shanghai into a Global City Controversial points  The economy of Shanghai is in its early stages of development.  The relatively low level of economic development resulted in the lack of the formation of major Chinese enterprises.  As with other parts of China, Shanghai continues to have a relatively high level of bureaucracy, and remains behind most other global cities in terms of policy transparency.

26. Conclusion The things that could make possible the development  The open attitude of the state for foreign investment  The preferential policies since the early 1990s  The substantial investment in urban and industrial infrastructures of the 1990s Shanghai’s potential  The most important regional headquarters location for MNCs.  The most important financial center in China

27. Thank You