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Last updated : Nov 2009
 
Shanghai Business Profile
Shanghai Business Overview - TravelPuppy.com
Shanghai Economy

Since its emergence as a major city, Shanghai’s business has thrived, This has never been more true than now, when the city is the economic powerhouse of China’s modernisation and vying to replace Hong Kong as Greater China’s financial and maritime trade hub. Given this push to make money, it is surprising that Shanghai is careful to maintain its somewhat attractive environment. But, the growth of tourism (about 6%) and a developing leisure economy explains such foresight in maintaining the character of the neighbourhoods. Shanghai probably has some quiet jealousy of Beijing, since the International Olympic Committee designated it the 2008 Olympic Games, but there is no indication that this will hold Shanghai back in profiting from spin-off opportunities as the full benefits of WTO membership kick in.

Shanghai is the main focus for foreign investment in China, having gained over 40 billion US Dollars to date – the most investment in any city in the world. International vehicle manufacturing companies with local joint ventures include Volkswagen, Ford, General Motors, Volvo and Buick, whose products fill the streets. The local competitor, Shanghai General Motors, has dispatched new models to compete with these foreign favourites.

Additional investors in the Pudong development area include Coca-Cola and Kodak. Financial services are an important sector of the economy, with the combined capitalisation of Shanghai and Shenzhen’s bourses (exchanges) already greater than that of Hong Kong. In the years ahead, more and more big mainland firms will seek to list on these exchanges rather than in Hong Kong. The strength and size of these exchanges can only grow – local supremos are now planning to take Shanghai up to Asia’s number one bourse, as it was prior to World War II. The city’s unemployment rate is also a positive sign – holding at 3.5%, it is lower than the national average of 4.5%.

The Pudong New Area is being developed in line with a strategy first announced in 1990: ‘With the emergence of Pudong as the head of the dragon, build Shanghai into one of the international economic, financial and trade centres.’ The intention was to bring this development from a backwater area – formerly under-utilised wasteland and slums – up to par with the tempo of change on the western bank of the Huangpu River. And it has succeeded tremendously.

Free trade zones
and high-tech parks opened in Pudong, and infrastructure enhancements in the New Area were matched with the launching of new bridge and tunnel links across the river. Pudong New Area is in actually 1.5 times larger than urban Shanghai itself. The area’s output has climbed by more than five times in the ten years since 1990 and its Orient Pearl Tower is the new symbol of the city.

Business Etiquette

Conducting business in Shanghai, at least on the formal level, requires lots of patience and persistence. Good manners and a cheerful disposition help save face for business clients. Public anger should be avoided. Nevertheless, protracted negotiations can usually be finished up neatly during a business banquet or a late night karaoke session – these are the backdrops where China’s legendary guanxi (connections) are exercised. Public business is quite formal, with executives in suits exchanging business cards, bows and handshakes. Women should not wear high heels or short sleeved blouses – skimpy clothing is considered offensive. Both men and women should dress in neutral colours. Avoid using large hand gestures, touching others and pointing. Gifts will help open initial contacts, although it's best that these never become open to misinterpretation as bribes. In many companies, particularly larger and older ones, a Party appointee, who has an honorary or nominal senior position in the company, will preside over the first sessions, then leave the real business in the hands of the operational management.

Business hours are normally 08:00-17:00 weekdays, with one or two hours for lunch.

Seniors are usually given respect, at least to their faces – in spite of the Cultural Revolution’s attack on the ‘Four Olds’, Confucian respect for seniority dies hard. Likewise, political changes might have emancipated women in China before the law but in business circles men still rule. Businesswomen should dress and behave soberly, while businessmen in Shanghai should be available for evenings in hostess bars with clients and associates. Foreigners are normally afforded cautious respect, however they should not always expect a Japanese-style enthusiasm for foreign languages and culture – mainland Chinese have a robust pride in their own traditional and language.

Public manners while dining can seem very lax to foreigners – Shanghainese spit, pick their teeth, belch, (and so on) quite openly. However, it's recommended that visitors tolerate but not emulate this. Late night drinking bouts to seal negotiations and cement relations are the norm. Shanghainese are heavier drinkers than many overseas Chinese, however will react negatively to heavy consumption by foreigners.