THERE has been a clarion call for more Singapore businesses to internationalise, expanding beyond the home market. The Business Times posed questions to industry leaders to understand the opportunities and pitfalls behind going abroad.
- Deborah Heng, country manager, Mastercard Singapore;
- Desh Balakrishnan, managing director, Maxus;
- William Chew, director, MyHealth Sentinel;
- Liaw Kok Eng, CEO, Zweec Analytics;
Moderator: Jamie Lee, BT Banking Correspondent
1. What are some ingredients for success for Singapore firms to venture overseas?
Deborah Heng: Companies planning to venture overseas will be well served to build an effective go-to-market (GTM) plan early on. Having a clear and in-depth understanding of the overseas market, building the right relationships with suppliers, distributors and partners, as well as establishing an effective communications channel with the end-customer, are vital as part of a firm's GTM strategy.
For companies wishing to establish their presence overseas, local governments often provide support, practical on-the-ground advice and monetary incentives. In 2015, the Singapore government introduced new and enhanced tax incentives as well as stronger grant schemes for small and medium-sized enterprises (SMEs) to encourage firms to grow beyond the constraints of Singapore's small domestic economy.
Firms in Singapore also have access to an educated and skilled workforce. However, there may be key gaps between Singapore and the overseas market. Therefore, it is important to identify these talent gaps and construct a sound talent management plan designed to minimise these gaps.
Additionally, it is crucial to focus on talent development to enhance performance in current positions as well as in readiness for more senior placements.
Desh Balakrishnan: Singapore is a market of 5.6 million people and there is only this much of growth possible within this population size. Compare this with huge economies such as China, India, US and the UK. Singapore companies should look at business collaboration possibilities overseas.
William Chew: For Singapore firms to venture overseas, they need a committed management and viable business plan, coupled with products that can be easily adapted for the local market. They must also have a good, knowledgeable and trustworthy local business partner, as well as a solid understanding of each specific foreign market.
Liaw Kok Eng: Companies need a good approach from the perspective and context of the targeted audience; a good understanding of the culture of the targeted audience; and a good network of reliable business partners or associates from the targeted audience.
2. A S$600 million fund has been set up to support firms in expanding overseas. What else needs to be done to spur Singapore companies to expand abroad?
Deborah: Local business owners need to be better educated about issues such as long-term security. Singapore is a conducive place as a base of operations. However, local firms are constantly facing stiff competition from other domestic and international competitors. International business trade may become a necessity to remain successful in an increasingly global marketplace and access the potential for cost savings.
A business will be less vulnerable to periodic fluctuations and downturns if it is not solely dependent on a single marketplace. There may also be increased opportunities to access innovation and talent overseas.
Desh: There needs to be specific areas of focus by industries for local business owners to be aware of the support apart from funding that the Singapore government has come up with. More study trips can be arranged so businesses can learn about how specific industries are thriving for local businesses from these industries to learn and adopt.
There can also be co-working offices set up by the Singapore government in various oversees markets for local businesses to test their products and offset the initial cash outlay of set-up costs which is a huge risk for our local businesses. Finally, local industry experts are needed to advise local businesses from a specific industry to learn from, and be guided on, venturing oversees.
William: There could be a "match-making service" to facilitate introductions of potential local partners to Singapore firms that are interested in that market. Subsidies could be awarded to Singapore companies to exhibit at overseas trade shows. A more vibrant and "adventurous" local investment scene should also be developed, to enable Singapore companies to raise expansion.
Kok Eng: The policy of disbursing the fund has to be audience-centric with the foundation of good stewardship. It should support instead of hinder the pace. It should highlight the upside, underline the risks, and more importantly, encourage unity among Singapore companies especially for those entering the same region. Finally, it should walk alongside the organisation.
The officers from PUB Technology office, PUB Industry Development office and IE Singapore are doing just that - assisting, encouraging and endorsing us as we explore opportunities globally and regionally together.
3. One common phrase here is that Singaporeans lack entrepreneurial spirit because Singapore has become too comfortable. Do you think that's true, and can that explain the lack of new businesses coming out from Singapore?
Deborah: Young, smart and driven Singaporeans tend to venture into traditional stable careers such as finance, law, medicine and engineering. If we can find the appropriate channels to educate young Singaporeans and challenge the cultural norms, be they through education systems, media or government initiatives, as well as present them with the necessary mentoring or opportunity to take that step, I believe we will see more of the younger generation of Singaporeans becoming successful entrepreneurs.
