When Steve Fitz was searching for the right city in which to establish an Asian regional headquarters for EMC two years ago, he weighed several factors. Not least among them was access to good quality, English-language schools for his four young children. Thanks to a Hong Kong government-sponsored promotional group, InvestHK, Fitz got what he wanted. In a scene that illustrates how competitive corporate location has become in China, InvestHK lined up several headmasters of the top schools in Hong Kong and asked each to enroll in their academies not only Fitz's kids but also those of his management team. They agreed.

Fitz, president of Asian operations for the $8.1 billion data-storage company based in Hopkinton, Mass., was understandably pleased. He ultimately chose Hong Kong over other cities on his list of contenders--Singapore, Shanghai and Tokyo--based on a host of considerations, including its large English-speaking talent pool, Westernized lifestyle, efficient transportation links and proximity to China's quick-growing market just across the border. "Singapore was the most attractive on a cost basis, but was too far away from our markets," explains Fitz from his office, which has a panoramic view of the Hong Kong harbor. "Japan was expensive from a tax and cost-of-living perspective, plus the flying access was not as good. Shanghai was a runner-up to Hong Kong, and a lot of companies have moved their headquarters to Shanghai, but the infrastructure is not there yet--it's not nearly as flexible in terms of flights within Asia."

Previously, Fitz was based in Tokyo for a year after relocating from New York, and his five top managers were spread across several Asian cities. "Now, instead of having discussions over the phone, we meet here at least once a week for a formal meeting and for informal gatherings, too, which fosters better communication throughout the firm," he says.

The strength of China's markets is pulling some Asian headquarters away from Tokyo and Singapore, but which of China's "three capitals" makes the most sense--Hong Kong, Beijing or Shanghai? The answer, it appears, is that each has strengths and weaknesses, and chief executives making decisions about where to set up shop need to understand those and factor in the nature of their own businesses. Getting the right matchup is critically important--a wrong decision can lock a company into deep frustration.