Asian Cities Dominate World’s Top Business Locations

Asian Cities Dominate World’s Top Business Locations

Sydney, 20 July 2011

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 FootprintsBusiness 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 liberalisation 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.

Global Office Locations 2011: Full City RankingGlobal Office Locations 2011: Full City Ranking
Rank Rank City No. of companies % of companies present in city
11 Hong Kong Hong Kong 191191 68.2%68.2%
22 SingaporeSingapore 189189 67.5%67.5%
33 Tokyo Tokyo 179179 63.9%63.9%
44 LondonLondon 177177 63.2%63.2%
55 ShanghaiShanghai 172172 61.4%61.4%
16= Sydney 136 48.6%
43 Melbourne 87 31.1%
47= Auckland 85 30.4%
90= Brisbane 48 17.1%
119= Wellington 31 11.1%

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 FootprintsBusiness 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.

Notes to EditorsNotes to Editors

MethodologyMethodology

Company sample:Company sample: The Fortune Global 500 list was used to identify the 300 largest firms (based on revenue) for inclusion in the study and was also used as the basis for sector categorisation. This company list was then amended to ensure that we were capturing they key office occupiers across all sectors. For example, law firms, which are not listed on the Fortune 500, were added to our sample.

The sample is composed of the principal firms in each sector, regardless of their headquarters’ locations. This means that the sample is not composed of equal number from each region – the split is roughly 45:35:20 EMEA: AMERICAS: ASIA PACIFIC.

City sample:City sample: The two cities with the largest population in each country in our sample were automatically included in the city sample. Any additional cities with a population of more than five million that were not the first or second city in a country were also included. This increased the number of cities in China, the United States and India in particular.

Measuring Office PresenceMeasuring Office Presence

Throughout this report we refer to companies being ‘present’ in a market, but what do we mean by this? For the purposes of this study we have taken it to mean that companies have a physical office presence in a city.

If, therefore, a company is registered through a PO Box, it is excluded as it does not necessarily follow that it has an office in a particular city. The exceptions to this rule are the UAE and South Africa, where it is the norm for companies to provide a PO Box rather than a physical address. In fact, in most cases there are ways to double-check that office existed in these markets.

The definition of ‘presence’ which we have adopted means that that the size of a company’s office floorplate or headcount is not picked up in the analysis: two firms might be present in the same market but on totally different scales.

The scale of a company’s presence in a market can also provide an indication of the extent to which the market has developed as well as the importance that a company places on a particular location. For example, North American firms often favour ‘touchdown’ space – small offices taken on flexible leases, often for back office purposes – when they enter a new market to minimise risks before they expand their operations.

To ensure that the analysis presented in this report is not misinterpreted, it is important to remember the possible variation in scale of presence which lies behind the statistics.

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