Shanghai looks good for cosmetics giant

Consumer goods giant Procter & Gamble is refocusing its strategy in China with a sales center in Shanghai as it opens operations outside Guangzhou.

As a result, the tax revenue of the local government in Guangzhou, where P&G is based, was reduced by 56 percent, or 1.45 billion yuan ($236 million), in the first six months of this year.

It is expected that the reduced tax income will reach 2 billion yuan by the end of this year, according to the Guangdong Provincial People's Congress.

Favorable conditions helped lure the company to Shanghai.

The city shifted from business tax to value-added tax in January last year, which could reduce a company's tax by up to 40 percent.

Guangdong introduced the policy in November last year.

Experts also said that the Shanghai free trade zone has also attracted P&G.

Executives at P&G China deny moving their sales headquarters to Shanghai, as they insist that there has never been a sales center in Guangzhou. They also added that Guangzhou has always been "the most important and ideal" manufacturing base in China.

Apart from the factory in Huangpu district of eastern Guangzhou, which is P&G's largest factory in Asia, P&G is also building a factory in the Luogang, also in eastern Guangzhou.

Shanghai is becoming more attractive to multinational cosmetics companies. Unilever returned to Shanghai in 2009 and set up an international research and development center that attracted a total investment of 500 billion euros ($659 billion). Johnson & Johnson also moved its international headquarters to Shanghai in 2012.