Shanghai FTZ bears fruit amid bolder reform

SHANGHAI – From the first batch of made-in-China Tesla cars to the first foreign-owned comprehensive hospital, the Shanghai free trade zone is advancing toward a higher level of openness since its establishment six years ago.

The Lingang area, the newly launched section of the Shanghai FTZ, is “Tesla’s dream city” in the eyes of Tao Lin, Tesla’s global vice-president.

Since the world-leading electric carmaker acquired a plot of land in Lingang last October, it has constructed a plant, installed equipment and started testing, heading toward the final stage of production and delivery.

The main body of the Tesla Shanghai gigafactory has been completed, and key workshops such as those for stamping, spray-painting and final assembly are already capable of production, said Yuan Guohua, president of the Lingang Group. The first batch of test vehicles has rolled off assembly lines, and the China-made Tesla Model 3 will be delivered by the end of the year.

Tao said that Tesla, through localized procurement, will facilitate the development of the auto parts supply chain and logistics in Lingang.

Ma Jun, head of the Lingang factory of Saint-Gobain Sekurit, said that Saint-Gobain invested 20 million yuan ($2.8 million) in a high-end automotive glass assembly base in Lingang, and the first piece of automotive glass is expected to be produced this month.

The high-speed development of Tesla in Shanghai will become the norm for companies in the future. According to the Lingang area administrative committee, for social investment industry projects, it will only take five days from the acquisition of the land to the acquisition of four main construction approval certificates in the near future.

A giant 6-million-yuan piano stands in the hall of Steinway Asia-Pacific in the Shanghai Waigaoqiao bonded area in the FTZ, ready for its overseas buyer.

“When we first came to China, we were just a small trading company that only sold a few pianos a year. Now we have upgraded to the Asia-Pacific headquarters. Last year, we sold nearly 500 Steinway pianos,” said Wang Xin, financial director of Steinway Asia-Pacific.

With the institutional innovation of the bonded area, companies here enjoy trade facilitation to build multifunctional headquarters, according to Chen Yanfeng from the Shanghai FTZ administrative committee.

After expanding its offshore businesses, Steinway can easily sell German-made pianos directly to customers in Southeast Asia or Australia from Shanghai.

Through expanded functions such as procurement and sales, trade settlement, and supply chain management, the Shanghai headquarters continue to enhance their resource allocation capabilities in China and global markets. Currently, there are 263 headquarters in the bonded areas of the Shanghai FTZ, accounting for nearly 15 percent of the city’s total.

On Sept 26, Shanghai Artemed Hospital, the first foreign-owned general hospital in the Shanghai FTZ, announced its official opening, showing the comprehensive opening up of the FTZ from the manufacturing industry to the services industry.

Divided into two phases with about 500 beds, the first phase of the hospital kicked off with 200 beds, specializing in orthopedics and tumors.

Pan Feng, executive director of the hospital, said that the hospital is exploring adoption of the DRG payment system in China, which charges fees fixed to specific diseases.

“We hope that this will promote China’s healthcare system reform while reducing patient burdens and healthcare spending,” said Pan.

New commercial forms are also constantly emerging in the FTZ. Last week, the Shanghai International Artwork Bonded Service Center was established.

Hu Huanzhong, chairman of Shanghai FTZ International Culture Investment and Development Co, said that the institutional innovation of the FTZ has promoted the development of the art trade. In 2018, the cultural trade volume of the Shanghai FTZ exceeded 40 billion yuan, 15 times what is was six years ago.