It seems that James Dyson, hardcore Brexit supporter and spearhead of Dyson group, has a lot to answer. Dyson is all set to shift base from the UK. Controlling significant market share in the Asian vacuum cleaner and hand-held hair dryer market segment, Dyson also forayed into air purifiers and has been enhancing product portfolio in its hair-care vertical. As per the current scenario, the group is setting its new headquarter in Singapore that will welcome legal officer Martin Bowen and CFO Jorn Jenson as others will stay put.
The company mushrooms more than half of its profit from Asia and is set to launch an electric vehicle factory in Singapore. Dyson’s CEO, Jim Rowan has cited that this move has got nothing to do with Brexit or with the UK’s corporate tax rate. It is to make sure the company is “future-proofed”. Also, the move is directly proportional to the regional importance to the company. From its past experiences, the group has seen humungous opportunities to increase the company’s top line in Asian countries, he added.
Regardless of the company defending this move as a business strategy, Pro-EU politicians accused James of ditching Britain after supporting Brexit right from the start. One of the Labour MP, Wes Streeting said the billionaire investor has no accountability for his workers or country.
However, Mr. Rowan stressed that the company would continue investing in the British base. He cited that the company would be spending 200m pounds in new testing facilities in Hullavington, 44m pounds on the renovation of office space and 31m pounds for undergrad students at its university. He added this move would not impact the company’s current labour pool of 4000 workers in Britain. The company also said they approached UK’s government for acquiring land adjacent to the research centre at Hullavington, representing a 350m pound expansion for autonomous vehicle testing.
Dyson reported the full-year results for the year 2018, wherein the company’s core profit crossed 1bn pounds mark for the first time and earnings before interest, depreciation, amortization, and tax stands for 1.1bn pounds. The top line of Dyson is up by 28%, and the bottom line is up by 33% on year on year basis. The contribution of the UK in its annual sale is accounted for only 4%, and rest comes from Asia and Rest of the world.
Looking at tax rates, Singapore has the most business-friendly tax ecosystem in Asia. Corporate tax, at 17% and personal tax, at 22%, which is way below than the average Asian corporate tax, at 21.2% and personal tax, at about 27%. In Europe, corporate tax is 19.55%, and individual tax is 32.5%. Also, Singapore is relatively a politically stable country.
Given this backdrop and that the founder, James Dyson has been a very loud supporter of Brexit, his move to relocate company headquarter is a symbolic blow and likely to make political waves against him. Criticized severely for breaching the trust of British people and ditching its roots when required, Dyson’s move looks to be pretty much a strategic one.
Dyson has found Asia as its new centre of gravity, where it sees humungous growth opportunities and aims to expand its presence to become a global tech giant. On the other hand, the Brexit related headwinds seem to be directing many such strategic moves which do not look to favour the UK at the face value while long-term prospects are yet to be looked at.