Original Title: Municipal Government Issues Several Policies to Further Encourage the Development of the Software and Integrated Circuit Industries

Shanghai Municipal Government Document [2012] No. 26

Notice of the Shanghai Municipal People’s Government on Issuing the “Several Policies on Further Encouraging the Development of the Software and Integrated Circuit Industries in the Municipality”

People’s Governments of All Districts and Counties; All Commissions, Offices, and Bureaus of the Municipal Government:

The “Several Policies on Further Encouraging the Development of the Software and Integrated Circuit Industries in the Municipality” is hereby issued to you. Please implement them conscientiously.

Shanghai Municipal People’s Government

March 15, 2012

Several Policies on Further Encouraging the Development of the Software and Integrated Circuit Industries in Shanghai

To accelerate the development of the software and integrated circuit industries in Shanghai, these policies are formulated in accordance with the “Notice of the State Council on Issuing Several Policies to Further Encourage the Development of the Software and Integrated Circuit Industries” (State Council Document [2011] No. 4), and in light of the actual conditions of this municipality.

These policies apply to software and integrated circuit enterprises and institutions that are registered with the municipal industrial and commercial authorities, have completed tax registration, and have been recognized by the competent industry authorities. In accordance with the regulations of the State Council and its relevant departments, software and integrated circuit enterprises in this municipality shall implement these policies in addition to enjoying the benefits provided by State Council Document No. 4 [2011] and other national and municipal policies supporting the development of strategic emerging industries.

I. Investment and Financing Policies

(1) The software and integrated circuit industries shall be designated as strategic priorities for Shanghai’s accelerated cultivation and development of strategic emerging industries. Focusing on the development of next-generation information technology and smart city construction, efforts shall be made to accelerate the advancement of the software industry toward high-end sectors, with a particular emphasis on promoting the independent and coordinated development of integrated circuit design, manufacturing, packaging and testing, equipment, and materials.

(2) The municipality will continue to allocate special funds to support the development of the software and integrated circuit industries. (Responsible Departments: Municipal Finance Bureau, Municipal Development and Reform Commission, Municipal Commission of Economy and Information Technology, Municipal Science and Technology Commission)

(3) Encourage investment in new 12-inch and larger integrated circuit chip production line projects, as well as major integrated circuit equipment R&D and industrialization projects, and actively ensure supporting infrastructure such as land, planning, and water, electricity, and gas supply. For eligible projects, the municipal government will provide a certain amount of R&D funding support in accordance with relevant regulations, and the respective districts and counties will provide matching funds of equal value. (Responsible Departments: Municipal Development and Reform Commission, Municipal Commission of Economy and Information Technology, Municipal Finance Bureau, relevant districts and counties)

(4) Further leverage the role of the National Emerging Industries Venture Capital Fund in the software and integrated circuit sectors in Shanghai. Venture capital guidance funds at both the municipal and district/county levels shall continue to invest in the establishment of venture capital enterprises in the software and integrated circuit sectors, guiding and mobilizing social capital to jointly invest, with a focus on supporting the development of software and integrated circuit enterprises in their start-up and growth phases. (Responsible Departments: Municipal Development and Reform Commission, Municipal Finance Bureau, Municipal Commission of Economy and Information Technology, Municipal Financial Services Office, relevant districts and counties)

(5) Encourage commercial banks to increase credit support for local software and integrated circuit enterprises and further promote the development of intellectual property pledge financing. Support commercial banks in expanding merger and acquisition (M&A) loan services to facilitate the M&A and restructuring of software and integrated circuit enterprises. Support the development of financing guarantee institutions and financial leasing companies to provide guarantee and leasing services for small and medium-sized software and integrated circuit enterprises. Encourage and support software and integrated circuit enterprises in restructuring and going public, making full use of capital markets such as the Main Board, SME Board, and Growth Enterprise Market (GEM) for financing and development.(Responsible Departments: Municipal Financial Affairs Office, Municipal Intellectual Property Office, Municipal Commission of Economy and Information Technology, Municipal Commission of Commerce, Municipal Development and Reform Commission)

