Sir James Dyson's decision to relocate his business headquarters from the U.K. to Singapore has been interpreted mostly in the lurid terms of Britain's Brexit debate. Reaction to the move has focused on the apparent contradiction between the entrepreneur's support for leaving the European Union and his decision to abandon Britain for the temptations of lower Singaporean tax rates.
But in truth Dyson's shift is neither a complete disaster for Britain nor an unalloyed triumph for Singapore. It probably doesn't even have much to do with tax. Rather, it illustrates a bigger story that is less about British decline, and more about the importance of getting close to rising Asia.
This is not to deny that Dyson's announcement on Jan. 22 looks grim for the U.K. Often dubbed the "Apple of home appliances," his elegant fans and whooshing hand driers are rare British manufacturing icons. Dyson himself is one of his nation's most recognizable entrepreneurs. As Britain tears itself apart over Brexit, his own decision to leave hardly inspires national self-confidence.
There is a further irony that ought not be lost on Brexiters and their naive vision of a future "global Britain." Singapore is on the cusp of signing a free trade deal with the European Union. In the future, it is not impossible that Dyson could end up with better access to European markets having based himself in Asia rather than the U.K. Marooned outside the EU, more British-based businesses are now likely to be tempted by foreigners offering favorable terms, as Singapore doubtless did.
But Dyson's migration also illustrates three more important lessons about the future of globalization, regarding manufacturing, consumption, and shifting growth patterns in Asia.
First, Dyson is a British brand, but it has not made products in the U.K. for the best part of two decades. Much of its factory production take place just over the border from Singapore, in southern Malaysia. The company has another plant close to Manila in the Philippines. Most recently, Dyson announced plans to build its first car factory in Singapore, as it begins an ambitious but expensive and risky transition to become an electric vehicle maker.
Attempting to limit the backlash from its recent announcement, Dyson specifically denied that it had been tempted by lower corporate taxes, where the U.K. and Singapore offer comparable rates. As its automotive spending rises, generous Singaporean tax concessions on investment and favorable intellectual property rules may have been more important.
Even so, focusing on tax rules is to miss the wider point. In earlier phases of international growth, companies like Dyson set up complex global production networks. Goods were made in the emerging world, but high-end jobs in areas like design, finance, and management tended to stay in western markets. That is now beginning to change, in part because of worries about the ongoing U.S.-China trade war.
A future of rising trade tensions, and thus rising trade costs, will push many companies to reshape their global production systems, moving their focus to particular regions instead. This could see some manufacturing "re-shored" to the U.S. and Europe. But it is just as likely to mean that complex central headquarters functions will be relocated to Asia.
Even putting the trade war to one side, Singapore makes a better base than Wiltshire to manage a growing supply chain of Asian components makers, from vacuum cleaners to cars. Last week Dyson insisted that only two top executives would relocate to Singapore, while much of the company's research and development would remain in the U.K. But Jim Rowan, Dyson chief executive, also noted the move was part of the group's "evolution" -- suggesting the process of Asian relocation was ongoing and far from over.
This links to the second broader change, concerning proximity to consumers. Dyson's home appliances are relatively high-end, and most of its $3.5 billion revenue still comes from advanced markets. Nonetheless the company says three quarters of its earnings growth during its last financial year came from Asia. Dyson's future success now rests on selling far more fancy air purifiers and heaters to Asian consumers.
Increasingly, companies looking to reach emerging markets customers realize it helps to be based close to them too. Former Renault-Nissan boss Carlos Ghosn was an early pioneer here, having long struggled to sell expensive European-designed cars to thrifty low-income buyers. In 2015 he launched the Renault Kwid, a cheap "global" vehicle built and designed in southern India, on the theory that designers in India were best placed to make cars fit for Indian drivers. The Kwid sold handsomely, not just in India, but across other emerging markets.
Much the same is true for Dyson. As the company forks out 2 billion pounds to develop battery-powered electric cars, it must design a product suitable for Asian buyers. This is especially true for those in China, the world's largest auto market, which Dyson says he expects to be the most important market for his vehicles. The company already has an R&D facility in Shanghai.
Dyson's decision to move specifically to Southeast Asia is also significant. As China's overall economic growth slows, many global companies will begin to look afresh at Asia's other emerging giants for future growth -- a point made in The Future is Asian, a new book from author Parag Khanna. For all of the inducements it may or may not have offered Dyson, Singapore undeniably provides a useful base from which to launch future forays into markets like Indonesia and India.
These three changes -- in patterns of global production, the distribution of consumption growth, and a southern shift in Asian economic dynamism -- underline why it would be a mistake to view Dyson primarily as a footloose entrepreneur, willing to relocate his business in response to short-term sweeteners.
For Britain that is little comfort. It means that, Brexit or no Brexit, Dyson might have moved his head quarters anyway. Nor can other developed economies in Europe and North America escape the obvious point -- if the future is Asian, more global companies are going to want to move themselves closer to that future too.
James Crabtree is an associate professor in practice at the Lee Kuan Yew School of Public Policy at the National University of Singapore. He is author of "The Billionaire Raj."