- GENEVA -- Multinational companies
are increasingly moving not only production facilities but headquarters
functions abroad, marking a new stage in the globalisation of corporate
activity, according to the United Nations Conference on Trade and Development.
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- Geneva-based Unctad says 829 headquarters operations
were established or relocated worldwide in the 15 months to March 2003,
nearly a quarter of them in developing countries.
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- The UK was the most popular choice among industrialised
nations with 181 HQs established in that time, followed by the US (126)
and Australia (54).
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- Of the 191 headquarters sited in the developing world,
the top locations were high-income Singapore (46) and Hong Kong (44), followed
by China (29). Unctad says the most common strategy is to set up regional
headquarters in places that have a strategic position in international
production systems. US-based IBM has opened a regional head office in Singapore
employing 1,000 people. The UK's GSK has established a regional head office
in the US.
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- However, some companies have relocated specific corporate
headquarters functions, such as Australia's BHP Billiton which has transferred
its managerial HQ operations to London.
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- Shifting the parent company's headquarters is rare and
usually results from a restructuring or cross-border merger or acquisition,
Unctad says. It cites the 1995 merger of Upjohn of the US and Sweden's
Pharmacia, which established headquarters in London.
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- But Sweden's Ikea moved its main HQ activities to Denmark
in the late 1990s and Viatron of the US this year announced it would establish
its global HQ in the Netherlands.
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- In establishing or relocating HQs abroad, companies hope
to improve performance and competitiveness. Typically they look for locations
with a combination of good international accessibility, a skilled multilingual
workforce, high quality of life, low taxes, excellent communications, well-developed
business support services (legal, accounting, public relations), low risk,
and proximity of customers.
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- For the host nation, establishment of multinational HQs
brings international recognition as an investment location and opportunities
for local employment and skill transfer.
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- © Copyright The Financial Times Ltd 2003.
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