Hu Ke Gui [2021] No. 12

To all entities this may concern,

In order to implement the innovation-driven development strategy, work faster to build Shanghai into a globally influential center of science and technology innovation, and create a large number of S&T little giants with competitive advantages in domestic and foreign markets, the Measures of Shanghai Municipality for the Implementation of the S&T Little Giant Project is hereby issued for implementation.

Science and Technology Commission of Shanghai Municipality

Shanghai Municipal Commission of Economy and Informatization

Shanghai Municipal Finance Bureau

August 30, 2021

Measures of Shanghai Municipality for the Implementation of the S&T Little Giant Project

Chapter I General Provisions

Article 1 The Measures is hereby developed in accordance with the Law of the People’s Republic of China on the Promotion of Small and Medium-Sized Enterprises, the Regulation of Shanghai Municipality on Advancing the Construction of a Scientific and Technological Innovation Center, and the Notice of the Ministry of Science and Technology on Issuing Some Policies and Measures for Supporting Small and Medium-Sized S&T Enterprises in Their Efforts to Accelerate Innovative Development in the New Era (Guo Ke Fa Qu [2019] No. 268) to

(1) implement the innovation-driven development strategy;

(2) further advance the independent innovation and core competitiveness of small and medium-sized S&T enterprises;

(3) create a large number of S&T little giants with competitive advantages in domestic and foreign markets; and

(4) work faster to build Shanghai into a globally influential center of science and technology innovation.

Article 2 The S&T Little Giant Project shall apply to S&T enterprises engaged in product development, production, management and technical (engineering) services in the high-tech field in line with the industrial development direction of the state and Shanghai with strong S&T innovation capacity, outstanding market competitiveness and great potential. Such enterprises shall be equipped with: a sound innovation system and mechanism along with corresponding research investment; products with independent intellectual property rights and high market share in the corresponding segments; a certain scale and excellent growth potential; and good credit record and strong financing ability. Innovation, scale and demonstration are their keywords.

Article 3 The S&T Little Giant Project is implemented under the coordinated efforts between the city and district authorities.

The Science and Technology Commission of Shanghai Municipality (STCSM) shall, together with Shanghai Municipal Commission of Economy and Informatization (SMCEI) and Shanghai Municipal Finance Bureau (SMFB), be responsible for the work related to the S&T Little Giant Project such as planning, approval, evaluation, and supervision.

The SMFB shall, in conjunction with STCSM, be responsible for budgetary arrangements and appropriations of funding, and cooperate in the supervision and inspection of fund use.

The S&T authorities of each district of the city shall be responsible for organizing the application for S&T Little Giant Project in their respective district. They shall also review, recommend and administer the projects in conjunction with industrial authorities of the district, and arrange for the necessary funding in conjunction with fiscal authorities of the district.

Chapter II Applicable Entities and Conditions

Article 4 The Measures applies to unlisted enterprises in Shanghai that have been registered for three years or more, have been qualified as high and new technology enterprises (HNTEs) (within the validity period), and meet the requirements of S&T credit management.

Article 5 The S&T Little Giant Project supports two types of entities: potential S&T little giant enterprises and S&T little giant enterprises.

Article 6 Applying for potential S&T little giant enterprises shall meet the following conditions:

(1) The proportion of R&D personnel in the total number of employees at the end of last year: no less than 10% for manufacturing enterprises and 30% for software or technology services enterprises;

(2) The total R&D expenses in the past three fiscal years shall account for no less than 6% of the total revenues from principal businesses;

(3) Revenues from principal business in the past year shall fall between RMB 30 million and RMB 100 million;

(4) The compound growth rate of the principal business revenues or net profits in the first three years shall be more than 20%, or the cumulative equity financing in the first three years shall exceed RMB 50 million (or equivalently in foreign currency);

(5) A good management team, a sound financial system, strong market adaptability, and flexible incentive mechanism.

Article 7 Applying for S&T little giant enterprises shall meet the following conditions:

(1) The proportion of R&D personnel in the total number of employees at the end of last year: no less than 20% for manufacturing enterprises and 50% for software or technology services enterprises;

(2) The total R&D expenses in the past three fiscal years shall account for no less than 5% of the total principal business revenues;

(3) Principal business revenues in the past year shall fall between RMB 100 million and RMB 1 billion;

(4) The compound growth rate of the principal business revenues or net profits in the first three years shall be more than 20%, or the cumulative equity financing in the first three years shall exceed RMB 80 million (or equivalently in foreign currency);

(5) R&D institutions (technology centers, laboratories, test platforms, etc.), R&D plans, corresponding operational mechanisms such as intellectual property protection, personnel training (including introduction), innovation incentives, and relatively sound, standardized management systems, as well as good management teams, strong risk control mechanisms, and sound rules and regulations shall be in place.