II. Enterprise Cultivation Policies

(6) Referring to the national standards for the identification and support of key software and key integrated circuit design enterprises within the national planning framework, the city will annually designate a batch of key software enterprises and key integrated circuit design enterprises within the municipal planning framework, which will receive priority support from both the municipal and district/county-level governments. (Responsible Departments: Municipal Development and Reform Commission, Municipal Commission of Economy and Information Technology, Municipal Commission of Commerce, Municipal Finance Bureau, Municipal Local Taxation Bureau, relevant districts and counties)

(7) To foster the growth and expansion of enterprises, software and integrated circuit enterprises whose annual operating revenue exceeds 10 billion yuan, 5 billion yuan, or 1 billion yuan for the first time will receive tiered rewards for their core teams from the municipal and district/county-level governments.Encourage enterprises to establish operations in Shanghai. For newly established software and integrated circuit enterprises in Shanghai with investment amounts exceeding 5 billion yuan, 1 billion yuan, and 100 million yuan, respectively, the relevant districts, counties, or industrial parks shall provide tiered rewards to the enterprises. (Responsible Departments and Units: Municipal Commission of Economy and Information Technology, Municipal Finance Bureau, Municipal Development and Reform Commission, Municipal Commission of Commerce, Municipal Science and Technology Commission, relevant districts, counties, and industrial parks)

III. R&D Policies

(8) For software and integrated circuit design enterprises purchasing technology usage rights or ownership from overseas enterprises, if the purchased technology is included in the current year’s nationally prescribed “Catalog of Encouraged Imports of Advanced Technologies and Products,” the municipal government will provide matching support equal to the amount of the national import interest subsidy. Districts, counties, and industrial parks are encouraged to formulate supporting policies based on local conditions. (Responsible Departments and Units: Municipal Commission of Commerce, Municipal Commission of Economy and Information Technology, Municipal Finance Bureau, Municipal Development and Reform Commission, relevant districts, counties, and industrial parks)

(9) For municipal software and integrated circuit enterprises undertaking or participating in major national science and technology projects, the local funding matching ratio shall be implemented in accordance with relevant municipal regulations. (Responsible Departments: Municipal Science and Technology Commission, Municipal Development and Reform Commission, Municipal Finance Bureau, Municipal Commission of Economy and Information Technology)

(10) Support local software and integrated circuit enterprises in applying to establish industrial technology innovation strategic alliances. Provide financial support for the alliances’ research on technology roadmaps, technical standards, business models, and intellectual property benefit-sharing mechanisms. (Responsible Departments: Municipal Science and Technology Commission, Municipal Finance Bureau)

(11) Further encourage cooperation between integrated circuit design enterprises and integrated circuit manufacturing enterprises. For integrated circuit design enterprises that utilize the city’s integrated circuit production lines to conduct the first round of wafer fabrication for engineering products meeting certain conditions, the municipal and district/county-level governments shall provide financial support to be used for the enterprises’ R&D investments. (Responsible Departments: Municipal Commission of Economy and Information Technology, Municipal Finance Bureau, Municipal Development and Reform Commission, relevant districts and counties)

IV. Talent Policies

(12) High-level talent who have made outstanding contributions to the software and integrated circuit industries shall be provided with appropriate funding or rewards in accordance with the city’s talent policies. (Responsible Departments: Municipal Human Resources and Social Security Bureau, Municipal Commission of Economy and Information Technology, Municipal Development and Reform Commission, Municipal Finance Bureau, and other relevant departments)

(13) For key software enterprises and integrated circuit design enterprises included in national and municipal planning and layout, in addition to enjoying the city’s talent recruitment policies for high-tech enterprises, support shall be provided in accordance with special talent recruitment policies for the recruitment of scarce, urgently needed, and exceptionally talented personnel. (Responsible Departments: Municipal Human Resources and Social Security Bureau, Municipal Commission of Economy and Information Technology)

(14) Implement government incentive policies for software designers and integrated circuit designers who develop products with independent intellectual property rights. (Responsible Departments: Municipal Commission of Economy and Information Technology, Municipal Local Taxation Bureau, Municipal Finance Bureau)

