SEPTEMBER 11
SINGAPORE — General Motors moved the headquarters of its international division from Shanghai to Singapore last month, while agribusiness giant Archer Daniels Midland is gradually doing the same with its Asia and Pacific operations. Other multinationals, such as IBM, have also shifted employees here for functions such as treasury operations.
“I’m going to spend a lot of time going back and forth — the five-hour flight is going to be my monthly bus trip,” said Mr Ismael Roig, president of Archer Daniels Midland’s Asia and Pacific operations.
The moves reflect the broader evolution of China, now the world’s largest market for cars, flat-panel televisions and scores of other products. The Chinese economy has become so large and affluent that firms increasingly treat it like Europe, with reports going directly to head offices in home countries and no longer lumped with those from developing nations.
“We are big in China and we want to be,” said Mr Stefan Jacoby, president of General Motors International. His division, which officially moved here on Aug 5, no longer includes the company’s China operations, but encompasses its subsidiaries in Africa, the Middle East, South-east Asia, Australia and South Korea.
The many frustrations of doing business in China have made some difference in the plans to move executives here — choking air pollution, countless regulations that favour local competitors and weak protection of intellectual property.
A rising wave of economic nationalism has also manifested itself in large-scale raids on Chinese offices of multinationals in the automotive, pharmaceutical and technology sectors.
Police officers are copying large numbers of computer hard drives and interrogating employees without allowing access to legal advice.
More importantly, many multinationals are starting to pay renewed attention to South-east Asia, which is showing signs of revival 17 years after the Asian financial crisis. They have found it hard to do that from Shanghai or Beijing.
Each major Chinese city has no more than one flight a day to Jakarta, Indonesia, for example. And China’s diplomatic and trade ties with South-east Asia have been strained by its increasingly assertive claims to control over practically the entire South China Sea.
The reasons for firms to shift their headquarters to Singapore “relate to growth opportunities in the Asia-Pacific beyond China”, said Mr Yeoh Keat Chuan, managing director of the Economic Development Board, Singapore’s investment promotion agency.
Mr Philipp Rosler, a former vice-chancellor of Germany who is now managing director of the World Economic Forum in Davos, Switzerland, said the forum had been surprised by the number of its member companies that had said in the past several months that they were considering moving their local or regional headquarters out of mainland China.
However, so far, it has not translated into a mass exodus. Two of the largest corporate leasing brokers in Singapore — Cushman & Wakefield and Jones Lang LaSalle — each say they see no sign of large-scale moves by multinationals from mainland China or Hong Kong to Singapore.
“There isn’t a huge long list of people moving out of China. That isn’t what we see at all,” said Mr Chris Archibold, head of Singapore leasing for Jones Lang LaSalle.
A reason is many American firms that rushed to open Asian headquarters in Shanghai a decade ago regret it, but are leery of antagonising the Chinese government by moving out, said the CEO of a Western company who spoke on the condition of anonymity.
History looms large. Jardine Matheson, Hong Kong’s leading British firm for more than a century, moved its incorporation to Bermuda in the 1980s and delisted from the Hong Kong Stock Exchange in 1994, before the return of Hong Kong to Chinese sovereignty. Those decisions prompted retaliation from Beijing, which has hindered the company’s ability to make large investments in mainland China for more than a decade.
For now, the operations being moved here remain smaller, even microscopic, than those remaining in China.
THE NEW YORK TIMES
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