Manufacturing companies in Asia-Pacific see Singapore, the PRC and Hong Kong as the best locations for regional headquarters [RHQ], according to a survey by Spire Research and Consulting.

Covering more than 100 global corporations in the Asia-Pacific region, the survey showed that the PRC came a close second to Singapore with 56 votes in comparison to Singapore's 57 for attractiveness as an RHQ location. While Singapore's economic policies, political stability, and lifestyle and leisure make it a first choice for multinational corporations [MNCs], the PRC is considered the most favourable manufacturing site of the future due to its huge domestic market size.

"These findings demonstrate that Singapore remains the most competitive location for RHQ in the Asia-Pacific region," said Leon Perera, group managing director of Spire Research and Consulting. "However, more companies are opting for dual RHQs ­ Hong Kong for North or Northeast Asia, and Singapore for South or Southeast Asia. Singapore will need to evolve new strategies to retain RHQs in the face of fierce competition."

Unlike America and Europe, where law and languages are standardized, the Asia-Pacific region is far too large for companies to have only one headquarters. "Dual RHQ will become the future important trend," Perera said.

Based on three criterion ­ economic policies, domestic market size, and infrastructure ­

the survey found that a country's economic policies are seen as the most crucial factor for deciding an RHQ location, while domestic market size comes second.

The finding of domestic market size as the second most important aspect indicated MNC's maturing decision-making, Perera said. Corporations tended to think highly of the country's infrastructure and government policies in the past to determine RHQ locations, and the emergence of the new factor showed that companies now have a better understanding of Asian environments and can operate comfortably in different cities, he said.

Though the PRC has advantages with its large domestic market, the country still has limitations in terms of competing with Hong Kong and Singapore, said Jun Ge, director of legal affairs at Intel in Shanghai. While regional management still remains an issue, foreign exchange control in the PRC needs to have more flexibility like that in Hong Kong, he said. But he also added, "China is definitely catching up."

For the PRC to become the most preferred location for RHQ, Perera said it may take 10 to 20 years. "In the short term," he said, there is "absolutely no way for China to take over Hong Kong, where hard and soft infrastructure and government policies are better; in the long term, I expect to see Beijing, Shanghai, and Hong Kong go more towards equality, in which Hong Kong will continue to be the location of choice, and Beijing is the region of government access while Shanghai has advantages in logistics," he said.

Meanwhile, the government's regulations show positive signs of encouraging multinational firms to open RHQ in the PRC, Ge said. Drawn by its lucrative domestic market, multinational companies are often willing to overlook the difficulties and shortcomings in the PRC and to establish RHQ there, Ge said. "It [China] is getting there."