European businesses in Shanghai: Investing in Shanghai’s global future
This article was originally published in Italian on Class on 17th Nov 2025.
Please note that this is a courtesy translation of the Italian language article originally published on Class Issue at: https://www.classxhsilkroad.it/news/politica-economica/shanghai-in-controluce-che-cosa-frena-la-capitale-finanziaria-202511171845301868
With China preparing to launch its 15th Five-Year Plan in 2026, attention will be on its implementation. Shanghai, as China’s most international city and home to over 80,000 FIEs, plays a crucial role in demonstrating its appeal to foreign investors. It is in this context that the Shanghai Chapter of the European Chamber has just published its Shanghai Position Paper, a key report based on inputs from its 560 members.
Shanghai is a major centre for international business, as shown by the Shanghai Chapter, which has the organisation’s largest membership with 560 members, making up a third of all members. The city’s attractiveness to international firms is reflected in our members’ business outlook: 64 per cent find it easy to do business in Shanghai, 74 per cent see it as a better location than other Chinese cities for setting up a Research and Development (R&D) facility, and 38 per cent believe Shanghai offers a significant advantage in its innovation ecosystem.
Yet, several indicators continue to challenge Shanghai’s ambition to be the Asia-Pacific’s leading international hub. No Shanghai Position Paper international companies are directly listed on the Shanghai Stock Exchange, in contrast with regional peers, such as Hong Kong, or Singapore. This underscores a key constraint on Shanghai’s aspiration to be an international financial centre: limited capital market access for foreign enterprises. These constraints affect the confidence of European companies: 68 per cent of our members reported missing business opportunities in the city due to market access restrictions or regulatory barriers – second only to Beijing among the Chamber’s seven chapters. Moreover, 76 per cent stated that conducting business became more difficult compared to the previous year.
To address this, the Shanghai Chapter proposes five key recommendations designed to improve European businesses’ operations while enhancing the city’s internationalisation.
First, establish a ‘one Shanghai policy’ and make Shanghai a single-entry point for foreign businesses with a unified set of conditions to operate across districts. Too often, companies must comply with different sets of rules to operate across the 16 districts of Shanghai, which creates considerable administrative burdens.
Second, increase Shanghai’s international appeal to foreign nationals and businesses. The foreign nationals’ population has fallen significantly in recent years – one estimate suggests a decrease from 215,000 in 2019 to 73,000 in 2023 – which harms the city’s internationalisation. High costs, such as rent and international schools, impact the retention of foreign nationals. Additionally, limited access to the Global Internet hampers the ease of navigating the city and incurs extra expenses for businesses to access it.
Third, support the growth of small and medium-sized enterprises. SMEs need to be genuinely recognised as the new frontier for growth, and their expansion should be facilitated. Access to finance (including loans from banks and delays in payments from economic partners) and a lack of transparency are particularly pressing concerns for European SMEs.
Fourth, enhance Shanghai’s competitiveness in the green transition. Access to renewables is a key concern for companies’ competitiveness. However, Shanghai’s local renewable generation remains low, and imports from other Chinese provinces are hindered by saturated high-voltage lines. Furthermore, incentives for consumers to adapt their energy patterns are weaker compared to other parts of China.
Fifth, strengthen Shanghai’s supply chain resilience, including export controls. As the largest port in the world, Shanghai should ease foreign companies’ trade logistics operations. Export controls are significantly impacting European companies. Although it is a national measure, Shanghai could lead in facilitating, expediting, and coordinating regional trade issues.
Consistently implementing these recommendations offers tangible steps to enhance the living environment for foreign nationals and improve the overall business climate for foreign enterprises, thereby further promoting Shanghai’s internationalisation.
By: Avv. Carlo D’Andrea, National Vice President of the European Union Chamber of Commerce in China and Chairman of the Board of the Shanghai Chapter, Founder and Managing Partner of D’Andrea & Partners Legal Counsel
