Singapore becomes hub of Chinese technology amid tensions in the US

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

Tencent and Alibaba are increasing their presence in the city-state, while TikTok owner ByteDance is reportedly investing billions of dollars.

Considered 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 was “expanding its business 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 faces a ban this month in the US, along with 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 United States and China on technology and the growing risk of disassociation, it makes sense for Chinese technology companies to separate their operations in China and outside of China,” said Tommy Wu of Oxford Economics.

“Singapore would be an ideal location given the city’s comparative advantage in technology, its geographic proximity to China and as a hub for innovation in Southeast Asia.”

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

Political turmoil in Hong Kong and the introduction of China’s controversial national security law has caused many companies to seek a more stable business environment in Asia.

Masking China

But there is another reason Singapore is so attractive to China, according to Nick Redfearn, deputy chief executive of British consultancy Rouse.

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

“This is generally because regional headquarters, operating 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.

Southeast Asia overtook the EU to become China’s largest regional trading partner in 2020, according to Redfearn.

Global footprint

Rui Ma, a Chinese technology expert and investor, added: “It has seen Western companies (Google, Facebook, LinkedIn and many more) make it their Asia Pacific headquarters for a while now, so it is only natural that Chinese companies too consider it for the same reasons.

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

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

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