S'pore Still Top HQ Choice But China Closing In: Report

Source : The Business Times, November 12, 2007

Republic scores on economic policies, infrastructure and political stability

MULTINATIONAL companies (MNCs) in the Asia-Pacific still see Singapore as the best place to base their regional headquarters but China is catching up fast, according to a survey.

The findings by Spire Research & Consulting show that manufacturing companies based in Asia-Pacific still consider Singapore the best location from which to manage their regional operations - for now.

But more companies are beginning to favour mainland China and Hong Kong, especially those with dual regional HQs, the report said.

'Singapore will need to evolve new strategies to retain regional HQs in the face of fierce competition,' said Spire's group managing director, Leon Perera, in a statement.

Spire said that it surveyed more than 100 global companies located in the Asia-Pacific region. Of the 105 respondents, some 60 per cent said that they operate in at least three Asian countries and nearly a third operate in seven or more.

Fifty-seven ranked Singapore as among their top location choices for a regional HQ, mainly because of its economic policies, infrastructure and political stability. The information technology and lifestyle and leisure sectors were the main industries that ranked Singapore as the best location.

Mainland China came a close second with 56 votes. This was unsurprising, as 'China is a mecca for international manufacturing companies, who account for roughly half of China's manufactured exports', said Spire.

Many MNCs increasingly want to locate their regional HQs in China because of the overwhelming importance of the Chinese domestic market, it added. While some companies have China HQs that serve the greater China market only, others such as General Motors and Fuji-Xerox have China HQs that manage their entire Asian operations, it said.

In the future, 'many international companies may be tempted to locate a South Asia headquarters in Singapore, with Malaysia providing keen competition, and a North Asia headquarters in Hong Kong, Shanghai or Beijing,' it said.

The companies surveyed rated economic policies, domestic market size and infrastructure as their top three criteria in deciding how attractive a place is as a location for a regional HQ.