How Shanghai excels in reforming its business environment

Huang Yixuan
City named as one of the top contributors to China's success in reforming its business environment and its high placing in the bank's Doing Business rankings.
Huang Yixuan

Shanghai is one of the top contributors to China’s business reform and the nation’s strong performance in the World Bank Doing Business ranking, the bank said in a report released on Monday. 

China has witnessed an unprecedented improvement in its business environment over the past few years, moving up from 78th position in the rankings for 2018 to 31st this year, and has been among the top 10 global reformers for two years in a row, according to the World Bank.

Shanghai, with a 55 percent weighting in the assessment for China in the report, has hugely contributed to China's rapid development of the business environment, as the city has continuously pushed forward reforms in accordance with the World Bank's suggestions, the city's Commission of Development and Reform said.

Following a city-wide meeting to mobilize the business reform agenda at the end of 2017, improving the business environment had become the top priority of the city's government. 

Leveraging the bank’s technical assistance and policy recommendations, in 2018 Shanghai launched the first version of its Business Environment Reform Scheme, which put in place more than 40 reform tasks and policies as well as 20 online administrative processing systems. It launched two new versions in 2019 and early this year covering 188 reform tasks under local jurisdiction and 58 reform policies.

Over the past two years, Shanghai authorities have taken a number of measures to streamline administrative procedures and cut red tape. 

The report showed that in the assessment of starting a business, getting electricity, dealing with construction permits, cross-border trading and registering property, Shanghai has cut procedures in handling administrative affairs by an average of 41 percent, while the time required for such processes had been cut by an average of 59 percent, the commission said.

In 2019, for example, the city government introduced simplified “notification and commitment-based approval procedures” to replace the traditional complicated and lengthy approval procedures. Shanghai was among the first cities in China to pilot such a simplified approval procedure and the first city to institutionalize it through the release of an official regulation in 2018. 

Shanghai also carried out pilot reforms in the city’s Pudong New Area last year to stitch together multiple licenses for starting a business into one “industrial integrated license,” which aimed to reduce the number of procedures and the time needed for business registration, the commission noted. 

As an example, it previously required five licenses from separate public agencies to open a convenience store, but with the reform in place, only one license is needed. 

So far, such reforms have been trialled in 43 industries such as convenience stores, restaurants, hotels, and fitness centers, the commission said.

Shanghai has also seen an increase in entrepreneurship. There were around 2.2 million firms registered in Shanghai by the end of 2019, while around 367,620 new firms were set up last year, an annual growth of 8 percent. 

There are currently more than 2.5 million market entities in Shanghai, an indication that one in every 10 people in the city is a business owner.

The city attaches great importance to the private sector. 

Over the past two years, the city government organized 16 meetings with private enterprises, carried out in-depth communication with 120 entrepreneurs and business owners and sent out 1,077 questionnaires to get feedback from the private sector on the city's business environment in 2019. 

Shanghai also established an advisory committee on business reforms last year, the first such committee in China. It consisted of 24 members who were all experienced practitioners and experts from various sectors including foreign and local business associations, industrial parks, law firms, accounting firms, academia and research institute, high-tech industry, medical industry and information technology industry. 

The latest version of the scheme has set three major targets for the city's further business environment development — to introduce “a single window portal” for all approval procedures through institutional restructuring and wide use of digital technologies to allow for cross-agency data sharing and joint approval; to improve Shanghai’s ranking in Doing Business assessment and the domestic business environment evaluation carried out by the central government; and to include other regulatory reforms as reflected by the business community to boost market vitality and economic growth momentum.

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