From CCP Media:
By virtue of their socioeconomic comparability and strategic positioning, Hong Kong and Singapore have been involved in a nip-and-tuck race to be Asia’s top destination for international businesses and investment. The latest developments, however, seem to be tipping the competition in favor of the Lion City.
Amid growing hostility toward Chinese technology companies in the United States, tech giant Tencent announced several days ago that it had picked Singapore as its beachhead for Asia, joining other Chinese unicorns Alibaba and ByteDance in the race to build up their presence closer to their home bases.
But no place is closer to their home bases than Hong Kong, the traditional steppingstone for mainland firms poised to go global. Hence arises the question: why were the trio of internet giants like-minded in opting for Singapore rather than Hong Kong to base its regional hubs, since both cities are known to have comparably strong fundamentals that have proved competitive and successful in winning over global investors?
Hong Kong and Singapore indeed have much in common and therefore are frequently compared to each other. Both cities are renowned for having a business-friendly environment, low tax regime and world-class infrastructure. Chinese and English are listed as official languages in both places.
And they both feature prominently in many of the world’s socio-economic development indices. Hong Kong, for instance, has been rated the world’s freest economy for 25 consecutive years by the Heritage Foundation, only to be knocked off the pedestal this year by Singapore.
When similarities abound, the answer to that question, therefore, has to be found in their differences that make the difference.
Unlike up-and-coming mainland firms eager to use Hong Kong as a springboard for global markets, Tencent and ByteDance are retreating from hostile markets in search of greener pastures.
As the result of a ban imposed by the administration of US President Donald Trump, which was effected on Sunday, American entities are no longer able to deal with Tencent’s super-app WeChat.
ByteDance, meanwhile, is facing a fast approaching deadline for a forced sale or shutdown of the US operations of its popular TikTok video-sharing app.
Anticipating headwinds and uncertainties in the US market, Alibaba bought half of a $1.2-billion skyscraper in Singapore early this year to house its regional headquarters.
For the trio making a strategic pivot to Asia, Singapore is strategically better positioned than Hong Kong. The 10-member Association of Southeast Asian Nations is home to some of the world’s fastest growing emerging economies, with Singapore playing the leading actor in regional affairs and a staunch advocate of free trade.
Lee Hsien Loong, prime minister of the trade-dependent island nation, has been a vocal critic of the Trump Administration’s unilateral tariffs on China, Singapore’s top trading partner. “The cause of a country’s trade deficit lies at home is neither caused nor cured by trade restrictions”, he wrote in 2018 of the US trade war on China.
For the tech giants who are pulling out of the US market woefully scathed, Lee’s defense of free trade must sound both soothing and appealing.
Despite it being as steadfast as Singapore in promoting free trade, Hong Kong has been haplessly caught in the eye of a geopolitical storm that is still gaining in force and scope. For geopolitical reasons, the Trump administration slapped trade and technology sanctions on Hong Kong which is ironically the single biggest source of trade surplus for the US.
Markets such as Singapore that enjoy unfettered access to the world’s latest technologies can prove a tremendous draw for technology-intensive firms like Tencent, Alibaba and ByteDance, now that Hong Kong has been placed on the US technology sanction list.
Situated on the periphery of the geopolitical contest between the world’s biggest economies, Singapore has performed a sophisticated, well-balanced act by maintaining a relationship of comity and cooperation with both China and the United States.
Washington, therefore, wouldn’t mind the island nation punching above its weight in regional and international affairs so long as it does not align with Beijing in this geopolitical competition. This leaves Singapore much leeway in dealing with Chinese technology companies forced out of the US market.
One other calculation that the internet giants might have in mind when deciding to skip Hong Kong for Singapore is the lasting sociopolitical stability the city state has on offer, a consideration that the trio won’t say out loud though for PR and political reasons.
Thanks to the legacy of the political philosophy of Singapore’s founding father Lee Kuan Yew, leaders of the multiethnic island nation have doubled down on the utmost importance of political stability and racial harmony as a foundation for progress and prosperity, a Confucianist political culture that must have struck a chord with the top brass of the Chinese tech giants.
The Mandarin-speaking environment in Singapore should prove another incentive and encouragement for mainland investors. Scenes of the summer of violence and unrest that wracked Hong Kong last year are still playing out among many mainland residents, especially that of an agitated mob attacking a Mandarin-speaking JPMorgan banker for telling his assailants “We are all Chinese”.
The relocation of the three internet giants to Singapore from the US market does not necessarily represent a vote of waning confidence in Hong Kong, where fundamentals still remain robust and strong, and anti-mainland sentiments are harbored only by an extremely small section of the local populace.
They are instead steering away from the epicenter of a raging geopolitical storm, in which Washington will keep exploiting Hong Kong as a pawn in its bigger battle against Beijing.