Chinese companies hedge risk in Singapore

  • As many as 500 Chinese companies have quietly redomiciled or registered in Singapore over the past 12 months in a bid to hedge against rising geopolitical risk as tensions between Beijing and Washington escalate.
  • They follow online fast-fashion retailer Shein, electric vehicle maker Nio and IT services provider Cue, who were among the first to switch parent companies or global headquarters to Singapore, list on the stock exchange, acquire local businesses and form joint ventures in the city state.
  • Chinese businesses setting up in Singapore is not a new phenomenon, but senior bankers say there is now an “acute” rush by mainland groups to establish holding companies to future-proof their businesses as the west steps up its scrutiny of corporate China.
  • The exact number of Chinese companies being set up is unclear because Singapore does not disclose the country in its public statistics. However, one lawyer said his firm’s internal research division found more than 500 new Chinese companies had set up in 2022 in Singapore, which experts noted was a rise from previous years.
  • Another business advisory group in the city-state that had reviewed the data calculated the number at 400, including family offices, but also asked not to be identified due to the sensitivities involved. Analysts expect the number of family offices — many of which are from China — to be well over 1,000 by the end of 2022, compared with 400 at the end of 2020.
  • “We call it Singapore-washing, and it definitely helps tick boxes when we present a company to investors if we can say it is domiciled or headquartered or even listed in Singapore,” said an executive at a global private equity firm.
  • The trend has accelerated. Shein, a fashion company popular with western consumers, has aggressively expanded its Singapore office this year. Since 2021, it has been operated by Singapore-registered Roadget Business, according to filings first reported by Reuters, which one lawyer specialising in US equity listing rules said “could make it easier to list in the US”.
  • Nio, the EV start-up that plans to expand into the US market after entering Europe, listed on the Singapore exchange on May 22, despite already being listed in New York and Hong Kong. The automaker said the listing was important for its “global business development” and an adviser familiar with the deal said the move was partially a hedge to retain access to international finance.
  • The flotation came at the same time Nio was put on a list of 80 Chinese companies facing expulsion from US exchanges following a stand-off between Washington and Beijing over accounting practices.

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