Honeywell International Inc, the world's biggest maker of aircraft electronics, is relocating its eight top Asia-Pacific executives to Shanghai from Singapore, moving them closer to clients and factories in what's expected to be the world's biggest buyer of aircraft in the next 10 years.
"We decided that China is more important as the center of gravity for this region," said Francis Yuen, chairman and president of Honey-well China.
Like Siemens AG, Alcatel SA and Eastman Kodak Co, Honeywell wants its regional headquarters closer to factories where average wages are a tenth of that in Singapore and to markets where demand is spurred by 8 percent annual economic growth.
"Shanghai is the hot place right now amid the boom that's being experienced in China," said David Cohen, an economist with MMS International in Singapore.
Honeywell's relocation "certainly is not going to be the last one," he said.
About 80 multinational companies, or a third of those with headquarters in China, had regional head offices in Shanghai as of September, according to the Web site of the city's Foreign Investment Service Center.
Living and doing business in China isn't without drawbacks, including inadequate legal protections, a muzzled media, local Communist Party interference, corruption among corporate and government officials and capricious public policies.
Advanced Micro Devices Inc, the world's second-biggest maker of personal computer processors, and Siemens, Germany's largest electronics company, moved head offices to Shanghai from Hong Kong last year. Sora Enso Oyj, the world's biggest paper maker by capacity, and Fuji Xerox Co also have uprooted from Singapore.
For Honeywell, setting up a head office in Shanghai brings it closer to Shanghai Airlines Co and China Eastern Airlines Co, among the country's fastest-expanding carriers.
Chinese carriers are likely to expand their fleets with between 1,600 and 1,900 planes worth US$144 billion by 2020, according to forecasts by both Airbus SAS and Boeing Co.
Honeywell's aerospace division has four ventures in Xiamen, Shanghai, Shenzhen and Nanjing, employing more than 270 people.
Honeywell, which has US$500 million invested in China, said mainland sales last year accounted for US$575 million of US$2 billion in Asia-Pacific revenue and will top US$1 billion by 2005.
The company said its new head-quarters will be in the Zhangjiang industrial park in the Pudong district. The complex will include an US$18 million research and development center that can accommodate up to 1,000 engineers.
"We are constantly exploring opportunities to migrate manufacturing operations to those regions that are competitive," Yuen told reporters in Shanghai. "The new site will allow us to tap the vast pool of customers, suppliers, employees and partners in China."
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