Shanghai, the largest metropolis in east China, is expected to record 10-percent year-on-year growth this year in both contracted foreign investment and actually used foreign capital, according to officials with the municipal foreign investment working committee.

The city plans to attract 12.1 billion US dollars in contracted foreign capital and actually use 6.5 billion dollars this year, the officials say.

The 10-percent growth targets are attainable, say the officials, who base their confidence in the developments of foreign direct investment (FDI) in the city during the first two months of this year.

From January to February, Shanghai actually used 1.258 billion US dollars in foreign capital, an increase of 51.4 percent over the year-earlier level.

Along with the quantitative increase, FDI in Shanghai is also undergoing some qualitative changes, says Liu Jinping, deputy director of the committee, citing investment patterns and an upward trend in returns upon investment.

The conclusion was drawn from studies of the existing 24,000-plus foreign-invested companies in Shanghai.

More foreign investors have obtained whole ownership for their operations in Shanghai, as part of their long-term development strategies in China.

Statistics show that in 2003, Shanghai registered 3,028 wholly owned foreign companies, or 80 percent of the total foreign-invested firms and almost five times the number of Sino-foreign joint ventures registered in the city last year.

By the end of 2003, 14,400 wholly owned foreign enterprises had been registered in Shanghai, accounting for 59.5 percent of the total foreign-invested companies in the city.

Besides the traditional investment modes, such as joint venture and whole ownership, some foreign investors have turned to mergers and acquisitions, which are believed more convenient and efficient, for establishing and consolidating a presence in Shanghai.

The officials with the committee forecast that more multinational corporations from abroad will take over state-owned enterprises in Shanghai in 2004.

Earlier this year, Shanghai Electric Group, an electric giant in Shanghai, put equities worth 6.5 billion yuan (about 783.13 million US dollars) on the local market and has attracted more than 100 overseas investors.

Meanwhile, some foreign investors who have already established footholds in Shanghai have set to integrate their upstream with downstream production or manufacturing with maintenance services.

For instance, Ricoh from Japan has recently launched a wholly owned investment holding company with a registered investment of 33 million US dollars in Shanghai to coordinate four retail and repair services and six production enterprises it operates on the Chinese mainland.

Another significant change in FDI in Shanghai was the formation of industrial chains, according to the officials of the committee.

The Tech-front (Shanghai) Computer Co. Ltd. from Taiwan Province is a good example.

Now, it has 14 supporting enterprises in Shanghai, which helped it produce and export 10 million laptop computers for US$5.3 billion last year, or 10.9 percent of the total export volume in the city.

Last year foreign-invested companies in Shanghai earned 43.7 billion yuan (US$5.27 billion) in profits, tripling the figure three years ago.
 
(Xinhua News Agency March 26, 2004)