This study examines foreign R&D in Shanghai and reveals that Shanghai has become one of the most concentrated centres of foreign R&D in China. Through interviews at 18 foreign R&D facilities in Shanghai, the study confirms the findings from previous studies that the majority of foreign R&D in China is adaptive and tactical in nature to serve the Chinese market. However, strategic foreign R&D does exist and such establishments are engaged in projects not only for China's local markets, but also for the global market; they are not only involved in short-term product development, but also in long-term original research.