Over the last decade, a shift in economic growth from the West to emerging markets has resulted in the emergence of new corporate hubs all over the world.
Rapid economic growth has occurred in regions such as Asia, the Middle East, and South America, which has been accompanied by greater infrastructure and, in some cases, less regulation.
Multinational corporations have hurried to take advantage of this, hiring more personnel in these nations and opening new offices in rising markets. Banks such as HSBC and Barclays, for example, have stated that they will increase recruiting in Asia while reducing employees in developed economies. GE, for example, has relocated its X-ray business from the United States to Beijing.
The emergence of these new business centers has sometimes come at the expense of the traditional centers such as New York, Frankfurt, and London. But it hasn’t always been smooth. Dubai, which experienced huge investments in real estate over the past decade, faced a property bust in 2009.
So here are 10 leading business cities in the world:
Hong Kong is the most preferred city for multinational corporations in the world, indicating a recent shift in economic dominance to Asia. Because of its location and lack of foreign ownership limitations, Hong Kong is in a unique position to allow enterprises to operate globally while yet having access to a highly trained and low-cost workforce. Cities like Hong Kong and Singapore are considered as important corporate hubs with access to the expected expansion in new countries nearby. Morgan Stanley, Deutsche Bank, and Credit Suisse are among the world's leading financial giants with headquarters in Hong Kong. Annual office rentals increased by 51% in 2010 over the previous year, and high demand and limited supply are likely to push rates up another 15 to 20% this year.
The highest-ranking Asian city on the list is Singapore. It has become a point of entry for firms and investors looking to get into one of the world's fastest-growing consumer markets, China. Being in the same time zone as key Asian markets including mainland China, Hong Kong, Malaysia, and Indonesia has helped. Flextronics, a contract electronics manufacturer, and Wilmar International, a commodities trader, are both headquartered in the city. Many foreign corporations and their expatriate personnel choose the island nation because of its high-quality infrastructure, efficient administration, low taxes, and busy shipping port and airport. Many banking and financial services firms have offices in the city, which ranks fourth after London, New York, and Hong Kong in terms of the number of financial services firms with offices there. In 2010, office rents increased by as much as 16 percent, with more hikes projected this year as businesses expand and demand rises.
Honda, Sony, and Mitsubishi are among the 47 Japanese Fortune 500 firms headquartered in Tokyo. Several of the world's major investment banks and insurance businesses have their headquarters in the city. Along with New York and London, it is also known as one of the three command hubs of the global economy. Tokyo, which is frequently at the top of the list of the world's most expensive cities, has suffered multiple setbacks in recent years as a result of stalled economic development and natural disasters that have crippled the Japanese economy. Tokyo, which was the most expensive office location in the world in 2009, fell two places to number three in 2010. Rents dropped by more than 11% year over year as the city transitioned to a "tenants market," with vacancy rates rising and rental levels falling.
Although London has a long history as one of the world's top business capitals, a number of rising markets have recently challenged its global standing. The city continues to attract the largest number of foreign corporations in Europe and continues to lead the world in banking, financial, and professional services. London is home to global heavyweights such as Rio Tinto and has over 480 offshore banks. The city attracts the most international visitors in the globe and contributes more than 20% of the UK's GDP. Following the global financial crisis in 2010, prime rents in London began to rise again in 2010. Due to a scarcity of new buildings, annual rent increases in the city's West End topped 27%. Rents in Ireland, Spain, and Greece, on the other hand, declined by 19 percent, 7%, and 3%, respectively, over the same time.
Shanghai, which receives considerable capital inflows from Hong Kong, is home to China's major financial institutions and mainland stock exchange. Because of its location on the Yangtze River Delta, businesses have quick access to China's massive manufacturing base, research and development, and back-office activities. As a result of these reasons, the city has a high concentration of mining, construction, and commodity enterprises. However, many businesses are beginning to relocate to the west in order to take advantage of lower labor costs. Government measures to decrease economic disparities between cities have resulted in improved infrastructure in other regions, with the goal of Shanghai and Beijing becoming service-based cities, with inland markets handling manufacturing and distribution. Shanghai has also established itself as a major Asian regional hub. Honeywell, a U.S. technology and manufacturing company, transferred its Asia-Pacific headquarters to Shanghai in 2003, while Infineon, a German chipmaker, shifted its regional headquarters from Hong Kong to Shanghai. Annual office rentals in the city increased by as much as 28 percent in 2010 as a result of increased demand.
Russia's importance as a developing market is demonstrated by Moscow's rating as the sixth most popular business hub in the world, and the second most popular in Europe. Due to high levels of bureaucracy and corruption, international enterprises find it difficult to do business in Russia without a local office, which is one of the reasons why the city is so crucial for foreign companies. Another factor is that Moscow has superior infrastructure and development levels compared to other large cities. Given its highly qualified labor population and its role as a hub for activities in Central and Eastern Europe, the 13-million-strong metropolis has a significant concentration of enterprises in the professional services industry. The creation of the Moscow International Business Center and the reconstruction of Moscow's city center have also contributed to the city's status as a hub.
