Singapore becomes hub for Chinese tech amid US tensions

Singapore becomes hub for Chinese tech amid US tensions

Singapore skyline

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Some of China’s largest tech companies are expanding operations in Singapore as tensions between Washington and Beijing rise.

Tencent and Alibaba are increasing their presence in the city-state as the owner of TikTok ByteDance is expected to invest billions of dollars.

Considered a neutral territory, Singapore has good ties with both the United States and China.

Relations between Washington and Beijing are becoming increasingly hostile, particularly when it comes to technology.

Tencent announced this week that “it is expanding its commercial presence in Singapore to support our growing business in Southeast Asia and beyond.”

The new regional office is described as “a strategic addition” to its current offices in Southeast Asia.

Tencent’s WeChat messaging app is facing a ban this month in the United States, alongside TikTok, under the Trump administration’s crackdown on Chinese apps and tech companies.

Donald Trump has already imposed bans on the Chinese telecommunications company Huawei.

“Given the tensions between the US and China in technology and the increased risk of decoupling, it makes sense for Chinese technology companies to separate operations in China and outside of China,” said Tommy Wu of Oxford Economics.

“Singapore would be an ideal location given the city-state’s comparative advantage in terms of technology, its geographical proximity to China and as a center of innovation in Southeast Asia.”

Singapore has always been seen as a regional base for Western companies due to its advanced financial and legal system. It is now firmly on the radar of Chinese companies.

The political turmoil in Hong Kong and the introduction of China’s controversial national security law have seen many companies seek a more stable business environment in Asia.

Masking China

But there’s another reason why Singapore is so attractive to China, according to Nick Redfearn, deputy chief executive of UK-based consultancy Rouse.

It could explain why the city-state has attracted so many foreign direct investment (FDI) compared to other Southeast Asian countries, he said.

“This is usually because the regional offices, which operate on behalf of the parent companies, act as foreign investors in countries like the Philippines, Indonesia, Vietnam and elsewhere.

“This can help Chinese companies avoid the emergence of Chinese investments,” he said.

According to Redfearn, Southeast Asia has overtaken the EU to become China’s largest regional trading partner in 2020.

Global footprint

Rui Ma, a Chinese tech savvy and investor, added: “You’ve seen Western companies (Google, Facebook, LinkedIn and many more) become their Asia Pacific headquarters for some time now, so it’s only natural that they also Chinese companies view it for the same reasons.

“I think the recent geopolitical tensions between the US and China make it even more attractive, but it’s not the only or the main reason.”

He says globalization is another driving force. “If Western companies can be global, why can’t we?

“Chinese companies are very willing to invest in the long term and will not be content with being left behind when it comes to future opportunities.”

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