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Chinese tech firms eye Singapore base amid US-China tensions, coronavirus border closures
- As Washington increases its scrutiny over firms such as ByteDance, more are opting to diversify into Asean markets instead of the US or Europe
- While Singapore is set to benefit, it has to balance risks over data safety and ensure it is not seen as an escape route from US sanctions, analysts say
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Rising business costs, uncertainties arising from souring US-China ties, and border closures due to the coronavirus pandemic – these are some factors prompting Chinese firms to increasingly adopt a business approach that has helped corporations diversify their operations while tapping into the mainland’s opportunities.
Under the “China Plus One” strategy, which has been used by businesses in the mainland for years, China remains the main supply source while certain operations are carried out in other countries, said Lau Kong Cheen and Vanessa Liu, senior business lecturers at the Singapore University of Social Sciences.
“The strategy is therefore a way to diversify supply chain risks, [and gain] access to new revenue channels and resources while tapping into China market opportunities,” they said.
This game plan has been particularly evident in Singapore of late, with reports pointing to a wave of Chinese tech behemoths expanding their footprint in the city state.
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Just last month, Tencent Holdings confirmed plans for a new Singapore office as part of its Southeast Asian expansion, while e-commerce giant Alibaba Group, which owns the South China Morning Post, is reportedly in talks for a US$3 billion investment in Singapore-headquartered ride-hailing firm Grab. Content platform company ByteDance, the developer of the popular TikTok video-sharing app, is also planning to invest “several billion dollars” in a data centre in the city state, according to reports.
Analysts and economists suggest this is the start of a tide that is gaining momentum amid increased scrutiny of Chinese firms by Washington. But while Singapore looks set to gain economically from this wave, it could also present challenges for the government if not handled carefully.
06:02
Global expansion of TikTok and other Chinese tech companies is likely, only not in the West
Global expansion of TikTok and other Chinese tech companies is likely, only not in the West
Pivot to Southeast Asia
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