By Patricia Cullen
The number of companies leaving the UK is growing, and with No Deal now a distinct possibility, more are expected to follow. However, none have caused more surprise than the Dyson HQ move from the UK to Singapore. But what has really prompted the move? BLM explores the reasons.
Sir James Dyson, a Brexit-supporting billionaire, renowned for his bagless vacuum cleaners and hand-dryers, has been challenged with allegations of hypocrisy after the announcement that he would relocate, meaning the company would no longer be registered in the UK.
Dyson denied the move was a result of Brexit, stating “We are now at a point where Dyson’s corporate head office will relocate there to reflect the increasing importance of Asia to Dyson’s business.”
While Dyson’s stated motivation to switch legal residence to the Far East city state lies in ‘commercial reasons’ and ‘future-proofing’ the business, political observers have linked the choice to concerns over Britain’s imminent departure from the EU.
Other factors at play
News of the move was made public just weeks ahead of the expected culmination of Brexit, raising questions about whether other factors were at play, such as Singapore’s free trade agreement (FTA) with the EU, which would make it easier to export goods from Singapore rather than the UK.
Last year Dyson’s profits broke £1bn as investments in advanced manufacturing and research reached a new high, while revenue continued its strong growth trajectory. The company aims to be truly global in the way it conceives and manufactures technologies and products, and Dyson’s HQ move to Singapore reflects a strategy to be closer to customers and manufacturing centres. Dyson’s CEO Jim Rowan went on to say, “We would describe ourselves as a global technology company and in fact we have been a global company for some time.”
The company currently employs more than 12,000 people around the world, with more than 4,500 in Britain. It will continue to recruit in the UK to maintain and enlarge its workforce at research and engineering sites in Wiltshire, London and Bristol, as well as at a new centre in Hullavington, where it is spending £200m on new building and testing facilities.
Access to cutting-edge technology
The Singapore Technology Centre will double in size and the Malaysia Design Centre goes into its fifth phase of development. The company vowed the relocation of the HQ will involve only two job moves, with CFO, Jorn Jensen, and the general counsel, Martin Bowen, both moving to Asia.
Dyson is not alone in moving its HQ away from the UK. The last couple of years has seen Panasonic relocating to Amsterdam, where Sony will soon follow, and ferry company P&O shifting registration of its vessels to Cyprus. Japanese retailer Muji is also rumoured to be moving its European HQ to Germany.
International relocation nothing new
But what makes Dyson unique amongst these brands is that it’s a British born business. These moves may not be solely Brexit-related, however, as there is nothing new about big businesses relocating their corporate HQs.
The United Nations Conference on Trade and Development welcomed the arrival of a world market as far back as 2003, emphasising the relocation of iconic American companies such as Burger King (to Canada), Budweiser (to Belgium), and Lucky Strike (to the UK).
Singapore’s competitive corporate tax rates
If Brexit is not a defining reason, then what are the benefits of moving? What is the pull of Singapore?
The country is rapidly becoming Asia’s business epicentre, has been consistently hailed as ‘the land of opportunity’, and a number of international corporations such as Nielsen and Procter & Gamble have announced plans to establish a presence there. Dyson is concentrating on Singapore, not because he is thinking short-term, but the opposite. He understands that the growing market for his company’s products lies in the Far East.
International companies who headquarter themselves in Singapore can also see corporation tax (currently 17%, compared with 19% in the UK) fall to 5% or even 0%, thanks to lengthy tax breaks and generous incentives for those who create jobs. There are no capital gains or inheritance tax in Singapore, while in the UK inheritance tax is charged at 40% on anything above £450,000.
Besides having one of the lowest corporate tax rates, Singapore is also considered by many as the gateway to Association of Southeast Asian Nations (ASEAN). It is a first-class technology hub and has become a preferred destination for businesses looking to springboard into the region’s developing markets, and according to Singapore’s Economic Development Board (EDB), 80 out of the world’s top 100 tech firms have operations in the city. In 2018, EDB anchored investments committing $10.9bn in fixed asset investments and $6.2bn in total business expenditure per annum.
Access to highly-skilled workforce
Singapore also consistently ranks high in country classifications. The 2017 Bloomberg Innovation Index places the country sixth in the world, just ahead of Japan and the US, and Singapore ranks second among 190 economies in the World Bank’s Ease of Doing Business 2018 report. The innovative working environment, alongside a large local pool of talent reinforces the country’s reputation as having one of the most productive and motivated workforces in the region, landing third place in the IMD World Competitiveness Yearbook, which details the most competitive economies in the world.
Backed by its advanced manufacturing capabilities and highly skilled workforce, Singapore can play a leading role in autonomous vehicles and smart mobility, and this is another motive for Dyson committing to the nation, following the decision to produce the Dyson electric car in Singapore from 2020.
Gateway to Asia
The country is strategically located at the crossroads of the main trade and shipping routes of the world, including the major sea route between India and China. This puts Dyson on the doorstep of China, the world’s biggest electronic vehicle (EV) market, without exposing the company to China’s tight trade controls and lax intellectual property protections.
In spite of Singapore’s small market size, with a population of just over five million, it has secured 22 bilateral and regional FTAs and has recently signed the European Union-Singapore Free Trade Agreement (EUSFTA) and the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).
These effectively unlock all of the world’s major markets to Singapore-based enterprises, which is all the more appealing as the US-China trade war shows no sign of waning.
It seems that the way forward is not to discredit businesses for daring to relocate parts of their operations overseas, but to generate a healthy and attractive environment which enables Britain to compete.