One in two business leaders would choose Shanghai if they had to select a headquarters in Greater China, according to a poll by Regus.
Nearly 300 small, medium and large businesses operating in the Greater China region were asked where, hypothetically, they would like to locate an HQ in Greater China if they were to open one today. Just 21% (one in five) opted for Hong Kong compared to 49% who said they would choose Shanghai, while 16% said Beijing.
"China has made no secret of the fact that it wants Shanghai to become the world's leading financial centre by 2020," says Hans Leijten, Regus' regional vice president for East Asia. "The results of our survey show that it could overtake Hong Kong, its long-time rival, as the destination for company HQs if business leaders feel the time is right and their leases leave them free to move there.
"With GDP in Shanghai forecast to grow at 8.3% in 2011 against Hong Kong's 4.4%, we believe growth will continue to fuel multinational companies' relocation to China's increasingly influential first tier city. We have seen demand double in Shanghai in 2010, and we have just opened our new Aurora Centre to help accommodate this growth."
The flow towards Shanghai was underlined in July this year when 24 global corporations including Walt Disney, Kraft Foods and Novartis International moved their regional HQs to the city, joining the nearly 280 multinationals already there.
The rising cost of office space in Hong Kong could be affecting its popularity as the launch pad into China. Although Hong Kong came second in the World Bank's Ease of Doing Business 2011 report, rental costs have soared this year in core business districts. According to Jones Lang LaSalle, Quarter 3 saw an 8.6% rise in Hong Kong's Central business district, bringing rents to US$1,448 per square metre per year. Shanghai rose 5.1% in the same period, and now costs US$558 per square metre per year, compared to US$492 in Beijing.
"There are many factors which companies consider when locating their HQ, chiefly access to key customers and the high costs of setting up a workplace in certain cities. We are finding that companies are increasingly looking to decentralise their operations to ensure that the right people are in the right market at the right time. By embracing flexible ways of working, forward thinking businesses are improving productivity and reducing the high costs of a centrally located HQ in a major CBD," comments Leijten.
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