Hong Kong has prevailed in fDi’s Asia-Pacific Cities of the Future 2013/14, displacing Singapore to claim first position. This is a significant result for the city, which gained five places from the previous 2011/12 rankings. 

Hong Kong has a proven track record for attracting FDI, gaining 184 projects in 2012, according to data from fDi Markets, as well as placing first in both the Infrastructure and FDI Strategy categories. Major investments into Hong Kong include UK-based Global Switch, which invested $361m in 2012, as well as China-based GDS Services and Kuwait-based Agility Post, which created 397 jobs in the same year.

Singapore ranked second overall, down one place from the previous ranking. The city performed well in most categories, achieving first place in the Economic Potential category and ranking second in both Infrastructure and Business Friendliness. Beijing gained four places in the overall ranking, rising from seventh place in 2011/12, to rank third. The city performed well in Economic Potential (ranking second) and in Business Friendliness (third).

New Indian entrants

Indian cities were represented in the Economic Potential category with two entries, Mumbai ranking fourth and Bangalore in seventh place. Mumbai is a high driver of outward FDI, according to fDi Markets, while Bangalore scored very highly in terms of the level of inward and outward FDI and the number of jobs this created. Mumbai and Bangalore are the only Indian cities to feature in any categories, and it is the first time that an Indian city has placed in the Economic Potential category. 

While Singapore ranked first place in the Economic Potential category, other notable entries included Chinese cities, which accounted for three of the top 10; Beijing ranked second, Shanghai third and Shenzhen ninth.

Japanese infrastructure 

Japanese cities scored extremely well in the Infrastructure category, claiming five of the top 10 places. Yokohama ranked fourth, with Chiba, Tokyo, Kitakyushu and Kobe claiming fifth, sixth, seventh and ninth places, respectively. These locations placed due to the quality and level of their transportation networks, as well as the high level of internet connectivity and speed available throughout the country.

In the Business Friendliness category, Chinese cities came out on top, claiming five of the top 10 places. Shanghai ranked in first place, rising from seventh place in the same category in 2011/12. At 25%, China’s corporate tax rate is among the lowest in the Asia-Pacific region. When coupled with the relatively short amount of time it takes to start a business, and the number of jobs created through FDI in the country, it is clear to see that establishing a presence in China has been made more attractive.

Australian and New Zealand cities dominated the Labour Environment category, claiming six of the top 10 places. Wellington topped the category, with Newcastle, Melbourne, Canberra, Auckland and Brisbane ranking third, fourth, fifth, seventh and ninth, respectively. The high number of university graduates in the countries, as well as their superior quality of life, make the countries attractive for investors.

Hong Kong on top of FDI Strategy

Hong Kong places a high importance on its FDI strategy, with a network of overseas offices to follow potential leads for investment and a social media strategy to target investors. Brisbane ranked in second place in this category, rising two places from the previous rankings in 2011/12, just displacing Melbourne which slipped into third place.  In addition, there were several new entries to the FDI Strategy category, with Chengdu, Adelaide, Yokohama and Wuxi placing in the top 10, having not featured in the 2011/12 rankings.

Phnom Penh retained the title of most cost-effective city in this year’s rankings, scoring well in every aspect of the category. Investors are drawn to the city by its low taxes and import/export costs. Rayong increased it ranking from 10th place in 2011/12 to second place in 2013/14, thanks to its low cost and ease of doing business. The Cost Effectiveness category also saw a new entry from Hangzhou in ninth place.

With continually declining FDI levels, Chinese and Australian cities scored particularly well in this year’s rankings, each with cities in the top 10. The Chinese global brand is continuing to impress in its drive and commitment to increase its FDI, with a particular zeal for its business friendliness. With a behind-closed-doors symbolic Third Plenum having taken place in November, and rumours of an easing of Chinese land restrictions, could this affect fDi’s rankings in 2015/16? While Hong Kong and Singapore traditionally come out on top, are Chinese and Australian cities starting to contend this trend? 

Methodology

To create a shortlist for fDi Asia-Pacific Cities of the Future 2013/2014, the fDi Intelligence division of the Financial Times collected data using the specialist online FDI tools fDi Benchmark and fDi Markets, as well as other sources. Data was collected for 95 cities under five categories: Economic Potential, Labour Environment, Cost Effectiveness, Infrastructure and Business Friendliness. In addition, surveys were collected under a sixth category, FDI Strategy. In this category, cities submitted details about their strategy for promoting FDI, which was then scored by fDi’s judging panel. Cities scored up to a maximum of 10 points for each data point, which were weighted by importance to the FDI decision making process in order to compile both the subcategory rankings as well as the overall Asia-Pacific Cities of the Future ranking.

Click on the link below for a PDF version of the complete results: