Companies vote with their feet on best locations

A worker adjusts the logo at the stand of Huawei at the CeBIT trade fair in Hanover, March 15, 2015.[Photo/Agencies]

The telecommunications giant Huawei Technologies Co Ltd has denied the rumor that it is planning to move its headquarters out of Shenzhen, South China's Guangdong province, due to the soaring price of land. Beijing News commented on Tuesday:

Although Huawei has ruled out the possibility of relocating its headquarters, the local district government recently stressed the need to serve the communications giant and keep it in Shenzhen. Such affection has a lot to do with a recent government report which highlights Huawei's considerable contribution to local growth. The company contributed about 14 percent of the district's total industrial output value in the first two months of this year.

It is understandable that local governments fight over major enterprises such as Huawei, which are inclined to vote with their feet and locate their businesses in cities offering better services and infrastructure, as well as preferential policies.

Admittedly, Huawei has been transferring some of its business groups to other cities, such as neighboring Dongguan in recent years, but that should not come as a surprise in the face of Shenzhen's soaring property prices.

Of course, the departure of some labor-extensive enterprises can help boost local industrial transformation, but that does not mean a city can thrive without successful manufacturers.

Therefore, governments at all levels need to create a benign and fair environment to support such businesses. For leading enterprises whose success lies in market-oriented competition, they may not necessarily crave preferential policies, because less red tape, wider access to fair competition, and better public infrastructure matter more to them.