A few days ago, the world-renowned luxury goods company Chanel (Chanel ), completed several years of group structure restructuring, and CHANEL LIMITED, located in London, officially became the parent company of the group.
In addition, departments including operations and finance will also be moved from Paris to London.
After this operation, the outside world believes that the company's headquarters is essentially moving from Paris to London. You should know that Chanel was founded in 1910 and its previous headquarters was always located in Paris, France.
is unique. In the past two years when the epidemic has swept the world, two other corporate giants originating from the European continent have also decided to base their headquarters in London.
In June 2020, the global daily chemical products giant Unilever (UNILEVER) announced that it had abandoned its dual headquarters in the UK and Dutch (with London, England and Rotterdam, the Netherlands) that it had used for nearly 90 years, and will its only global headquarters in London.
February 8, 2022, Rotterdam, Netherlands, United Liver Company Higher headquarters
In November 2021, the global oil giant Royal Dutch Shell also announced that it had decided to move its headquarters from The Hague, Netherlands to London.
Multinational enterprises are like giant global machines that pursue profits. They are good at constantly adjusting the spatial configuration of the value chain based on factors such as factor costs, tax benefits, and risk aversion, and choosing cities that can maximize profits.
Of course, London, which was selected as its headquarters by many giants, is not necessarily their "final destination". But it is undeniable that the migration of corporate giants' headquarters has become increasingly new variables in a new round of global urban competition.
This kind of migration occurs from time to time, whether abroad or in China. This trend and the logic behind it are bound to be worthy of the attention of those cities with ambition.
Global "energy level"
The reasons for the enterprise to migrate its headquarters can be summarized into two.
One is to improve efficiency and the other is to avoid risks.
For the purpose of improving efficiency, enterprises need to choose places where production factors or intermediates are more accessible and have lower acquisition costs. Many industries will show cluster development, and industry giants will also choose to set up headquarters in areas close to industrial clusters. This is why.
In addition, it can also improve efficiency by getting closer to the market and consumers. For example, the headquarters of the steel company is mostly located near the upstream iron ore or downstream automobile industry clusters.
The second reason is becoming increasingly important for multinational companies. Risk is a multi-dimensional concept, which includes operating risks and tax risks brought about by political games, as well as exchange rate risk in the global financial market.
In recent years, with the intensification of international political and economic games, some companies have begun to choose to move their headquarters to a third country that is relatively neutral and can avoid the direct impact of this game. Such examples are increasing in recent years, and Singapore is the biggest beneficiary.
It is difficult to define which category Chanel chooses for London, but it is clear that this luxury giant is at least closer to its customers.
House prices in London have been rising since the outbreak of the epidemic. Even if we look back 10 years, this trend still exists. Obviously, those who can hold private properties in London must be the most valuable loyal customers of luxury goods companies.
House prices in London have been rising since the outbreak of the epidemic
Rich people in Eastern Europe, West Asia, South Asia and Africa are all heading to London to avoid the epidemic, war, assassination and the fear of lack of strong protection of private property rights.
London has a strong attraction to the rich, and this attraction is not limited to English-speaking countries, it is global. In fact, in countries and regions with native English speaking, the desire of the rich to settle in London is far lower than that of the rich in countries and regions with native English speaking.
Compared with London, Paris, France, as the base of luxury brands, is also a world city, and its radiation power is slightly worse.
Paris' radiation power is more limited to its own country, along the Mediterranean coast and other former French colonies. Moreover, this radiation power is also weakening. Many outgoing politicians and "richest people" in former French colonies will choose to live in London for a long time rather than Paris.
Therefore, for luxury goods companies, London is indeed one of the few cities with the most wealthy people in the world, and it is closest to the market and customers.
In addition, London's financing convenience as a global financial center is also unmatched by any other city in Europe. Therefore, some analysts believe that Chanel's choice of London may also lay the foundation for future listings.
London's financing convenience is unmatched by any other city in Europe. Before Shell chose London mainly because of tax issues. The Dutch government and Shell have been unable to reach an agreement on the 15% dividend withholding tax rate.
Secondly, Shell's management is not very satisfied with the complex corporate structure brought by the dual-headquarter model, so it hopes to take advantage of the opportunity of setting up a single headquarters to handle the company's equity and governance issues.
In addition, when Unilever announced its headquarters in London in 2020, it also stated that the cancellation of dual headquarters can simplify the company's structure. In other words, the daily chemical giant, which is also a powerful small country in the European continent - Dutch "blood" of the headquarters, is partly similar to Shell's reason for replacing its headquarters. That is, with the outbreak of the epidemic, the company faces a new external environment, and must streamline the structure, improve efficiency, and respond to new challenges.
So, since in order to improve efficiency, we need to turn the dual headquarters into a single center headquarters, why not move back to the "Land of Dragons" Netherlands, but go to London? There are many reasons for external analysis, such as the above tax factors, etc. These reasons do exist. But fundamentally speaking, the ultimate reason for multinational giants to choose cities is still the energy level of the city and the economic value this energy level brings to shareholders.
"low energy level" also has the chance to have
For example, multinational company A is listed in London and Amsterdam at the same time. In essence, this is equivalent to dispersing the listed equity of the company to two exchanges and listing separately.
Obviously, the breadth and depth of the London market far exceed that of Amsterdam. In terms of quantity and size of institutional investors in London are far larger than Amsterdam. Therefore, rational companies will list more equity in London, which means that shareholders from London will inevitably have a greater say.
Shareholders, especially institutional investors, obviously hope to have more communication with the headquarters management. The physical distance between the two parties is still very important and not insignificant. Therefore, London must be the first choice for the company headquarters in the eyes of investors. Unless the Netherlands can provide sufficient "discounts" to increase shareholder interests in tax or other fields, it is no surprise that London will win based on the comparison of shareholder power in the context of split listing.
