Posted : 2013-11-20 17:52
Updated : 2013-11-20 17:52

Seoul vs. Singapore

By John Burton

General Motors recently decided to move its international headquarters from Shanghai, where it had been operating for the last nine years. So where to go?

The relocation was part of a corporate restructuring in which GM's China operations will be spun off as an independent unit while the international headquarters will continue to look after "key parts" of GM's business in Korea, Southeast Asia, Australia and New Zealand, India, the Middle East and Africa as well as Chevrolet and Cadillac in Europe.

Seoul would have seemed an obvious choice for the new base, which would be in charge of international sales and marketing, finance, government relations, human resources, information technology and legal functions.

Korea has become a major production hub for GM, accounting for a fifth of the automaker's global production after it took over bankrupt Daewoo Motors in 2002. GM already employs 245 administrative staff in Seoul.

But GM chose to ignore Korea and instead decided to place the new headquarters in a country not known as a major auto hub and where German luxury cars are favored by a status-conscious public despite the fact that car prices there are among the highest in the world due to punishing license fees. That place is Singapore.

The number of jobs involved with the international headquarters is not large, around 120. But where the headquarters is located has high prestige value.

So why did GM decide to pick Singapore? GM said one key reason was the city-state's close geographical proximity to emerging key markets in India, Southeast Asia, the Middle East and Africa. Another factor may have been the fact that Singapore served as GM's Asia-Pacific regional headquarters between 1993 and 2004, before it was moved to Shanghai.

But GM also might have preferred Singapore to Seoul because it is reportedly considering gradually reducing its presence in Korea and shifting the production of new models elsewhere because of rising labor costs, militant unions and a stronger Korean currency.

Such a move would come despite the fact that GM's acquisition of Daewoo's small car technology, which the U.S. automaker lacked, helped revive GM's fortunes after its 2009 bankruptcy by enabling it to produce vehicles popular in fast-growing emerging markets.

In the competition among Asian cities to attract the regional headquarters of multinational firms such as GM, Singapore has boasted of its "business-friendly" environment. This includes a tamed workforce since unions in Singapore are grouped under a government-controlled labor federation, similar to the corporatist model employed in Mussolini's fascist Italy of the 1930s, and strikes are as rare as a snowstorm on the tropical island.

Singapore has been aggressive in courting multinational companies to base their Asia headquarters in the city-state by touting such advantages as a high standard of living, advanced infrastructure, a clean environment, minimal crime, competitive tax rates, a skilled English-speaking workforce and a clear regulatory framework.

But Seoul also has many of these advantages from clean air and low crime rates to one of the world's most efficient public transport systems.

GM may not have been aware of the growing disenchantment among expatriates living in Singapore. The government's policy in recent years to boost the population above 5 million on the compact island has led to a sharp jump in rents and housing prices, making the city-state nearly unaffordable for even relatively well-paid foreign residents.

The soaring property prices also reflect Singapore's efforts to become what could be described as the world's largest gated community as it seeks to attract the super-rich from around the world, such as Russian tycoons and Indonesian timber merchants, with promises of bank secrecy and security. It brings to mind Somerset Maugham's description of Monte Carlo as "a sunny place for shady people."

Foreign schools in Singapore are increasingly difficult to get into as the growing ranks of foreign bankers swell demand for places for their children. The subway and buses have become crowded and the roads are increasingly subject to traffic jams, a constant source of complaint. And Singapore's cultural attractions remain patchy, with no museum that can match, for example, the newly opened Museum of Modern and Contemporary Art in central Seoul.

The influx of foreigners into the country has led to a backlash among the local population, with increasing displays of resentment. Many expat friends, who once enjoyed Singapore, are now making plans to leave.

Seoul has a good story to tell in attracting international professionals, but unfortunately it is telling it rather badly. It should mount a well-executed publicity and marketing campaign, something that Singapore has done well. Singapore spends millions of dollars a year on promotion activities and its inward investment agency, the Economic Development Board, is seen as the one of most important government agencies and attracts the cream of the bureaucracy. Seoul and the central government should take note and do the same.

John Burton, a former Korea correspondent for the Financial Times, is now a Seoul-based independent journalist and media consultant. He can be reached at

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