Japan(Toronto)-(Via Shanghai (overnight Layover))-Hongkong-(Via Shanghai)-Japan(Hiroshima)

I am Japanese and will travel to Hong kong with a Canadian friend. We will go Hong kong Via Shanghai and stay in shanghai around 23 hours because of the transit. While we will stay in Shanghai for waiting for the flight to Hong kong, can I and my Canadian friend go out from airport and enjoy sightseeing using this 72 hour free transit?? If so, do the Canadian friend have to apply for the visa free permit at airport in Japan before we take off to Shanghai and Hong kong??