Shanghai Free-Trade Zone

A master planned
project done

By Kenneth Nesbitt
October 18, 2016

This morning, we visited the Shanghai Pilot Free Trade Zone or SHFTZ.  Personally, this had been one of the more anticipated events during our stay in Shanghai.

For those of you who are unfamiliar with exactly what a Free Trade Zone or FTZ is, let me try to explain it as simply as I can.  All countries may assess and collect duties and or taxes on commodities imported into their borders.  Usually there is a number of days within which Customs expects those duties and or taxes to be paid.  A Free Trade Zone is a designated area where imported goods can be shipped and stored without the Responsible Party having to pay the duties and taxes because technically the goods have not entered into the commerce of that country yet.  Also, many manufacturing companies ship their raw materials into FTZs and assemble their final product there as well. This allows them to manage cash flow better by only having to pay duties and or taxes on a finished product and not every component in said product.  Got it?  Good.  Let’s continue.

The Shanghai Pilot Free Trade Zone was approved by the Chinese State Council in the summer of 2013.  It is actually comprised of four free trade zones supervised by Chinese Customs.  Besides the sheer size of the FTZ, what really stood out to me was the guiding focus of the Chinese Government on Re-opening and Reform policies that are intended to make Shanghai a global leader in trade and shipping.  For example, prior to Reform, Foreign Direct Investment was only approved by the State on a case by case basis.

Today, companies from over 70 countries are doing business in China due to policies that streamlined business registration and consolidated the services or requirements of different government authorizes into a single transparent and online platform.  A fact that was shared with us during a meeting with the Director of the Shanghai Pilot Free Trade Zone was that in only 10 hours, produce can go from a field in Australia to a supermarket shelf in Shanghai. That’s efficiency! Not surprisingly, in only 3 years, the Shanghai Pilot Free Trade Zone now accounts for 20% of the GDP for Shanghai.

After the tour of the FTZ, I headed off to a pre-arranged meeting with the Business Development Manager for Eastern China for UPS.  We discussed what I had observed and if some of my assumptions about the future development of the FTZ in particular, but the entire Chinese economy as a whole, were valid.

Today’s visit showed me that China is very self-aware as it pivots from a manufacturing based economy to one more dependent on diverse, sustainable, and intellectual industries that can not only provide a certain quality of life, but also bring status to the people, to Shanghai, and to China.  Personal opinions about a one party system aside, the Shanghai Pilot FTZ, is an example of a master planned project done well.  We would be wise to keep our eyes on Shanghai.

Stay tuned for more!  The Company Visit & Dinner with President Mark Becker of Georgia State University is up next!

kennethnesbittA native of South Carolina, Kenneth Nesbitt has lived in Atlanta since 1997. He earned his B.A. degree in Marketing from Morehouse College and is a Licensed Customs Broker. Kenneth currently works in International Business Development for UPS where he advises small and medium sized businesses in Georgia and South Carolina on expanding into foreign markets and supply chain optimization. An avid traveler, Kenneth has spent time on four of the seven continents, and enjoys learning about other cultures, cuisines, and experiencing the beautiful diversity this world has to offer.




YLFPChina Web

Homma Rafi | YLFPChina Media Contact
Office of International Initiatives, Georgia State University

Paulina Guzman | YLFPChina Co-Director
World Affairs Council of Atlanta

Kimberly Griffin | YLFPChina Co-Director
Confucius Institute, Georgia State University

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