Shanghai is set to offer foreign asset managers expanded access to invest in local start-ups. Mayor Gong Zheng announced the city’s commitment to bolstering the financial and technology sectors by granting international investors more freedom in private equity and venture capital investments. “International asset managers will be encouraged to invest more in Shanghai’s technology firms and participate in the city’s innovative activities,” Mayor Gong said after the annual International Business Leaders’ Advisory Council meeting in Shanghai.
“We will create more synergies among capital, data, technology, and talent.”
Funds raised for investments in unlisted Chinese start-ups reached a peak of US$132.7 billion in 2021, according to data compiled by Mergermarket. However, this figure plummeted to US$67 billion in 2022 and US$45.4 billion in 2023, and stood at US$25.7 billion in the first half of this year. “Shanghai and China have reasons to shore up confidence for investment in unlisted firms,” said Wang Feng, chairman of Ye Lang Capital, a Shanghai-based financial services group.
“Funding for start-ups [in China] has dried up over the past years.”
Shanghai’s efforts to encourage foreign asset managers to invest aim to rejuvenate the investment landscape, particularly for technology firms in the city. The forthcoming increase in Qualified Foreign Limited Partner (QFLP) quotas is a step towards revitalizing and sustaining a dynamic start-up ecosystem in Shanghai. The 36th International Business Leaders’ Advisory Council for the Mayor of Shanghai (IBLAC) has successfully concluded, bringing together top minds from leading multinationals to present their latest proposals and suggestions for the city’s innovation initiatives.
Mayor Gong Zheng remarked that the basic framework for the city’s science and technology innovation has taken shape, marking a significant step forward in the city’s comprehensive strength and overall effectiveness in sci-tech innovation.
Shanghai boosts foreign investment access
“The guest speakers and attendants all share a commitment to Shanghai and China, as well as a strong belief in the future and potential of Shanghai,” stated Severin Schwan, chairman of the board of directors of Roche Group.
Shanghai will encourage multinationals to apply for local R&D grants and programs while helping local enterprises expand their research activities globally. The city aims to actively participate in global scientific governance and continue working closely with international organizations. “We will work with all stakeholders to create an open, fair, just, and non-discriminatory innovation environment to address challenges and risks,” Mayor Gong Zheng noted.
There is still room for multinational companies to be better integrated into Shanghai’s innovation ecosystem to advance technology innovation and commercialization, said Miguel Lopez, CEO of German industrial and engineering conglomerate thyssenkrupp AG. Lopez suggested that Shanghai should promote the establishment of a non-profit, international application-oriented research innovation institution, similar to Germany’s Fraunhofer-Gesellschaft. He envisions building a technology ecosystem based on infrastructure that connects businesses, government, universities, and institutions conducting scientific research.
“Shanghai is one of the most developed places in the world. It is the perfect place to expand this kind of technology flagship projects,” Lopez said. The 144-hour transit visa-free policy adopted in China has largely benefited business travelers, demonstrating the agility of the government in terms of attracting businesses, according to Lopez.
