Multinational companies rank Shanghai, Hong Kong and Singapore as the top 3 locations for headquarters in the region

• Joint study by Roland Berger and the European Union Chamber of Commerce in China on the performance and attractiveness of different cities within the Asia-Pacific region as a location for corporate regional headquarters
• Shanghai, Hong Kong and Singapore emerge as the top 3 locations for regional headquarters out of 15 cities
• Most important criteria: proximity to clients and markets, favorable legal and regulatory environment, stable and favorable political environment, favorable business environment, favorable tax environment
• Study provides detailed insight into the cities' characteristics as headquarters locations and trends in the general business environment

Shanghai, Hong Kong and Singapore come out on top of the list of the most attractive locations in the Asia-Pacific region for multinational companies to establish their regional headquarters. Moreover, when assessing these 3 cities in detail, Singapore and Hong Kong score highest on several key criteria ("legal & regulatory environment", "political environment", "business environment", "tax environment"), while Shanghai scores high in overall attractiveness mainly due to its proximity to the market. These are the key findings of a joint study by Roland Berger Strategy Consultants and the European Union Chamber of Commerce in China, conducted among 1,600 senior representatives of multinational companies active in the Asia-Pacific region.

The "Asia-Pacific Regional Headquarters Study 2011" by Roland Berger Strategy Consultants and the European Union Chamber of Commerce in China focuses on evaluating the performance and attractiveness of different cities within the Asia-Pacific area for locating regional headquarters. "With the gradual global economic shift toward the Asia-Pacific region, many multinational companies attribute increasing strategic importance to this region, especially as regional GDP and consumer demand growth rates outperform those in other regions," says Charles-Edouard Bouée, President Asia and Member of the Global Executive Committee of Roland Berger Strategy Consultants. "In line with this trend, more and more companies are establishing their regional headquarters in Asia-Pacific. Our study provides detailed insight into Asian cities' characteristics as headquarters locations and identifies the obstacles faced by European companies when operating in these cities."

Most important criteria for choosing a city for headquarters

Based on interviews with company representatives, the study identified ten important criteria for locating regional headquarters: (1) proximity to clients and markets, (2) a favorable legal and regulatory environment, (3) a stable and favorable political environment, (4) a favorable business environment, (5) a favorable tax environment, (6) access to human capital, (7) cost of operations, (8) transparent and easy market access, (9) proximity to production facilities, and (10) access to distribution channels.

Respondents were first asked to rank the various locations according to their attractiveness for establishing Asia-Pacific regional headquarters. Shanghai, Hong Kong and Singapore came out on top of the list of preferred locations, with very close overall scores. Each of these three cities were then assessed in more detail using the aforementioned 10 criteria. The findings show that Singapore performs best on many key selection criteria, including a favorable legal and regulatory environment as well as a stable and favorable political environment. Hong Kong comes close and is remarkably strong in terms of administration, regulation and taxation. Shanghai compares favorably on "overall attractiveness" with the other top three locations mainly due to its high score on the "proximity to clients/markets" criterion.

"The finding that Shanghai is currently considered one of the top three most attractive destinations for the location of European multinational companies' Asia-Pacific regional headquarters reflects China’s growing importance in the world and the significance of Shanghai as the largest center of business and finance in China." state the authors of the study. "However, seeing how Shanghai is perceived compared with Hong Kong and Singapore on issues such as the legal and regulatory environment shows there still is room for improvement in these areas."

The study provides specific insight into the performance and attractiveness of the 3 cities with regard to their potential for hosting regional headquarters. It also identifies the obstacles faced by European companies when operating in these cities.