After lockdown, Shanghai tries to mend fences with foreign firms

The image of China’s most cosmopolitan city and its biggest business hub was badly damaged by the two-month lockdown, with countless expatriates relocating and foreign businesses warning that they are reconsidering investment plans.

The Shanghai government plans to hold 20 meetings this month with foreign firms engaged in key industries such as automobiles, trade, semiconductors and biomedicine, a report by the Jiefang Daily, a Shanghai government-backed newspaper, said on Sunday. The report was reposted on the Shanghai city website.

The firms would be picked from major investment countries and regions, including the United States, Europe, Japan and South Korea.

Four online meetings have been held so far since June 1, when the city eased its lockdown, according to Shanghai government statements.

The first was attended by executives from U.S. blue chips such as Procter & Gamble and Johnson & Johnson, and the second included automakers Tesla, General Motors and Ford. The companies did not respond immediately to requests for comment on Wednesday.

In addition, the European Chamber of Commerce said on Tuesday it had been informed during a meeting with the city’s vice mayor that Shanghai will no longer require official invitation letters, so-called PU letters, for foreigners returning for work and their dependents, addressing what had become a bugbear for the expat community.

China began in early 2020 to require foreigners to obtain PU letters as part of their visa application as it dramatically tightened border controls when the coronavirus pandemic hit.

Many firms had complained about the difficulties and long waits in obtaining the document, which impeded the hiring of foreign staff.

‘Initiative to encourage work’

The removal of this requirement was “an initiative from central government to encourage work and production resumption in Shanghai”, the European Chamber said.

Asked for comment on Wednesday, the Shanghai government referred to remarks city official Gu Jun made at a press conference in late May, in which he acknowledged that the epidemic had impacted foreign trade and investment in the city.

He said the city would take measures to boost confidence among businesses and support multinationals in setting up regional headquarters and research centers in Shanghai. It did not provide further comment.

Tom Simpson, managing director of the China-Britain Business Council, said it was expecting to meet with the Shanghai government in the coming weeks.

Shanghai had provided its members “more practical” business resumption support including issuing logistics permits and reopening warehouses, he said.

During the lockdown, Shanghai tried to keep factories open under “closed loop” operations but businesses said the arrangements posed numerous difficulties.

The lack of flights into China – the vast majority have been canceled for more than two years – also remains a key hindrance.

China has resolutely stuck to a “zero-Covid” policy that aims to eradicate the spread of the virus, an approach that is increasingly out of step with the rest of the world where economies have reopened after vaccination campaigns.

Joerg Wuttke, president of the EU Chamber, said the zero-Covid policy was not just denting Shanghai’s attractiveness, but China as a whole, especially as other rival markets open and try to lure companies away from China.

“The world is not going to wait for China to clean this mess,” he said.