Shanghai issues new regulations for recognizing innovative firm HQs

Shanghai has issued new regulations on recognizing and rewarding innovative headquarters of enterprises.

To get officially recognized as an innovative enterprise headquarters, a company has to meet requirements in four aspects, namely innovation, growth potential, contributions, and functions, according to the city's development and reform commission.

As for specific standards for enterprises to be identified as innovative enterprise headquarters, an applicant needs to be a Shanghai-registered company in the industrial sector or the services sector, with total assets reaching 200 million yuan (US$29.02 million) or a market value of no less than 2 billion yuan.

The enterprise's annual sales revenue should be more than 100 million yuan or its average compound growth rate of sales revenue in the last three years should exceed 20 percent.

Plus it must have complex headquarters functions in Shanghai, including research and development, sales, and settlement, and have two or more branches in areas outside the city.

Also delimited is the scope of industries in which a company runs its main business or offers its main products or services, which covers the key areas in accordance with the national "Guidance Catalogue of Key Products and Services for Strategic Emerging Industries" and related plans, as well as the core industries defined in the "Statistical Classification of Digital Economy and its Core Industries (2021)."

Growth potentials

On the company's R&D investment, the annual R&D expenses of an applicant industrial enterprise should account for more than 5 percent of its sales revenue, while for companies in the services sector such as software and information services, integrated circuit design and biomedical R&D outsourcing, the figure needs to be over 10 percent. Or, total annual R&D expenses of more than 50 million yuan can also meet the requirements for R&D outlay.

As for the number of annual R&D personnel, the enterprise can either post a percentage of more than 10 percent for industrial companies and 20 percent for services companies, or the total number of annual R&D personnel should exceed 100.

To get recognized as an innovative headquarters, a company also needs to have core intellectual property rights of major products or services in Shanghai. That requires more than 15 invention patents, exclusive rights of IC layout design and software copyrights. Or, those having product registration certificates of innovative drugs, new and improved drugs with high technical content, and innovative class II or class III medical devices can also qualify.

Enterprises that fail to meet the requirements on some indicators still have the opportunity to get included if they have made outstanding contributions to society and the economy or have played a remarkable leading role in their industries.

The qualified innovative headquarters can apply for funds and rewards in accordance with provisions, including setup funds of at most 5 million yuan for an enterprise that is registered in or has moved into Shanghai after January 1, 2022, with a paid-up registered capital exceeding 100 million yuan.

Funds for rent as well as rewards for operation will also be offered to certain qualified innovative enterprise headquarters.