Exploring Domestic Market of the YRD via Shanghai’s Import Platform
01 June 2020
China has been trying to encourage imports in recent years to satisfy the huge demand of both businesses and consumers for imported goods. Shanghai - as an important commercial city - is home to China’s first pilot free trade zone (FTZ). The city has been making continuous improvements and innovations in trade and customs facilitation measures to optimise the business environment. It has also established a cross-border e-commerce comprehensive pilot zone to help overseas companies access the mainland market via different channels. As the host city of the China International Import Expo (CIIE), Shanghai also serves as an important window for expanding imports and helping businesses venture into the mainland market. Meanwhile, the central authorities have been actively advancing the integrated development of the Yangtze River Delta (YRD) region and have given Shanghai the important strategic task of promoting cross-border trade in the region. It is against this backdrop that Shanghai has become a major hotspot for tapping the mainland market. Hong Kong businesses could therefore consider making use of Shanghai’s multitude of business platforms to develop domestic sales in the YRD and explore import opportunities on the mainland.
Integrated Regional Development in the YRD
The YRD, which is home to 46 ports, is one of the most vibrant and open economic regions in China. Its GDP comprises roughly a quarter of the mainland China’s total and is an important engine driving the country’s economic growth. In 2019, its aggregate imports and exports accounted for 37% of the mainland’s total. Its inbound foreign direct investment (FDI) made up 39% of all inbound FDI on the mainland, while its outbound FDI accounted for 29%. In particular, the value of aggregate imports in the YRD amounted to US$670.6 billion in 2019, accounting for a third of the total on the mainland . Shanghai alone accounted for 44% of that import amount, importing goods worth over US$290 billion last year . If all imports passing through the customs territory of Shanghai were also counted, the aggregate value of goods imported by Shanghai reached US$380 billion . These figures suggest that Shanghai is an important access point for overseas goods entering the YRD, and even the mainland China market as a whole.
The Outline of the Plan for the Integrated Development of the YRD issued by the State Council in December 2019 elevated the integrated development of the YRD to the level of national strategy and clarified Shanghai’s leading role in this process. The new pattern of co-ordinated regional development, including co-operation and interaction between the metropolitan areas of Shanghai, Nanjing and Hangzhou and the creation of a world-class city cluster in the YRD, is designed to generate new opportunities for regional development.
Shanghai is not just a core city in the YRD but is also an important transport hub for China. It has excellent port resources. Nine national expressways connect the city to various parts of the country. The Shanghai Hongqiao Railway Station is at the intersection of two rail arteries, the Beijing-Shanghai and Shanghai-Kunming Railways. As well as being the departure station and terminus of the Beijing-Shanghai, Shanghai-Nanjing and Shanghai-Hangzhou high-speed railways, it is also a component part of the Shanghai Hongqiao Integrated Transportation Hub. Two international airports serve the city, in Pudong and Hongqiao, and it is an important global air hub, with routes linking major Asian, European and American cities as well as other international destinations. Shanghai is also among the major international shipping centres in the globe. The Shanghai Port handled some 730.5 million tons of cargo in 2018, and 42 million TEUs of containers, making it rank first in the world for the ninth consecutive year .
Taking the Lead in Promoting Cross-border Trade
While leading and driving the integrated development of the YRD, Shanghai also has the key strategic task of promoting mainland China’s cross-border trade. This includes hosting the CIIE, which is the first national-level import expo in the world and China’s largest platform for the import of goods and services from all over the world. Two successful editions were held in 2018 and 2019, the last of which saw participants from 181 countries, regions and international organisations and over 3,800 companies in attendance. The expo covered a fairground of 360,000 m2 and attracted over 500,000 domestic and overseas professional buyers. Among the domestic buyers, 32% were from manufacturing, while another 25% were from the wholesale and retail sectors. The value of business contracts emerging from the 2019 CIIE amounted to some US$71.1 billion, a 23% increase from the inaugural CIIE the year before . The CIIE attracted visitors from near and far and provided exhibition windows and matching platforms for exhibitors who brought new technologies and new varieties of products with them.
