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Looking Beyond China, Some Companies Shift Personnel

Keat Chuan Yeoh, managing director of the Singapore Economic Development Board, says there are opportunities in Asia beyond China.Credit...Charles Pertwee for The New York Times

SINGAPORE — General Motors moved the headquarters of its international division here from Shanghai last month. Archer Daniels Midland, the agribusiness giant, is gradually doing the same with its Asia and Pacific operations. Other multinationals, like IBM, have shifted staff members here from China for a few functions, like treasury operations.

“I’m going to spend a lot of time going back and forth — the five-hour flight is going to be my monthly bus trip,” said Ismael Roig, the president of Archer Daniels Midland’s Asia and Pacific operations.

The moves reflect the broader evolution of China, now the world’s largest market for cars, flat-panel televisions and scores of other products. The Chinese economy has become so large and affluent that companies increasingly treat it like Europe, with reports going directly to head offices in home countries and no longer lumped in with those from developing countries.

“We are big in China, and we want to be,” said Stefan Jacoby, the president of General Motors International. His division, which officially moved here on Aug. 5, no longer includes the company’s China operations, but encompasses G.M. subsidiaries in Africa, the Middle East, Southeast Asia, Australia and South Korea.

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Procter & Gamble opened this research center in Singapore, though it remains in China.Credit...Charles Pertwee for The New York Times

The many frustrations of doing business in China have made some difference in the plans to move executives here — choking air pollution, countless regulations that favor local competitors and weak protection for intellectual property. A rising wave of economic nationalism has also manifested itself in large-scale raids on the Chinese offices of multinationals in the automotive, pharmaceutical and technology sectors. Police officials are copying large numbers of computer hard drives and interrogating employees without allowing access to legal advice.

More important, many multinationals are starting to pay renewed attention to Southeast Asia, which is showing signs of revival 17 years after the Asian financial crisis. They have found it hard to do that from Shanghai or Beijing. Each major city has no more than one flight a day to Jakarta, Indonesia, for example. And China’s diplomatic and trade ties to Southeast Asia have been strained by its increasingly assertive claims to control over practically all of the South China Sea.

The reasons for companies to shift headquarters to Singapore, “relate to the growth opportunities in Asia Pacific beyond just China,” said Keat Chuan Yeoh, the managing director of the Economic Development Board, Singapore’s investment promotion agency.

Philipp Rösler, a former vice chancellor of Germany who is now a managing director of the World Economic Forum in Davos, Switzerland, said the forum had been surprised by the number of its member companies that had said in the last several months that they were considering moving their local or regional headquarters out of mainland China.

But so far, it has not translated into a mass exodus. Two of the largest corporate leasing brokers in Singapore — the New York-based Cushman & Wakefield and the Chicago-based Jones Lang LaSalle — each say they see no sign of large-scale moves by multinationals from mainland China or Hong Kong to Singapore.

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General Motors workers in Singapore, where it moved the base of its international division from Shanghai.Credit...Charles Pertwee for The New York Times

“There isn’t a huge long list of people moving out of China; that isn’t what we see at all,” said Chris Archibold, the head of Singapore leasing for Jones Lang LaSalle.

Many American companies that rushed to open Asia headquarters in Shanghai a decade ago now regret it but are leery of antagonizing the Chinese government by moving out, said the chief executive of a Western company who spoke on the condition of anonymity.

History looms large. Jardine Matheson, Hong Kong’s leading British company for more than a century, moved its incorporation to Bermuda in the 1980s and delisted from the Hong Kong Stock Exchange in 1994, before the return of Hong Kong to Chinese sovereignty. Those decisions prompted retaliation by Beijing, which hindered the company’s ability to make large investments in mainland China for more than a decade.

For now, the operations being moved here remain tiny, even microscopic, compared with those remaining in China.

Archer Daniels Midland has built a large team in Shanghai that can negotiate acquisitions of agribusiness factories in China, do due diligence and conduct audits, Mr. Roig said. So the top priority now for the company in Asia is to develop the same capability in the growing Indonesian and Vietnamese markets.

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The central business district on the waterfront in Singapore.Credit...Charles Pertwee for The New York Times

Singapore is a two-hour flight from Jakarta and from Ho Chi Minh City, Vietnam. Singapore also has tax laws that favor commodities trading operations and agreements with other countries that make it relatively easy to resolve trading disputes with companies elsewhere.

But most of Mr. Roig’s subordinates remain in Shanghai. Similarly, only 40 G.M. managers and executives have moved from Shanghai to Singapore, and the entire international operations headquarters occupies a single floor of a downtown office building.

Companies are finding it easier to persuade talented managers to move to Singapore, with its fairly clean air, than to Shanghai. Zhang Xin, the chief executive of SOHO China, the leading developer of top-end office buildings in Beijing and Shanghai, said she was stunned when three-fifths of the mostly European teenagers and the coach at her son’s soccer club in Beijing all moved out of China this summer, a shift that she attributed to air pollution.

The European Union Chamber of Commerce in China said in its wide-ranging annual position paper, released in Beijing on Tuesday, that eight of its member companies had reported rising difficulties in persuading talented staff to move to China, particularly because of air pollution.

Shortages of spaces at English-language schools have also been an issue elsewhere. Singapore has prevented local families from enrolling their children in the elementary school and junior high grades at the city’s international schools, avoiding the overcrowding that has afflicted many such schools in mainland China and, particularly, Hong Kong.

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Stefan Jacoby, president of General Motors International, says, “We are big in China, and we want to be.” But his division, newly relocated in Singapore, no longer includes China.Credit...Charles Pertwee for The New York Times

Chip Kimball, the superintendent of the highly regarded Singapore American School, said that more expatriates were moving to Singapore. But he noted that his school had experienced only a slight increase in demand because the government had arranged for a series of other international schools to open in the last five years.

By contrast, “the bottleneck in Hong Kong right now is schooling,” said May Tung, the head of the Hong Kong financial services practice of DHR International, a Chicago-based executive recruitment firm.

While few headquarters are moving, and even fewer factories, multinationals do appear more cautious in adding further to their already numerous research centers in China.

Companies like Procter & Gamble and Baxter Pharmaceuticals have been opening or expanding research and development centers and high-tech factories here in Singapore, although they also retain large operations in China.

Kishore Mahbubani, the dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore, said the growth of Chinese technology companies like Baidu and Huawei meant that a constituency was growing in China for eventual improvements in intellectual property protection.

The chief executive for Asia at another Western multinational, who insisted on anonymity because of the legal dangers in criticizing China openly, said that at many companies now, “They’re just convinced if they open that R.&D. center in China, every technical secret they’ve got will be copied, every patent will be exploited.”

A version of this article appears in print on  , Section B, Page 1 of the New York edition with the headline: Looking Beyond China, Some Companies Shift Personnel. Order Reprints | Today’s Paper | Subscribe

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