From the sales center to the R&D engine, Shanghai's foreign-funded enterprises are leading a wave of innovative transformation

Ask AI · How do foreign-invested cultivation mechanisms in Jing’an District help companies move from sales hubs to an R&D engine?

Previously, the layout of foreign-invested companies in China generally focused heavily on sales and lightly on R&D. But now, this situation is changing. With government support, multiple foreign-invested headquarters are accelerating their move from management decision-making and sales service centers to innovation centers and R&D centers, seeking to connect the full chain of “local innovation—results conversion—company upgrades—industrial uplift.”

Recently, at a conference in Jing’an District, Shanghai, focused on promoting the transformation and upgrading of foreign trade for foreign-invested enterprises, some companies shared their respective transformation case studies.

In the biopharmaceutical sector, Sanofi is increasing its China-focused expansion in Shanghai, while also planning to establish a China R&D and innovation center in Jing’an. Tang Lei, head of translational medicine at Sanofi China, said the company will set up a new legal entity for its R&D center in Jing’an District—an across-the-board strategic upgrade of its existing China R&D center.

As Tang Lei explained, the Shanghai R&D center will become Sanofi’s largest translational medicine research center in China. It will be deeply linked with Sanofi’s six global translational medicine centers, fully leveraging Shanghai’s world-class research resources and an open policy environment to comprehensively accelerate the R&D process of innovative drugs in key areas such as immunology, chronic diseases, oncology, and rare diseases. In addition, the company will promote international simultaneous development of new drugs and the first launch of innovative drugs in China, accelerating access for Chinese patients to innovative drugs in key therapeutic areas.

In the beauty and health sector, JNO (Guerlain/娇韵诗) will locate in Jing’an the site for the company’s first overseas laboratory worldwide, as well as the second-largest R&D center globally. Song Xianli, Asia-Pacific R&D director at JNO, introduced that the center focuses on the needs of Chinese consumers’ skin characteristics—from touch and fragrance to packaging. It will coordinate with the Paris headquarters to develop together, so that high-end beauty products truly match the Chinese market and achieve localized innovation for global beauty brands.

Why do these foreign-invested companies want to transform? Zhao Tiantian, deputy director of the Jing’an District Commission of Commerce, provided the answer. As he said, during the “14th Five-Year Plan” period, Jing’an District’s total value of import and export of foreign trade reached 484.51 billion yuan, realized foreign investment totaled 4.51 billion USD, and the scale of foreign-related economic activity has ranked first among central urban districts for 10 consecutive years. The district has gathered 148 headquarters of multinational companies and more than 6,100 foreign-invested enterprises, with the highest headquarters economic density and the highest concentration of global brands in the city. But with changes in the global trade landscape and requirements for domestic high-quality development, the traditional foreign-trade layout characterized by “heavy sales and light R&D” can no longer meet development needs, making the transformation and upgrading of foreign-trade enterprises an inevitable choice. To address this, Jing’an is anchoring three major advantage tracks—biopharmaceuticals, beauty and health, and high-end consumption—and using R&D innovation to solve transformation challenges, with innovation serving as the core driving confidence for foreign-trade enterprises to enhance their business level.

Zhao Tiantian believes that increasing R&D and innovation investment by foreign-invested enterprises not only can effectively enhance their core competitiveness and steadily improve the quality and efficiency of operations, but can also continuously strengthen the region’s economic contribution and keep improving the industrial ecosystem, achieving win-win coexistence between enterprise development and regional prosperity.

According to Zhao Tiantian, relevant departments, by establishing a gradient cultivation mechanism for foreign-invested headquarters, support companies in extending from single functions to composite functions and from regional functions to global functions. This improves decision-making authority in global strategy, business planning, resource allocation, and funds settlement. It also encourages foreign-invested enterprises to set up industrial investment funds, participate in and facilitate mergers and acquisitions and restructuring, and build cross-industry cooperation platforms—so they can integrate into the global service provider ecosystem and deeply link China and international dual circulation. Up to now, a large number of foreign-invested enterprises have completed the role transformation from selling in China to functioning globally.

(This article is from Yicai Finance and Economics.)