Shanghai has also actively rolled out measures for optimising the business environment at ports. For example, a raft of measures for deepening the reform of business environment for cross-border trade at Shanghai’s ports (Hu Shang Zheng Fa No. 47 ), issued in 2019, lowered harbour fees on cargo by 15% and terminal security charges by 20%, pushed port companies to reduce removal fees by 10% and shipping companies to reduce terminal handling charges (THC) and documentation fees correspondingly, thereby lowering businesses’ import and export logistics costs. In 2014, Shanghai became the first city to launch the “China (Shanghai) International Trade Single Window”. Since then, businesses can complete all customs clearance approval formalities for imports and exports by making a single submission on the same platform using the “Single Window”. Furthermore, the China (Shanghai) Pilot Free Trade Zone has implemented the “declaration after entry” mode for goods entering the free trade zone from abroad. A customs office is specifically set up at Shanghai Exhibition and Convention Center for round-the-clock declaration of exhibits within the zone, ensuring that the exhibits are declared and released upon arrival. The time these exhibits remain at the ports has been cut from two to three days to less than 24 hours.
In February 2020, during the coronavirus outbreak, the Shanghai municipal government issued a circular on policy measures for prevention and control of the epidemic, as well as support of business development (Hu Fu Gui No. 3 ) . It put forward 28 measures to help enterprises cope with the challenges of the epidemic and promote the resumption of work through a variety of fiscal and tax policies. Several Measures for Further Deepening the Reform of Business Environment for Cross-border Trade at Shanghai’s Ports(Hu Shang Zi Mao No. 16 )  was issued in the same month. A raft of 19 measures was put forward, including promotion of a “two-step declaration” mode of customs clearance for imported goods , speeding up of customs and logistics, and paperless processing of port control documents. It is hoped that these measures will not only help businesses cope with the present temporary difficulties, but also boost the steady growth of foreign trade in the longer term.
Trading Platforms to Boost Imports
While optimising the business environment and accelerating the development of an open economy, Shanghai is also implementing pro-active import policies. These include building and promoting trading platforms to boost imports and carrying forward and magnifying the spillover effect of the CIIE in order to turn the exhibits into trading commodities and create a “never-ending” CIIE. By the end of 2019, Shanghai had launched 49 offline “6 days+365 days” perennial exhibition and trading service platforms  in addition to the “ CIIE 6 Days+365 Days” one-stop online trading platform. As well as helping global commodities, services and technologies enter the China market, these platforms also provide suitable access points for Hong Kong businesses interested in developing domestic sales.
These 49 platforms are of four major types. They include 15 with comprehensive functions, 18 professional trading platforms, nine e-commerce platforms and seven country-specific commodity centres. Together they provide businesses with a comprehensive service in merchandise trading, bonded exhibition, warehousing and other import-related matters. Among them, the Waigaoqiao Bonded Area of the Shanghai Pilot Free Trade Zone has eight accredited “6 days+365 days” perennial exhibition and trading platforms, including the ones detailed below:
- The Shanghai Waigaoqiao International Exhibition and Trading Center for Wine & Beverages was the first professional trading platform established by the Waigaoqiao Bonded Area. It provides bonded exhibition, wine tasting, product promotion, professional training, product launch, business negotiation, import agency, logistics and distribution, business counselling and other services as well as a “front shop, back warehouse” consumer experience. The customs office and other regulatory departments based in the bonded area provide the centre’s corporate members with a green channel for trade facilitation. This platform had 219 corporate members at the end of 2018, which had facilitated wine imports worth RMB8.84 billion, up 14% from 2017 and accounting for 23.9% of the country’s total. With the participation of large numbers of wine dealers, the centre has over 3,000 varieties of wines on its display shelves.
- Cosmetics is one of the major product categories traded in the Waigaoqiao Bonded Area. The Shanghai Waigaoqiao International Exhibition and Trading Center for Cosmetics provides cosmetics importers with professional one-stop services in certificate record-filing, import agency, exhibition and trade, full-process warehousing, business co-operation and other matters. Non-special cosmetics make up over 90% of the cosmetics market. Shanghai took the lead by introducing record-filing management for non-special cosmetics in March 2017, replacing the cumbersome approval procedures which were used to take three to six months to complete the formalities. Record-filing, in contrast, only takes about five working days, thus effectively reducing business cost and speeding up the process by which the imported goods get to the market.