With almost 20 million citizens, Beijing is one of the world's most densely inhabited cities. It is one of five Asian cities on the Top 10 list. Mining, construction, and agricultural businesses are all concentrated in the city. Firms that engage often with government agencies and state-owned enterprises, as well as those in highly regulated industries like energy and mining, are more likely to establish a presence in China's political core. Companies attempting to tap into the city's burgeoning consumer markets are likewise well-represented. Beijing's vehicle industry has exploded in recent years, as China has surpassed the United States as the world's largest car market in terms of volume sales. Last month, Daimler launched a Mercedes-Benz design center in the city, while General Motors has joint ventures with state-owned automakers SAIC Motor and FAW Group. Following a government push to build the central business area, Beijing has been rapidly developing prime office space. Because of rising domestic demand for high-quality office space and limited supply, office rents soared by a whopping 48 percent in 2010.
More than 75% of enterprises in the media, technology, and telecommunications sector are based in Madrid, roughly on par with New York, giving Madrid comparable bragging rights as a media city. Telefonica, Europe's second-largest phone carrier, is headquartered in the city. After London and Paris, Madrid is the third-largest city in the European Union (EU), accounting for more than 12% of Spain's gross domestic product in 2009. The city has fared better than the rest of the country, which has been hit hard by a housing bubble and debt crises. In the first quarter of 2011, its unemployment rate was 4.5 percentage points lower than the national average of 21.3 percent. However, due to limited demand, office rental prices have fallen by 7% in 2010. Madrid benefits from Spain's appeal among overseas corporations as the country's capital. In fact, when it comes to recruiting multinational corporations, Spain is among the top five countries in the world. In total, Europe is home to five of the top ten countries where the world's largest corporations have offices. The scale of the European consumer market, as well as the ease with which EU corporations can grow into adjacent nations, is a key lure for these companies.
Dubai is the most important business center in the Middle East and Africa, demonstrating the government's success in promoting the city as a regional hub. During political upheaval in the Arab East, the city has also benefited as a "safe haven" for foreign companies. In the industrial products and services industries, Dubai attracted more than 70% of the enterprises questioned by CB Richard Ellis. It frequently acts as the headquarters for higher-level decision-making due to its strategic location—halfway between Europe and Asia. Dubai has been a popular destination for expatriate personnel due to incentives such as tax savings and a more permissive attitude toward Western culture, such as women not needing to cover their heads in public. The Dubai International Financial Center, which runs the emirate's tax-free business park, announced that 64 firms entered in the first half of 2011, up 8% from the previous year. However, several government regulations make it difficult for overseas businesses to operate in the local market. For example, a citizen of the United Arab Emirates must hold 51 percent of a company. The property market in Dubai has yet to fully recover from the property slump and debt crisis that hit the Gulf state in 2009. In 2010, the Middle East and Africa were the only places in the globe where office leasing costs continued to fall. Rents in Dubai fell by as much as 20% as a result of severe oversupply and high vacancy rates in the domestic market.
Only three Western European cities made the list of the world's top ten business centers, including Paris, one of the world's main cultural centers. In terms of the number of foreign enterprises present, France ranks third in Europe. Because of its mature economy and skilled workforce, Paris, like its Western equivalents, is home to numerous front-office corporate operations. Professional services and insurance companies are well-represented in Paris, but automobile and mining companies are underrepresented. BNP Paribas, a French bank, and AXA, an insurer, are both based in the city. In fact, the Paris region is responsible for about 30% of France's GDP. Despite continued economic debt concerns in France and the Eurozone, office rents increased by 9% in 2010. Because of a shortage of new supply, business rents have risen.
THOUGHTS TO PONDER:
1. Global financial hubs are cities with high concentrations of trade, trading, real estate, and banking.
2. These key cities are home to stock exchanges and investment bank corporate headquarters, and they employ a considerable number of financial experts.
3. New York City, Frankfurt, and Tokyo are just a few examples that may be found all over the world.
4. The location of the company should be such that it can attract customers and create a customer base in the area. The firm should choose a location that is easily accessible by public transit and appealing to clients and employees.
5. The component "Economy" examines the city's economic strength and advancement. The component "Business environment" focuses on infrastructure and logistics.
6. Cities are becoming increasingly important to the global economy, which is linked to the phenomena of urbanization. Currently, urban regions house slightly more than half of the world's population. This only applied to around a third of the world's population in 1950. Physical urbanization is expected to continue in the coming decades, according to UN predictions. More than two-thirds of the world's population will live in cities by 2050.