Organizing for growth: How the Fortune 200 companies cover the world

Globalization has made it almost impossible to be part of the world’s largest companies without covering the whole planet. Realizing that a company could not cover the world from a single Headquarter in New York, Paris or Tokyo, major multinational companies have established regional headquarters in the major regions of the world.

As many as 87% of the Fortune 200 companies have opted for establishing regional headquarters for their international operations, according to the latest report by Infomineo. The main geographic clusters that are managed though a regional headquarter are Asia Pacific (APAC), the Americas, Europe and the Middle East and Africa (MEA).

APAC is home to 116 regional headquarters. A clear leading destination for regional headquarter is Singapore, that emerges as hub for APAC operations with 52 HQs, despite fierce competition from neighboring countries, in particular China with Hong Kong and Shanghai.

According to the report, most companies choose to establish a single headquarter covering the entire Asia pacific region. However, a few companies opt for establishing a regional headquarter specifically focused on ASEAN or Southeast Asian countries. Other F200 companies treat China as a separate region, establishing a regional headquarter specifically catering to its market, which highlights the significance and potential of the Chinese market.

The EMEA region hosts 171 regional headquarters. There, only a handful of cities have a high concentration of regional headquarters: London emerges as a clear choice for the Europe regional hub, while Dubai (45 HQs) and Johannesburg (17 HQs) are the preferred destination for MEA or African headquarters respectively.  Interestingly the Brexit has not generated a significant exile of MNCs from London to continental Europe.

Zooming in on Africa, with its 54 countries, clear sub-regional hubs are emerging, with Nairobi being a natural destination for East Africa, and Casablanca winning share for North Africa and West Africa thanks to its tailored policies to attract HQs.

The Americas region is home to 143 regional headquarters.  Most F200 companies have separate regional headquarters for North America and Latin America rather than a single RHQ for the Americas.

According to the report, New York is the main hub for the North America regional headquarter, with 24 HQs, followed by the state of Texas. Texas has been able to attract these RHQs better than California thanks to a business and tax friendly ecosystem.

Reg. South America Sao Paulo is the leading destination, with 23 HQs, despite being the only Portuguese speaking country in the region. Miami, with its large Latino population, and the structural advantages of the USA, has been able to also make significant headways in attracting HQs, despite not being physically part of South America.

When it comes to factors influencing MNCs’ selection of RHQs location, access to talent seems a decisive one. Companies are interested in locations that appeal to a skilled, modern, and mobile workforce, with some consideration for factors that directly affect talent attraction and retention such as: the quality of infrastructure, cost of living, and openness to immigration.

Interestingly, while taxes are an important factor to look at, tax concessions cannot attract businesses by themselves according to the report. This is reflected in the path taken by the top destination cities. For example, Singapore, has been combining financial incentives with non-financial ones such connecting companies to partners and facilitating access to government incentives as well as collaborating with government agencies to continually develop a talented and globally competitive workforce. Similarly, New York’s diverse and talented workforce, as well as its attractiveness to global talent are some of the reasons why foreign companies choose to locate their RHQs there.

The report concludes by examining case studies of MNCs choosing their RHQs locations, illustrating the importance of connectivity and proximity to knowledge hubs, in addition to access to talent.

The complete 4th edition of the report:

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