Doing Business - Singapore vs China

Choosing the optimal jurisdiction for a business is an important decision as it determines the future and success of that business. Factors such as political and economic stability, financial and physical infrastructure, company and labour laws, taxation system, legal environment, intellectual property protection, availability of human resources, cultural fabric, and language play a vital role in choosing the right business environment for your business.

In this article, we provide an overview on various key differences between doing business in Singapore and China.

Business Environment

  • Singapore is ranked as the #2 place in the world for ease of doing business in the World Bank’s ‘Doing Business 2018’ report. In comparison, China ranks at #46. Below are some of the key factors that contributed to each country’s ranking:

(Ranking based on 190 countries)

Singapore

China

Starting a business

3

28

Protecting minority investors

7

64

Paying taxes

8

114

Trading across borders

45

65

Enforcing contracts

1

6

  • Forbes ‘2018 Best Countries for Business’ ranking placed Singapore in the 8th position. Comparatively, China was ranked at the 49th position. Singapore did well in areas such as trade freedom (#1), property rights (#6), investor protection (#6) and technology (#4). On the other hand, in comparison to the previous report, China has also seen substantial improvements in areas such as red tape, investor protection and tax burden.

Taxes

  • Singapore corporate tax rate is a flat rate of 17%, based on chargeable income. China’s corporate income tax is a standard tax rate of 25% but can be further reduced to 15% for qualified companies that engaged in industries encouraged by the China government.
  • Singapore and China both have a progressive system for personal income tax. With Singapore income tax rate ranging from 0% to 22% based on chargeable income, and China’s ranging from 3% to 45%. 

IP Protection

  • Singapore has the third-best IP protection regime in the world according to the World Economic Forum (WEF) ‘2018 Global Competitiveness Report’ while China ranked #49 for IP protection.
  • Forbes magazine ranked Singapore #6 for property rights in its ‘Best Countries for Business’ 2018 ranking while China’s rank was #52.

Global Competitiveness

  • The World Economic Forum’s ‘2018 Global Competitiveness Report’ ranked Singapore’s economy is the second most competitive in the world out of 140 countries and China was ranked #28. Access to financing, political instability, corruption, inefficient government bureaucracy, tax regulations, and inadequate supply of infrastructure were some of the factors that disadvantage China as a competitive economy. By contrast, Singapore’s institutions were ranked as the world’s best; it was placed at the top 3 positions for lack of corruption, government efficiency, and goods and labour market efficiency. Financial market sophistication and infrastructure are the second-best in the world.
  • Singapore is second freest economy in the world according to Heritage Foundation’s ‘2019 Index of Economic Freedom‘. An efficient regulatory environment, competitive tax regime, lack of corruption, transparency and efficiency of services, highly flexible labor market, equal treatment of foreign and domestic investors, and a highly effective legal system were factors that boosted Singapore’s economic freedom score. China ranked #100 in the Index, seeing an improvement from the last report in areas such as property rights, government integrity, judicial effectiveness and business freedom.

Openness to Trade

  • Singapore’s economy is the most open to trade in the world according to the World Economic Forum’s ‘2016 Global Enabling Trade Index’ and China is ranked at #61. 
    Singapore performed best in the area of border administration and operating environment, and both China and Singapore are highly ranked in terms of infrastructure.
  • Some of the most common problematic factors that both countries face on trade are burdensome procedures and tariff barriers for both import and export. 

Bureaucracy

  • The World Economic Forum ranked Singapore as #1 for having the Highest Public Trust of Politicians, #6 in Incidence of corruption. China was ranked #47 and #66 on the same parameters in its '2018 Global Competitiveness Report'.
  • Singapore was ranked #3 on Transparency International’s '2018 Corruptions Perception Index' while China ranked #87. 

Labor Force

  • The World Economic Forum’s 2018 Global Competitiveness Report measured the following labour-related factors for both Singapore and China: 

(Ranking based on 140 countries)

Singapore

China

Digital skills among population

6

45

Ease of finding skilled employees

9

44

Cooperation in labour-employee relations

2

52

Ease of hiring foreign labour

97

36

Labour tax rate

75

139

At-a-glance Country Rankings: Singapore and China

Year

Category

Singapore’s Rank

China’s Rank

Source

2018

Ease of Doing Business

2

46

World Bank, 2018 Ease of Doing Business Report

2019

World’s Freest Economy

2

100

Heritage Foundation’s Index of Economic Freedom

2018

World’s Most Competitive Economy

2

28

World Economic Forum, Global Competitiveness Report

2018

Country with Least Corruption Perception

3

87

Transparency International’s Corruption Perceptions Index

2018

World’s Best Country for Business

8

49

Forbes’ Best Countries for Business Index

2016

Country Most Open to Trade

1

61

World Economic Forum, Global Enabling Trade Report

On a Final Note

Singapore is known as the gateway to ASEAN and companies setting up in Singapore have ease of access, not only to markets in the South East Asia region, but also to the mainland China.

Singapore company formation made easy

Hawksford's experienced and professional staff will be able to guide you through moving or setting-up your business in Singapore.

With our expertise, we can assist you in setting-up your business structure right the first time.

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