Australia reaps the HQ dividends

As the economic power of the Asia-Pacific region continues to grow, more and more companies are setting up headquarters functions to oversee their business growth in this dynamic market. Australia is one of the preferred locations for these operations, and in recent years has been growing in popularity.

According to fDi Markets, the top three locations for regional headquarters in Asia-Pacific are Singapore, Australia and Hong Kong, collectively accounting for 75% of the market. The city-state of Singapore has been leading the field for many years, thanks largely to its central geographic position in south-east Asia, a stable pro-business government, low tax rates and excellent education system and talent supply.

Australia has now reached the number two spot, increasing its 9% share of Asia-Pacific headquarters in 2010 to 18%. Looking at fDi Markets data, the main industries setting up headquarters in Australia are software and IT services, communications, business services and financial services. The main source countries are the US, the UK and Canada. 

UK popularity

Andy Thompson, senior investment manager for the UK with investment promotion agency Austrade, says 2017 saw continued interest from UK IT firms looking to establish offices in Australia, particularly those operating within the fintech, cybersecurity and educational technology sectors. “For many, their reasons for doing so were a combination of demand and interest from the Australian market, a strategic base for servicing clients in the Asia-Pacific region, and being able to provide 24-hour support for global operations in Europe and North America,” he says.

Headquarters functions are a people business, and therefore access to a skilled workforce is a key consideration. Austrade publication Why Australia is clear about the talent on offer, claiming that the Australian labour force is one of the most educated, multicultural and multilingual in the world. More than 40% of Australian workers hold a tertiary qualification and almost 30% were born overseas. About 2.1 million Australians, 9% of the population, speak an Asian language.

With its diversified services-based economy (the services sector accounts for 75% of the economy), employee productivity is also an asset. Between 2010 and 2016, Australia experienced an 8.4% increase in labour productivity while real unit labour costs rose by only 1.5%.

First choice

Also of importance to headquarters operations is proximity to customers and market growth potential. Keirra Smith, a director at New South Wales International Trade & Investment, highlights the importance of Sydney’s fast-growing technology ecosystem as an attractor.

“Global technology firms are choosing New South Wales as the location for their first Asia-Pacific offices,” she says. “Google, IBM, Atlassian, Dimension Data, Dropbox and Microsoft are among the latest in a series of global digital and IT leaders (including Snap, Airbnb, Uber, LinkedIn, Facebook and Twitter) to select Sydney as the base for their Australian and Asia-Pacific operations, recognising its significant role at the heart of Australia’s digital economy.”

A good quality of life for skilled workers is a big part of the Australian success story. Headquarters staff tend to be highly skilled people who are mobile and can live and work anywhere they want. They choose to work where they can enjoy a good lifestyle.

Warren Bartlett, deputy commissioner at Trade & Investment Queensland, gives the example of the South African financial service group Rand Merchant Insurance Holdings starting up its Youi insurance company on Australia’s Sunshine Coast. “Youi came to Queensland in 2008 citing the great work-life balance available for its employees,” he says. “The company has continued to grow to become a leading brand in the Australian insurance market, and in November 2017 opened its new global headquarters next to the University of the Sunshine Coast in Sippy Downs.”

Lifestyle story

Andrew Hoyne, principal at Australian place visioning and branding agency Hoyne, believes in the power of lifestyle provision to help secure investment success. “Look at Melbourne, named by the Economist Intelligence Unit in 2017 as the world’s most liveable city, and for the seventh time in a row,” he says. “Is it any wonder that global companies such as Eventbrite, Slack and Zendesk have chosen the city for their headquarters? For Slack, Melbourne’s lifestyle and cultural qualities are similar to other Slack locations such as San Francisco and Vancouver, providing an important comfort factor.”

One message from Mr Hoyne’s book The Place Economy is that thinking people-first and improving quality of life for a place is a sound investment for economic development. While Australia performs well at a global level at the moment, because of its continuing population growth (a rate of 1.7% per year since 2006, one of the highest growth rates for a developed country), there is debate over the effect this is having on Australian life.

The book suggests that more money, intelligence, imagination, craftsmanship and emotion needs to be invested into Australia’s cities and suburbs if the country is to maintain the quality of life for which it is renowned. Importantly, it argues that government, commerce and communities need to listen to each other and collaborate in the building of cities if they are to be successful.

Bright future

Maroochydore in Queensland is one city that is leading by example. With a new 53-hectare central business district planned, a clear vision has been established to build on the attractions of a seaside town to secure a thriving, future-focused city. It will be embedded with smart technology throughout, creating a greener city centre that is not only liveable but will have a transformative impact on the region’s economy. 

Working with SunCentral, the corporation established by the Sunshine Coast Council to oversee the design and delivery of the new city centre, Mr Hoyne has positioned Maroochydore as ‘The Bright City’, one of Australia’s most advanced communities. This has provided a platform to engage and collaborate with residents, businesses and investors alike to help bring the vision to life.

The message for investment promotion agencies in Australia is to understand what makes places attractive and inspiring, and help support the creation of great cities for people, if they want to keep on attracting businesses to the good life Down Under.