Tesla ‘gigafactory’ is built in Shanghai

Business & Technology

Often overlooked in the torrent of trade war news involving China is an important trend: It is easier than ever today for most businesses — not things like media or nonprofit work, of course, but most businesses — to operate in China. Tesla is one foreign company taking full advantage of streamlined regulations in China.

Photo credit: SupChina illustration


Often overlooked in the torrent of trade war news involving China is an important trend: It is easier than ever today for most businesses — not things like media or nonprofit work, of course, but most businesses — to operate in China.

The World Bank has ranked China as the 31st-easiest country to do business in, up from number 45 a year ago, the South China Morning Post reports. An “eagerness to reform” in areas like access to credit, ease of paying taxes, and dealing with construction permits is cited for the higher ranking.

The reforms are continuing with a new foreign investment law, which Joerg Wuttke, president of the European Union Chamber of Commerce in China, called “surprisingly accommodating to all concerns…we have.”

Two global industries especially benefiting from Beijing’s reforms are the finance and auto industries.

  • In finance, majority-foreign-owned ventures have been approved for the first time this year, with S&P Global receiving a license to operate its ratings services in January, and JPMorgan’s asset management arm becoming the first foreign business to take control of its local joint venture in August.
  • In the auto industry, rules capping foreign ownership are being phased out, and BMW announced a year ago that it would take the opportunity to buy a majority stake in its joint venture with Brilliance China Automotive Holdings.

The case of Tesla

Electric carmaker Tesla has taken full advantage of streamlined regulations in China. Last week, Bloomberg reported that it took Tesla “just 168 working days, about six months, to go from permits to hooking up the electricity to the brand new plant” in Shanghai. Tesla’s Shanghai factory is the first fully foreign-owned car plant in China.

The “gigafactory,” as Tesla calls it, has begun producing vehicles on a trial basis, and CEO Elon Musk has “predicted that his company will be producing at least 1,000 cars a week in Shanghai by the end of the year.”