Govt offers int'l firms cash to establish new local HQs

International companies can receive up to 8 million yuan ($1.27 million) from the local government if they set up a new headquarters in Shanghai, local media reported Thursday.

The incentive policy is a measure to draw more high level jobs to the city as it struggles along with the rest of the country to break from its longtime reliance on manufacturing.

"It's natural for Shanghai to create this policy because of the pressure it faces restructuring its economy," said Liu Shengjun, deputy director of the China Europe International Business School's Case Center and Lujiazui International Finance Research Center.

"Because the manufacturing sector is moving to neighboring cities and rural areas in the remote central and western regions and the sluggish real estate sector, Shanghai's economic growth has lagged behind other cities. It's critical for the city to attract more headquarters to spur economic development," Liu told the Global Times.

The local government will award 8 million yuan in start-up capital to companies that establish new headquarters in Shanghai with Shanghai-based senior managers and 50 or more employees, according to a report in the Xinmin Evening News. The government will hand out the money over three years. It will give 40 percent in the first year, 30 percent in the second year and 30 percent in the third year.

The Shanghai Municipal Commission of Commerce held a press conference Thursday to promote the incentive policy, which went into effect in July and will continue until 2017.

Companies that turn the existing headquarters into one for the Asia region or the Asia Pacific region will receive 3 million yuan.

International companies that have been recognized as investment companies and make an annual turnover of more than 1 billion yuan for the first time this year will receive a bonus of 5 million yuan.

As of the end of August, 384 international companies have set up their headquarters in Shanghai, the most of any city on the Chinese mainland.

Under another new incentive policy, senior managers who work at the headquarters are eligible for a five year residency permit.

The policy also allows lower-level employees to apply for three-year permits.