Health club operator Fitness First has ditched Hong Kong as a base for its regional operations, blaming high staff and rental costs. 'We have moved our Asia headquarters to Malaysia for a number of reasons,' said Kent Richards, the club's managing director in Hong Kong, adding that only senior managers were affected. 'One reason is that the Malaysian government provided significant incentives to move our head office to Malaysia and it meant for us something like a 40 per cent cost saving for our head office expenses.' Group managing director Michael Lamb said the primary savings from making the move to Kuala Lumpur were lower office rent, lower staff salaries and reduced housing allowances for staff. There were also tax incentives for basing its regional headquarters in Kuala Lumpur, Mr Lamb added. Hong Kong does not provide tax incentives for companies looking to set up their regional headquarters. Mr Richards said the company also wanted to be closer to its Asian growth markets - Thailand and Malaysia, where it opens three to four clubs each year. Fitness First claims to be the second-largest health club chain in the world, with 350 clubs worldwide and more than 870,000 members. In Hong Kong, it operates seven clubs - including three of its premium The Spa outlets. However, the company stressed the move did not signal a withdrawal from the Hong Kong fitness market. 'Fitness First is not pulling out of Hong Kong. We are not downsizing our operations. We are still growing and developing our business here,' Mr Richards said. 'We are now ready to put more clubs up,' he said, adding that the company was considering opening three more clubs in Hong Kong - which would each entail an investment of around $15 million in terms of equipment, renovation, and staff training. The government has been trying to lure more companies to set up regional headquarters in Hong Kong. A spokeswoman for its investment promotion arm, InvestHK, insisted the city remained attractive to foreign investors.