Google Exploring Shanghai’s Free-Trade Zone

Companies such as Amazon and Apple use Shanghai’s free-trade zone to run some of their value-added services in China, due to the area’s looser rules on foreign capital.

Yang Jie reports: The jury is still out on the business benefits of Shanghai’s free-trade zone— but one notable U.S. tech giant is among the firms that has dipped a toe into the pilot area’s waters.

“The free-trade zone’s rules make it easier for foreign companies to run e-commerce operations, for example. But they have little benefit when it comes to activities such as Internet search and e-mail, which are dependent on the location of the server and the storage of data”

Google, of Mountain View, Calif., set up a company in Shanghai’s pioneer free-trade zone last year, according to online filings reviewed by The Wall Street Journal.

Companies such as Amazon and Apple use Shanghai’s free-trade zone to run some of their value-added services in China, due to the area’s looser rules on foreign capital and greater freedom in terms of industries that foreign businesses can participate in.

The free-trade zone’s rules make it easier for foreign companies to run e-commerce operations, for example. But they have little benefit when it comes to activities such as Internet search and e-mail, which are dependent on the location of the server and the storage of data, according to people familiar with the matter.

A Google spokesman declined to comment on the issue. The company’s establishment was first reported on Monday by The Paper, a Shanghai-based media outlet.

An online company registration database shows the company, Peng Ji Information Technology (Shanghai) Ltd., was registered on Dec. 25, 2014. Google Ireland Holdings — an Irish-based subsidiary of Google — is listed as its only shareholder…(read more)

Source: WSJ

–Yang Jie with contributions from Gillian Wong