The Chinese government’s September 2013 announcement of its plan to establish a free-trade zone (FTZ) in the Pudong district of Shanghai has led to a raft of demands from local and international businesses to take advantage of the zone’s light touch.

The Shanghai Statistics Bureau estimates that close to 10,000 corporates had registered in the zone as of June 2014 – 661 of which were foreign-invested enterprises. The level of demand is no surprise, given the various tax, clearance and import advantages that companies registered in the FTZ enjoy.

While many of the specific regulations surrounding the zone remain hazy, there are several concrete advantages to be had in terms of ease of establishment and lower taxes.
 
“Previously, if you wanted to set up a company you needed to be on the government’s list of approved industries in China,” said Joe Zhou, head of China research at Jones Lang LaSalle (JLL). “But in the FTZ, you can register any company as long as the business is not explicitly prohibited on the ‘negative’ list [of permitted activities for foreign companies].”