General Motors Co said on Wednesday it will move its international operations headquarters to Singapore from Shanghai in the second quarter of 2014.
The shift comes after GM split its China operations from its international unit earlier this year, saying that would make it easier to focus on the Chinese auto market, the world's largest.
(Read more: GM earnings beat the Street)
The move is likely to come as a blow to Shanghai, which has been trying to compete with the likes of Singapore and Hong Kong as a place for multinational companies to base their Asia headquarters.
GM said it had considered other locations for the relocation and looked into keeping the headquarters in Shanghai, but eventually decided on Singapore.
"It offers several advantages, including greater proximity to key CIO markets such as ASEAN and India, the Middle East and Africa," said Lori Arpin, vice president of communications at GM International Operations.
Many multinational companies are lured to Singapore's shores by its competitive tax rates, use of the English language, skilled workforce and high standards of living.
Its headline corporate tax rate is 17 percent, though companies that base their regional headquarters there can benefit from a lower rate if they meet certain criteria such as providing jobs and spending a certain level of money in the city-state.
Singapore though, is one of the most expensive countries in the world in which to own a car and is not known as a major base for automakers.
General Motors said it would have about 120 employees in Singapore who would oversee "key parts" of the company's business in the Asia-Pacific region, Africa, the Middle East and Chevrolet and Cadillac Europe.
(Read more: General Motors on track to sell self-driving car)
The new base though will house some of its sales and marketing, finance, government relations, human resources, IT and legal functions.