Hong Kong versus Singapore as regional headquarter base in Asia
Sept 26, 2019
Hong Kong as a hub for global finance and a wonderful gateway to the Chinese market:
Despite talk of the region’s decline, Hong Kong remains the exceptional gateway to access to the Chinese markets. Hong Kong counts about 64 percent of FDI into mainland China and 65 percent of ODI from the mainland flows through Hong Kong. Hong Kong is also responsible for about 70 percent of mainland Chinese overseas IPOs and 60 percent of its overseas bonds.
As long as the RMB remains heavily managed and protected, Hong Kong will keep its fundamental role for fundraising and international financial transactions
Moreover, despite recent damage due to the protests and political issues, Hong Kong still remains much more transparent and business-friendly than in China mainland. The Heritage Foundation, a conservative think tank, has ranked Hong Kong as the world’s freest economy for 25 years in a row while China was ranked 100th.
Hong Kong will continue to play a crucial and irreplaceable role for doing business with China, even if political risks are growing. Hong Kong can perform functions that no mainland city can and is better placed than Singapore for many aspects of doing business in China.
The advantages of Singapore as a new platform in Asia:
By opposition to Shenzhen and Shanghai, Singapore becomes a global financial center in a similar way to Hong Kong.
In addition, Singapore offers a transparent common law legal system, low levels of corruption, and a low tax and business-friendly environment. Hong Kong and Singapore’s common characteristics have made them long-time rivals as financial centers in Asia.
Crucially, Singapore now holds advantages in terms of political stability and freedom from outside interference.
While Hong Kong provides access to Asia’s biggest market, Singapore is also very well positioned as a base to access to the south East Asian countries and certainly Asia globally.
In the process, Hong Kong may lose some of its economic dynamism especially in the retail and tourism Markets. With the development of the south east countries, Singapore becomes a strong option as ever for foreign firms who want to base their regional operations in Asia.
As of 2016, Singapore was home to the regional headquarters of 4,200 firms. Google, Facebook, and Twitter are among some prominent firms to have their Asia Pacific headquarters in Singapore.