In fact, Unilever and Shell are listed in three places, in addition to being listed in London and Amsterdam, they are also listed in New York.
New York, USA, Shell company logo
It can be said that from the headquarters migrations of these European multinational companies in recent years, we can see that in an era when everyone is facing more external uncertainty, multinational companies will increasingly tend to choose cities with higher energy levels to allocate resources.
However, the energy level of a city cannot be changed in the short term. So, will cities with lower energy levels not have any chance? not necessarily. Boeing's migration case is worth studying.
In 2001, Boeing moved its global headquarters from Seattle in the northwest of the United States to the first city in the central city Chicago ; in May 2022, Boeing announced that it would move its headquarters from Chicago to Arlington. Arlington is an unknown city, but its advantage is that it faces the river along the US capital Washington, DC, and is very close to the federal government.
Boeing is located in Arlington County, Virginia, and is adjacent to Washington, DC.
Boeing rose in the "frontier" of the northwestern United States , Washington, , and its original headquarters was in Seattle with a big chance.
Company founder William Boeing used to be a Seattle wood businessman. In the early 20th century, the fuselage of the aircraft was made of wood, which means that William Boeing was an upstream supplier of the aircraft industry at that time. Later, he launched a vertical integrated expansion of the company, expanding from wood supply to downstream industries, and starting the supply of flying machinery materials.
From wood suppliers to aircraft manufacturing, Boeing naturally chose Seattle as its founding headquarters. This process seems very accidental, but if you analyze it carefully, you will find that this is inevitable.
html In the early 120th century, the first simple aircraft of mankind like to use North American spruce as the material for fuselage, and the aircraft tested by Wright Brothers were mainly made of this wood. The main origin of North American spruce happens to be the northwest of the United States. Therefore, it can be said that William Boeing’s “successful defeat” is actually an inevitable result of industrial development and corporate expansion.
Boeing rose in Seattle, Washington, the "border" of the northwestern United States. Its original headquarters was in Seattle with a lot of chance
WWII is the most important turning point in the development of the aircraft manufacturing industry, and military orders have allowed Boeing to achieve a leap forward. The aircraft war between the United States and Japan in the Pacific has given the western United States, which is lying on the Pacific, a geographical advantage as the center of the aircraft manufacturing industry.
Therefore, all kinds of seemingly accidental factors contain inevitable trends, and in the end, Boeing's headquarters remained in Seattle for a long time.
In 2001, the reason why Boeing's headquarters moved to Chicago was that Chicago's city level was higher. As the second largest financial center in the United States, Chicago's energy level was better than Seattle.
Another reason is tax factors. At that time, the city of Illinois and the city of Chicago would provide Boeing with more than $60 million in tax benefits and other incentives over 20 years. Therefore, the outside world also believes that the 20-year tax incentive has expired, so Boeing is about to move.
But these are not the whole reason.
is not a winner to take all
In fact, Boeing's more important factor in moving to Arlington is that it is closer to the "big customers". Boeing's aircraft manufacturing includes civil and military use. Needless to say, the largest customer in the US domestic military market is naturally the federal government. And if we want to compete for foreign markets, whether for civil or military purposes, the federal government is still the most important "middleman" or "salesman".In the past two years, even in the domestic military aircraft market in the United States, Boeing is increasingly facing competition from rivals such as Lockheed Martin, Northrop Grumman and General Electric. At this time, it is obviously a wise move to move to a city a step away from the federal government. The city level here is much lower than that of Chicago, and even worse than Seattle, but that doesn't matter. What shareholders want is to get customers close and improve corporate value. Therefore, in a sense, the relocation of Boeing actually illustrates a truth: in an era when the global economy is facing many new variables, large companies often rethink the spatial allocation of the value chain, thereby improving efficiency and responding to uncertainty. In this process, not only cities with higher energy levels are beneficiaries and winners can take all. Non-core cities with special advantages also have their own opportunities. In the past few years when the global economy is shrouded by the epidemic, China's economy has shown strong resilience and China's large-scale enterprise group has become stronger. It is worth noting that in the past two years, China has also experienced the migration of headquarters of large enterprises. In 2021, China Electrical Equipment Group Co., Ltd. will be headquartered in Shanghai. In the same year, the headquarters of China Electronics Group moved to Shenzhen. In earlier in 2016, China Ocean Shipping Group Co., Ltd. was officially established in Shanghai. The headquarters of the above central enterprises are either in Beijing or scattered across the country before restructuring. The reason for choosing to set up headquarters in Shanghai or Shenzhen in this round is that there are higher levels for the consideration of optimizing regional development, but it is undeniable that the relocated enterprises are undoubtedly closer to their own markets and customers from a geographical location. It must be noted that the above central enterprises are not in monopoly industries such as oil and electricity, but are in competitive fields or in some areas where there is some competition. That is to say, they have market pressure to improve efficiency. In this sense, it is not surprising that it is straightened out the value chain of the enterprise and improve overall operational efficiency from the dimensions of space configuration. Obviously, there are more than a few of this type of enterprises in China's central enterprises. Even if they will not move out of their headquarters, there is still a possibility that their diversified industrial sectors will be re-optimized in space. This is a valuable opportunity for some cities to attract quality external elements. For a city, it is obviously not easy to improve its city level in a short period of time. The energy level of any city is the result of a long-term effect of political, geography and economic factors such as the interweaving of various factors, and decades or even hundreds of years. It is still possible to give full play to your unique advantages and attract large enterprises to be tilted in the process of reconfiguring the resource value chain when the city's energy level cannot be changed.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-