- The Waigaoqiao International Intelligent Manufacturing Industrial Park is the only “6 days+365 days” perennial exhibition and trade platform awarded this title in the smart manufacturing sector of the CIIE. Its exhibition area is continuously expanding. As an important professional platform for co-operation and exchanges for overseas smart manufacturing companies entering the China market, it has imported all kinds of advanced technological equipment from various parts of the world and boosted the development of China’s equipment manufacturing industry.
The Waigaoqiao Bonded Area is also trying hard to promote the development of country-specific (region) commodities centres and Belt and Road country centres. So far, a number of country-specific commodities centres have been established, including the Greek Pavilion in the China (Shanghai) Pilot Free Trade Zone and the commodities centres of Australia, Chile as well as 16 Central and East European Countries. These centres tap the resources of their own embassies, consulates and international chambers of commerce and use advantages like bonded exhibition and trading to exhibit the special characteristics of their commodities, strengthen opportunities for import trade and introduce new products to the China market. They have also linked up with over 1,200 small and medium-sized enterprises worldwide to take advantage of domestic sales opportunities in China. (For further details, please read: Accessing China’s Domestic Market via Waigaoqiao’s Service Platforms)
The Shanghai Hongqiao Central Business District (CBD), which is Shanghai’s bridgehead for linking with the YRD, is the place where the Shanghai-Nanjing development axis and Shanghai-Hangzhou development axis intersect. It is also the seat of the CIIE and the core catchment area of the spillover effects of the CIIE. It boasts a number of Belt and Road -oriented direct marketing platforms for commodities, country-specific commodity trading centres, professional trading platforms and YRD cross-border e-commerce platforms.
- The Hongqiao Import Commodity Exhibition and Trading Center, which has been named a “6 days+365 days” perennial offline exhibition and service platform, has boosted the business model of bonded exhibition and trade. So far, it has attracted a total of more than 500 brands and over 5,000 varieties of commodities from 60-plus countries and regions. With its matrix of agglomerated and multi-function powerhouse trading platforms, it has developed an ecosystem of trade encompassing trade in goods, trade in services, trade in technology, general trade, bonded exhibition and trade and cross-border e-commerce based on the new platform economics model of cluster development and upstream-downstream co-ordination. The Hongqiao CBD has forged comprehensive ties of co-operation with 17 major YRD cities, including Nanjing, Ningbo, Suzhou, Jiaxing and Jinhua and built a number of functional platforms, such as a YRD regional cities exhibition centre, a YRD e-commerce centre and a joint platform of exhibition, business travel, and recreation and sports demonstration zones in the YRD. It is now exploring the development of certain platforms for industry data acquisition, connectivity, sharing and applications targeting the YRD.
Cross-border e-commerce is also growing quickly in Shanghai and the YRD, and it is changing the forms and patterns of trade in the whole region. Overseas businesses, including small and medium-sized companies in Hong Kong, should therefore consider not only using the previously mentioned trading platforms in Shanghai, but also the city’s e-commerce channels to enter the YRD and even open up business opportunities in the whole mainland market. (For further details, please read: Tapping Cross-Border E-Commerce Retail Import Opportunities Through Shanghai)
 Source: Outline of the Plan for the Integrated Development of the YRD
 Source: General Administration of Customs
 Shanghai Municipal Statistics Bureau
 Shanghai Municipal People’s Government
 China International Import Expo
 For further details, please read: Shanghai Issues 28 Measures to Support Enterprises in Fighting Epidemic
 For further details, please read: Shanghai Announces Reform Measures to Improve Cross-Border Trade Environment
 Under “two-step declaration” method, an import enterprise can lade its goods on completion of risk assessment and handling by the Customs upon making a preliminary declaration. Full customs declaration can be made afterwards within the prescribed time.
 Source: Shanghai Municipal Commission of Commerce
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