February 27, 2024
Multinationals pick Singapore over Hong Kong for Asian headquarters
Singapore has solidified its position as the preferred choice for multinational firms seeking an Asian headquarters, outpacing Hong Kong by hosting regional offices for 4,200 companies in 2023. This dominance, outlined in a Bloomberg Intelligence report, underscores Singapore’s appeal due to factors such as stronger ties with the West, a broader talent pool, economic diversity, and tax incentives. Notably, even Chinese companies, looking to mitigate geopolitical risks and expand their reach, are favoring Singapore over Hong Kong.
The 50-page report emphasizes that Singapore’s allure is rooted in its political stability, freedom, and proactive measures to attract foreign businesses. While Hong Kong positioned itself as China’s financial hub by managing political protests and adhering to the Covid-Zero policy, Singapore underscored its independence and emerged as the top choice for international business offices.
Despite Hong Kong’s lower standard corporate tax rate of 16.5%, Singapore’s flexible tax programs, allowing reductions from 17% to 13.5% or less for specific activities, contribute to its attractiveness. Singapore’s targeted incentives for foreign companies establishing regional hubs have proven successful, attracting a prestigious roster of multinationals such as FedEx Corp., Microsoft Corp., Google (Alphabet Inc.), Mead Johnson, Rolls-Royce, and General Motors Co.
Even companies operating in more sensitive environments, including TikTok Inc. and Shein, have chosen Singapore as their business hub. Established Chinese entities like electric-vehicle maker Nio Inc. find a home in the city-state, while tech giants Alibaba Group Holding Ltd. and Huawei Technologies Co. are expanding their operations there. State-owned firms like China Railway Materials have also set up overseas headquarters in Singapore.
With its corporate critical mass and a more diversified economy, Singapore is positioned to continue outpacing Hong Kong in attracting global business over the next five years, as highlighted in the Bloomberg Intelligence report.
