Anxious to remain competitive with centres such as Hong Kong, Singapore and competing commercial centres within China, the Chinese government has created a new species of Free Trade Zone (SFTZ). The first of the FTZs date back to 1980 but have been widely replicated throughout China since that time.

It is approximately 30 square kilometres in size and includes the Pudong international airport and Yanshan port which puts it squarely at the centre of the largest commercial centre in China, Shanghai.

It holds out promise of relaxed rules on everything from profit distribution, tax, out bound investment, enhanced approval and customs processes and encouragement for companies to set up in a whole list of financial, logistical and other industries, China seeks to become more competitive in. The focus is upon encouraging a more liberal environment to attract foreign expertise designed to assist China’s transformation to a more sophisticated economy.

Whilst much attention has focused on the benefits for the financial, insurance and logistics sectors there are encouraging references to IP intensive industries which are to be supported through new policies encouraging investment and innovation.

These include ‘outsourcing of biological medicine’, software, cross border e-commerce, high technology businesses and encouragement to set up pilot programs around such services within the zone. Wholly foreign owned ‘medical institutions’ are also to be permitted.

There is also to be a zone specific IP mediation process which is to assist the rapid resolution of IP disputes.

Because it is thought that such an experiment may well test the viability of extending a similar regime over a much wider area of Shanghai its progress should receive careful scrutiny.