The race between Beijing and Shanghai to attract international firms to open offices in their central business districts is hotting up and set to intensify with the capital city's offer of cash subsidies to firms investing there.

In what some believe might pose a challenge to Hong Kong's attractiveness as a business location, the mainland's two principal cities are competing to establish clusters of skills and services to boost their bids to become alternative locations for the Asian regional headquarters of international firms.

South China Morning Post