The world’s largest companies are opting to locate their offices in booming Asian economies, reflecting a shift in global economic power, according to new research by CB Richard Ellis (CBRE).
Business Footprints is the first study of its kind that analyses the office locations of 280 of the world’s largest companies across 232 cities. The study found that Hong Kong is the most popular city for international businesses, with 68.2% of international companies surveyed represented there.
The combined impact of rapid growth in mainland China’s major markets, easy access to other major Asian economies, and Asia’s world-leading emergence from the global recession have enabled Hong Kong to act as a gateway between east and west. The city also boasts the world’s third-lowest tax regime globally; corporation tax at a maximum of 16.5%, personal income tax at a maximum of 15% and no sales tax or VAT – providing an enticing scenario for international companies and workforces.
CBRE Head of Research for Asia Pacific, Nick Axford said Hong Kong was the city set to benefit most from the gradual liberalization of the Chinese financial services markets.
“The city holds a unique position from which international businesses can operate globally, due to its location, lack of foreign ownership restrictions, tri-lingual mix and international, highly-skilled workforce,” Mr Axford said.
Hong Kong is closely followed by Singapore, home to 67.5% of surveyed companies, and then by Tokyo (63.9%). At fourth position is London - the only city in the Western world to be ranked in the top five most popular cities worldwide, alongside the rapidly emerging Eastern powers. The top five is completed by Shanghai (61.4%) which is increasingly adopting the role of financial and business capital of China.
The Pacific region achieved three positions in the top 50. Sydney is home to 48.6% of surveyed companies, placing it at equal 16th in the rankings with a total of 136 companies of the 280 surveyed choosing to conduct business in the city.
Melbourne was ranked in 43rd position followed by Auckland at equal 47th and Brisbane and Wellington placing at equal 90th and 119th respectively.
CBRE Senior Director Transaction Management, Global Corporate Services, Tim Nicholas said the Business Footprints the Business Footprints survey indicated companies headquartered in Asia Pacific had significantly less propensity for overseas expansion than those headquartered elsewhere.
“At present, Asia Pacific-domiciled companies also typically confine their choice of locations in overseas markets to fewer cities than companies from other regions,” Mr Nicholas said.
“The largest proportion of the global office footprint of Asia Pacific domiciled companies is in their own region. Nearly 40% of companies headquartered in Asia Pacific were present in fewer than 10 countries, compared with fewer than 20% of those headquartered in EMEA or the Americas.”
Among countries, the United States ranks first with 89.6% of global companies represented there. This reflects the expansive size of the United States, which offers international companies numerous choices of major cities from which to access its markets.
In terms of the Pacific, the Business Footprints survey found the world’s largest companies rate Australian locations as particularly strategic. Australia placed equal ninth with Hong Kong in the country rankings with 68.2% or 191 companies maintaining an office presence in the country. New Zealand also made the Top 50, ranking a respectable 46th place with 34.6% or 97 companies present in the market.
Mr Nicholas said location decisions were typically driven by corporate strategies designed to cut costs, access low cost or skilled workers, and reach new markets.
“The extent of a company’s office presence, in terms of number of countries, varied widely between sectors,” Mr Nicholas said.
“For example, Pharmaceutical & Healthcare firms typically have the widest global office distribution at country level while, at the other extreme, Automobile & Parts companies have a presence in the fewest countries.”
Mr Nicholas added that the Pacific Region was highest on the radar for the Banking and Financial Services sector, with 32 of the 48 banking institutions surveyed having an office in Sydney, placing the city equal 9th in the global city rankings.