Ride-hailing giant Uber’s plan to relocate its Asia-Pacific headquarters from Singapore to Hong Kong has provided the Chinese special administrative region with a welcome shot in the arm following a period when its value proposition as a base for regional headquarters has been on the wane.
At the turn of the millennium, Hong Kong and Singapore were neck and neck in the tussle for international companies’ regional headquarters. However, the last 15 years has seen Singapore edge ahead of its rival because of Hong Kong’s uncertain political climate combined with dramatic economic rise of southeast Asia.
Foreign investors announced 521 new HQ projects in Singapore between 2005 and 2019, against 236 HQ projects in Hong Kong, according to fDi Markets data.
The gap has widened in the last few years as widespread anti-government protests have further undermined Hong Kong’s business proposition. In 2019, investors announced 47 new HQs projects in Singapore, against the six HQ projects in Hong Kong, fDi Markets data shows.
Uber’s proposed relocation therefore represents something of a shift against the prevailing tide.
“Uber wants to be a pillar of Hong Kong’s economic recovery, and send a signal to other global leaders that Hong Kong is ready to lead the next wave of tech innovation,” Uber’s general manager for Hong Kong, Estyn Chung, said in a statement.
Move comes with catch
However, the US group’s proposal comes with a caveat: the Hong Kong government must formally recognise its services first, a move that has stirred a heated debate in the territory, where taxi drivers view the ride-hailing firm as a significant threat.
“Like any business, regulatory certainty is key – it is time for Hong Kong to regulate ridesharing,” Uber added.
Uber gave up its southeast Asian operations in 2018, when it sold them to Singapore-based rival Grab in exchange for a 27.5% stake in Grab’s business. The group signed a similar deal with China’s Didi two years previously.
In Hong Kong, Uber claims to have 250,000 registered drivers, although they operate in a legal grey area.
“Uber has retrenched from southeast Asian markets in the past years, therefore there is less of an incentive to keep its headquarters in Singapore,” said Carlos Casanova, head of Asia Pacific economic research at credit insurance firm Coface. “Hong Kong might just offer a better business opportunity for them.”
Despite falling behind Singapore over the last decade, Hong Kong’s position as a dynamic regional hub means it retains plenty of attributes, Mr Casanova added.
“Hong Kong is a bigger financial centre than Singapore, both in terms of asset under management and its ability to provide Chinese firms with critical access to global capital markets. This is especially important in the context of financial decoupling and deteriorating relations between the US and China,” he said.
Uber has made its demands, and any possibility that Hong Kong might close the gap on Singapore in the tussle for international groups’ regional HQs rests with the special administrative region’s government.