Shanghai has emerged as a more attractive option than Hong Kong for multinational companies looking to set up Asia-Pacific headquarters because of its location and the rising importance of the mainland market, according to the European Union Chamber of Commerce in China. But competition between Shanghai, Hong Kong and Singapore, the 3 key business hubs in the region, is expected to continue for some time, given their respective competitive advantages.
Shanghai now has 319 regional headquarters established by foreign businesses, fewer than a quarter of the number in Hong Kong, home to 1,200 regional headquarters. Last year, 24 multinationals including Walt Disney, Kraft Foods and Norvartis International announced plans to shift regional headquarters to Shanghai.
The main challenges for Shangha-based headquarters lie in the regulatory and tax environment, which creates less favorable conditions compared to Singapore and Hong Kong.