The Chinese Local Administrative Measures for Building Up the ‘Headquarter Economy’: a comparison between Pudong and Shenzhen

Abstract

Why do large domestic and multinational enterprises choose one Chinese city over the others in which to set up their company headquarters? What could the Chinese local governments do in order to attract enterprises to establish headquarters in their localities? Following the Chinese commonly used term ‘headquarter economy’ and investigating the issue mostly from the local governments' perspective, this research examines two cases, Pudong and Shenzhen, to see how they have capitalized on their local advantages and attracted different types of large investments. Both the Pudong and Shenzhen governments provide preferential policies and administrative reforms to build a good investment environment and to develop a ‘headquarter economy’. Their preferential policies are similar in design but different in content, so as to attract different target investors. Their administrative reforms are similar in direction but with variations in pace and design for implementation. Our conclusion shows that ‘headquarter economy’ is a concept flexibly used and wisely adopted by Chinese local governments to develop local economies.