V. Intellectual Property Policies

(15) Further encourage software and integrated circuit enterprises to apply for domestic and international software copyrights, exclusive rights to integrated circuit layout designs, or invention patents, and provide appropriate funding for such applications in accordance with relevant regulations. (Responsible Departments: Municipal Copyright Bureau, Municipal Science and Technology Commission, Municipal Intellectual Property Office, Municipal Finance Bureau, Municipal Commission of Economy and Information Technology)

(16) Strengthen intellectual property protection, crack down severely on piracy, and cooperate with judicial authorities to safeguard the legitimate rights and interests of intellectual property owners. Government agencies, enterprises, and public institutions at all levels must use genuine software, and the use of domestically developed and controllable software is encouraged. Fully implement policy measures requiring government agencies to use genuine software, and include software procurement funds in the fiscal budget. (Responsible Departments: Municipal Copyright Bureau, Municipal Intellectual Property Office, Municipal Commission of Economy and Information Technology, Municipal Finance Bureau)

VI. Import and Export Policies

(17) Pilot and promote full-process bonded supervision for integrated circuit design-related operations. (Responsible Departments: Shanghai Customs, Municipal Commission of Commerce, Municipal Commission of Development and Reform, Municipal Local Taxation Bureau, Shanghai Branch of the State Administration of Foreign Exchange)

(18) Continue to implement the customs and inspection and quarantine enterprise classification management system. Further implement customs clearance facilitation measures for enterprises with high credit ratings, providing fast and convenient port services to software and integrated circuit enterprises that meet the recognized criteria. For eligible software and integrated circuit enterprises, implement the customs “bonded release” clearance measure for their imported and exported goods. (Responsible Departments: Shanghai Customs, Shanghai Entry-Exit Inspection and Quarantine Bureau, Municipal Port Office)

(19) Port inspection units, including customs and entry-exit inspection and quarantine authorities, shall continuously optimize customs clearance procedures for import and export goods of software and integrated circuit enterprises. They shall continue to improve the “5+2” day customs clearance system and prioritize the application of convenience measures such as advance appointment for inspection and customs declaration during holidays and expedited release. For exported software products delivered via the internet, physical inspection and customs declaration are not required.(Responsible Departments: Shanghai Customs, Shanghai Entry-Exit Inspection and Quarantine Bureau, Municipal Port Office, Municipal Commission of Commerce)

VII. Industrial Layout and Management Policies

(20) Accelerate the development of national-level bases such as the Shanghai National Microelectronics Industry Base, Software Industry Base, and Software Export Base; actively establish Shanghai as a national pilot demonstration city for cloud computing service innovation and development; continue to designate and build a number of municipal-level software bases, software export (innovation) parks, and integrated circuit design industry bases; and prioritize support for the construction of public service facilities within these bases.In accordance with the city’s industrial layout guidelines—combining the “phase-out of secondary industries and promotion of tertiary industries” in central urban areas with new town development in suburban areas—relevant districts, counties, and industrial parks may introduce targeted policies to promote industrial agglomeration and cluster development, thereby further optimizing the industrial layout. (Responsible Departments and Units: Municipal Development and Reform Commission, Municipal Commission of Economy and Information Technology, Municipal Commission of Commerce, Municipal Science and Technology Commission, Municipal Bureau of Planning and Natural Resources, relevant districts, counties, and industrial parks)

(21) Relevant functional departments shall further streamline administrative approval procedures for software and integrated circuit projects—including project initiation (filing or approval), environmental impact assessments, market listing, registration, and acquisition of industry qualifications—to enhance administrative efficiency; allow R&D expenditures to be included in total project investment in accordance with relevant regulations; and provide simplified, expedited channels for software and integrated circuit enterprises when applying for environmental impact assessments. (Responsible departments and units: Relevant departments, districts, counties, and parks)

VIII. Policy Implementation

(22) All relevant responsible departments shall expedite the formulation of implementation rules to ensure the effective implementation of this policy. This policy shall take effect on the date of its issuance and remain valid until December 31, 2016.