Volvo Construction Equipment moving its Asia headquarters to Shanghai
May 26, 2020 Category China News Round-up, Weekly
Volvo Construction Equipment, an arm of Sweden’s Volvo Group, said it plans to move its Asian headquarters from Singapore to Shanghai. The reason for the shift is a new set of policies in China (Shanghai) Pilot Free Trade Zone, allowing foreign businesses headquartered in the zone to conduct offshore business. Foreign companies used to set up operations in China focused only on business in the domestic market, but policy changes now permit them to engage in offshore trade. Last year, the Shanghai arm of Volvo Construction Equipment was the first company in the zone to complete an offshore transaction, with coordination from the Shanghai government, supervisory authorities and banks. It shipped two excavators from its factory in South Korea to Nigeria as part of China’s Belt and Road Initiative (BRI). The machinery itself did not go through Shanghai, but all the paperwork, including orders, capital transfers and insurance, were arranged in Shanghai.
“Previously, policies here meant that we had to do off-shore trade through Volvo Asia in Singapore,” said Zhan Xu, Vice Chief Executive of Volvo Construction Equipment in China. Sales of the Shanghai operations now account for more than half of Volvo Construction Equipment’s global revenue, and the company said it expects to increase its Shanghai-based offshore business. The Lingang Special Area, set up last year as part of the Free Trade Zone, is designed to create a multinational headquarters cluster to develop deeper international trade. “For Shanghai, the aim is to attract multinationals to establish headquarters here and conduct supply chain management here,” said Zhang Yong, Researcher with the Comprehensive Institute of China (Shanghai) Pilot Free Trade Zone at Fudan University. Volvo’s Zhan said the company plans to move a whole set of related service industries, including legal affairs, tax and audit operations, to Shanghai from Singapore. Zhan cautions that the new offshore business is at an early stage and will need careful nurturing by all involved parties, the Shanghai Daily reports.
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