Chapter III Support Mode and Implementation Cycle

Article 8 The S&T Little Giant Project is an important step of Shanghai Municipality to support small and medium-sized S&T enterprises in achieving continuous technological innovation. The applicant enterprise shall file an application according to the requirements of the annual application notice. After the application is approved, the enterprise shall invest in its own S&T innovation activities first to improve the innovation ability, and will receive corresponding funding after achieving results and passing comprehensive performance evaluation. This is the post-subsidy mode where municipal fiscal funding is granted after the project has borne fruits.

Municipal finance shall be allocated at no more than 20% of the R&D expenditures in the implementation cycle, with a ceiling of RMB 1.5 million per S&T little giant enterprise and RMB 1 million per potential S&T little giant enterprise. District-level finance and municipal finance shall be allocated at the ratio of 1:1.

Article 9 The implementation cycle of the S&T Little Giant Project undertaken by enterprises shall be two years.

Chapter IV Application, Handling and Recommendation

Article 10 The STCSM, the SMCEI and the SMFB shall issue the notice on application for the S&T Little Giant Project to the public every year, specifying the requirements such as the time and channel of application as well as required materials.

Article 11 Those who meet the requirements of S&T little giant (including potential S&T little giant) enterprises may apply according to the annual notice. Enterprises shall be responsible for the authenticity, integrity, validity and legality of any information provided, and shall accept the supervision and inspection of relevant departments.

Article 12 District S&T departments shall, together with district industry departments, strictly examine the applicant enterprises as per the application conditions set forth in Articles 6 and 7 before classifying them into qualified candidates for potential S&T little giant enterprises and S&T little giant enterprises, and recommending them to relevant municipal departments.

Chapter V Review and Approval

Article 13 The STCSM shall, together with the SMCEI and the SMFB, review the applications as per relevant provisions on the management of projects under Shanghai Science and Technology Program, form a list of recommended projects based on experts’ opinions, and announce it to the public. Where there is no objection to the announcement, a notice of approval shall be released.

Article 14 Approved S&T little giant/potential S&T little giant enterprises shall be issued the Certificate of Shanghai (Potential) S&T Little Giant Enterprise as a proof of approval jointly by the STCSM and the SMCEI.

Chapter VI Service Development and Performance Evaluation

Article 15 The STCSM and the SMCEI shall, together with relevant district departments, set up a cultivation and development system of horizontal coordination and vertical interaction and a routine tracking service mechanism to track the growth of enterprises in a timely manner, streamline and understand their demands, and coordinate to address them through the joint meeting mechanism of serving enterprises in Shanghai.

To meet the innovation needs of S&T little giant/potential S&T little giant enterprises, preferential policies shall be put into good use in terms of technological R&D, S&T finance, globalization, collaborative innovation, talent training, and listing cultivation. Social service agencies shall be encouraged to provide professional services such as financing, M&A, listing, technology transfer, intellectual property management, overseas market expansion, industry-university-research cooperation, industrial chain coordination, and cultivation of entrepreneurs and professionals.

Article 16 At the expiry of the implementation period of the S&T Little Giant Project, the STCSM shall, together with the SMCEI and the SMFB, organize enterprises to carry out the comprehensive performance evaluation as per relevant provisions on the management of projects under Shanghai Science and Technology Program. The comprehensive performance evaluation shall be mainly composed of financial audit and implementation evaluation.

(1) Financial audit shall cover the implementation of financial management system, the availability and use of R&D funds, revenue status during the implementation period, and accounting and financial information.

(2) Implementation evaluation shall be carried out by field, and scored qualitatively and quantitatively around the growth ability, innovation capacity, market competitiveness, and social contribution of enterprises.

1. Enterprises passing the comprehensive performance evaluation shall be granted funding according to their grades of “Excellent,” “Good” and “Qualified” proportionally. For specific standards, the notice of performance evaluation in current year shall prevail.

2. Enterprises failing the comprehensive performance evaluation or whose projects have been “Concluded,” no funding will be granted.

Chapter VII Supplementary Provisions

Article 17 The Measures shall be interpreted by the STCSM, the SMCEI, and the SMFB.

Article 18 The Measures shall come into force as of September 1, 2021, effective until August 31, 2026.