Foreign-funded firms in Shanghai see profits soaring

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Last updated at: (Beijing Time) Thursday, December 18, 2003

Foreign-funded firms in Shanghai see profits soaring

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As the world leader in cosmetics, L'Oreal Group is receiving a boost from its business in China as sales turnover in the first three quarters in Shanghai, China's hot spot for foreign investment, increased by 66 percent compared with the same period last year.

"L'Oreal has maintained an increase rate of over 60 percent in the past two years and it's profit in China is much higher than the average gains of its branches around the world," said Owen Jones, CEO of L'Oreal Group.

"As for L'Oreal, China is a significant market of great potential," said the CEO.

"In China, L'Oreal seems to have changed its cosmetic factoriesinto money printing machines," said a commodity analyst with AC Nielsen, one of the five global leaders in market research, information and analysis.

L'Oreal is not the only company doing well. Many foreign fundedenterprises based in Shanghai have benefited from the boost of China's economy this year.

According to statistics from the Shanghai Foreign Economic Relation and Trade Commission, the profits volume of foreign invested enterprises in Shanghai in the first 10 months of this year is up to 37.122 billion yuan (about 4.47 billion US dollars),62.1 percent higher than last year.

"Such a big profit is quite attractive even globally," said LiuYouhai, deputy president of Advanced Semiconductor Manufacturing Corporation of Shanghai. Their annual investment yields in recent years have never been lower than 20 percent.

As for foreign industrial giants investing in Shanghai, high investment yields, favorable policies and good services are the major attraction of Shanghai.

According to Shanghai Foreign Investment Commission (SFIC), in the first 10 months of this year, 3,700 foreign funded projects have been signed off, the total foreign investment of which is up to 9.74 billion US dollars, 25 percent higher than last year. So far, realized foreign investment has reached nearly 5 billion US dollars.

"With this speed, it is estimated that foreign investment realized this year in Shanghai will be more than 5.5 billion US dollars, and contracted foreign investment will reach 11 billion US dollars," said sources with the SFIC.

Spurred by the high returns, many foreign funded enterprises inShanghai have increased their investment.

According to SFIC, about one-third of foreign investments contracted in the first 10 months are supplemented investment in projects signed before.

"That's the inevitable outcome of higher investment yields," said Yang Jianwen, an economist with Shanghai academy of social sciences.

The enormous profits have encouraged many multinational enterprises to settle their regional headquarters and research centers in Shanghai.

So far, 53 regional headquarters of multinational enterprises have been set up in Shanghai. And the number of foreign invested research centers each with an investment of over two million US dollars has reached 100.

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