April 17, 2018

Shanghai Free Trade Zone adopts practical measures to boost ‘global maintenance’

Shanghai has been developing the “global maintenance” services in its Free Trade Zone and other places since 2014 as part of the city strategy to promote “Shanghai Manufacturing” and “Shanghai Service.”

Now, 24 companies in the Free Trade Zone has obtained the qualification for inbound maintenance and remanufacturing business and their global sales reached US$496 million last year.

Orbotech, one of the 24 companies, registered a global maintenance company in the zone last year and acquired the inbound maintenance qualification a few months ago. Before Orbotech maintenance company was set up in the zone, out of consideration for intellectual property protection, all the parts had to be sent abroad to be maintained then shipped back into China, and the import and export tariff were 27 percent in total, plus two months’ shipping time and fee.

Orbotech used to spend millions of dollars each year on parts maintenance, said Cao Feng, director of Orbotech’s Asia-Pacific logistics center. The new maintenance company can now exempt Orbotech from paying import and export tax. It can also take advantage of Shanghai’s resources such as its ports, equipment, technologies and talents.

According to regulations of Shanghai Custom, Orbotech should set up two separate manufacturing lines for domestic and overseas customers. An extra manufacturing line could cost millions of dollars for the company. Considering Orbotech’s potential contribution to the city’s high-end manufacturing industry and the company’s qualified products label and visible management, Shanghai Customs finally permitted Orbotech to carry out global maintenance business with only one manufacturing line, thus reducing half of the time that takes the company to obtain the inbound maintenance and remanufacturing qualification.

Providing classified and refined management services for companies has become a rising trend, which benefits the latter greatly, Cao said. The maintenance technicians recruited mostly from the Fortune 500 companies in Shanghai are not only interested in the high salary at Orbotech, but also its maintenance techniques, he added. It’s estimated that 40 percent of the global orders of the Orbotech maintenance company will come from Japan, Korea, Singapore and other Asia-Pacific countries and regions by 2019.

Based on the companies’ qualification appraisal and products’ risk analysis, Shanghai has been piloting innovative global maintenance industry supervision in the FTZ since 2014, replacing the previous individual registration with annual examination of the companies’ qualification.

The zone has also exempted the companies from old mechanical and electrical products pre-shipping examination. The new mechanisms adopted by the zone will meet the companies’ need for speedy clearance and will shorten their maintenance cycle by 70 percent and provide the companies with effective control on products safety risks and environmental protection, said Fang Bin, deputy director of the Examination and Supervision Division of the Shanghai Entry-Exit Inspection and Quarantine Bureau.