SingaporeCompanyIncorporation.sg, a portal for starting a company in Singapore has today published a comparative report on doing business in China and Singapore. The report is designed to help international companies, including those based in China, determine which country would help them grow their business in Asia Pacific and beyond.
The report referred to data from World Bank’s 2014 ‘Ease of Doing Business’ report and World Economic Forum’s Global Competitiveness 2013 – 2014 as well as 2014 Global Enabling Trade reports. It measured five indicators, namely company incorporation, corporate tax rate, foreign investment friendliness, intellectual property protection and workforce.
“Choice of a business destination in Asia requires careful analysis of macroeconomic and business factors. China, on its face, is an attractive business destination if one considers the low cost labor and economies of scale. However, an in depth analysis of factors like time and procedures for starting a business, tax environment, transport infrastructure and living conditions indicate that Singapore’s strengths outweigh that of China,” explained Ms. Cheryl Lee, Operations Manager at SingaporeCompanyIncorporation.sg.
In gist, the indicators measured are as follows:
Foreign investment friendliness
Singapore government offers numerous incentives to foreign businesses to set their shop in the city-state. Singapore supports an open trade policy and has few barriers to external trade transactions. The 2014 Global Enabling Trade report ranked Singapore at the top position due to its trade-friendly regulations and a business enabling environment. China stood at the 54th place.
In the report, China’s import and export procedures, transportation network high tariffs were cited as the prohibitive factors for businesses in China. Singapore, on the other hand, has good road, railway, ports and air infrastructure with smooth procedures pertaining to import and export.
Intellectual property protection
Protection of Intellectual Property (IP) rights is a crucial element responsible for gaining confidence of foreign investors. According to the World Economic Forum’s Global Competitiveness Report 2013-2014, Singapore stands second in the world and first in Asia for IP protection. The Global Competitiveness Index (GCI) ranks China at 53rd position. The report assesses the strength of the IP protection measures, including anti-counterfeiting measures.
To maintain its competitiveness, Singapore offers flexible immigration policies and greater clarity on employing foreign workers. Singapore provides companies with access to highly educated and skilled workforce, whether domestically or from abroad. This is in contrast to China. In addition, doing business in China requires knowledge of Standard Chinese or in some cases, dialects. In contrast, the official language of business in Singapore is English.
GCI ranked Singapore at the top position for excellent ‘Labor Market Efficiency’. GCI ranked China 34th for the same measure.
“The report aims to show that Singapore is an ideal platform for international businesses that want to go regional, but still want to do business with China,” explained Ms Lee.
“China presents regulatory and bureaucratic hurdles to foreign investors and the inherent advantages of low-cost-labor too seem to be fading. Singapore on the other hand offers a business environment more open and conducive to innovation and growth with lesser regulations. The excellent infrastructure coupled with seamless network connectivity makes it the ideal destination for global business,” concluded Ms Lee.
To see the full report, please visit https://www.singaporecompanyincorporation.sg/reports/doing-business-in-singapore-vs-china/.