Desh: The Singapore government has always been coming up with initiatives and programmes for local businesses to be set up. The challenge has been for the local businesses to venture out of Singapore due to various factors such as lack of knowledge on venturing out; lack of funds to venture overseas, and lack of overseas partner knowledge.
William: I disagree. There are plenty of talented local entrepreneurs who want to expand overseas but lack the internal resources or scale to expand. The Singapore market is very small and the health tech sector, in which mHS operates, is heavily dependent on government adoption and spending. Since overseas adoption of new technology is based on establishing credibility, it is essential that the Singapore government supports local companies to "validate" their credibility.
Kok Eng: The cost of failure, rules and restrictions and complacency are common factors that kill entrepreneurship. First, the cost of business failure is very high here in Singapore. Sometimes, it is almost a "death sentence". Second, and honestly, there are too many regulations in Singapore which restrict businesses.
The Singapore government has achieved excellence economically since its founding years leveraging on the then progressive global economy. Since the turn of the millennium, we have experienced diverse effects of the ever dynamic global economy.
Third, complacency only encourages us to be risk-averse. A paradigm shift in the mindset to harness sustainable progress and growth is important. I must say that government policies are making progress in that direction by encouraging startups, but this will need time to mature.
We are thankful for the few who will go against the odds with their entrepreneurial spirit. We should focus on discovering them and nurturing them, cultivating in them the spirit of paying it forward, instead of hoarding.
4. What are some pitfalls that Singaporean firms should watch out for when going overseas?
Deborah: When looking to expand overseas, firms should learn the local laws and regulations. It may be easy to take the transparency of Singapore laws and regulations for granted.
It is also absolutely vital to understand consumers' behaviour. It makes it much easier to craft effective sales and marketing strategies based on knowledge of the local consumer.
Finally, they must garner a deep understanding of local banking and financial practices. Whether a business owner requires a loan or a savings account, it is imperative to understand the ins and outs of the banking system.
Desh: Business owners must watch government regulations for foreign business set-up, as well as taxation policies, HR guidelines, and finance policies. They must also be aware of specific market considerations for their business set-up, from rental of office space to staff costs. They also need to know how long they can continue operations prior to breaking even.
William: Singapore firms must guard against overly optimistic assumptions of market penetration as well as adoption. They should not rely on projections from "opportunistic" local business partners, who seek short-term wins, but may not be committed to investing the time, effort and resources to build a sustainable market. Finally, businesses must protect their intellectual property from theft.
Kok Eng: Singaporeans firms should be more aware of the culture, laws and business etiquette when going overseas. Lack of preparedness and experience in the country can stifle the growth of firms overseas. In terms of going overseas and the target country market, the firm should decide whether to grow organically or accelerate the penetration into the country via finding a local partner.
A lot of companies sometimes don't understand that growing organically can sometimes be more beneficial than going with a local partner with whom the trust element is still developing.
Weigh the pros and cons, do your homework, be prepared when going overseas. Don't just expand to a particular country because everyone else is doing that.
5. How can technology help Singaporean companies as they go overseas?
Deborah: With innovation in cashless and digital payments making massive strides in both the developing and developed markets, firms can become less dependent on cash. The lines between online and offline are blurring, therefore cross-channel, online and mobile payment technology will greatly benefit businesses when expanding overseas.
With the help of technology, tracking business transactions and managing sales performance electronically will help streamline operations anywhere in the world. In addition, with multiple layers of security in online payment technology in place, both companies and their customers will feel more secure when dealing with cross-channel transactions.
Desh: Technology has become fundamental to all businesses as they expand, and even more when they are venturing oversees. For example, they can use data analytics to gather deeper insights on consumers. They can automate various processes and services to reduce labour costs and improve productivity. And with various technologies to enhance customer service such as chatbots - this will be key to easing labour costs as well.
William: For consumer products, especially intangibles such as software, music, games, services and music, the Internet is a fantastic medium for promotion and distribution. For business-to-business companies, a credible website is an essential "calling card" to help project your image, product info and value proposition to potential customers and business partners.
Online communications tools such as Skype make it simple and economical - free - to "meet" and collaborate with your business partners and even conduct demonstrations of your products. The ability to easily make and post videos today provides a simple way to promote and provide instructions in different languages on why choose and how to use a company's products.
Kok Eng: Technology is a differentiating factor but being innovative takes precedence. A company that articulates well to the audience to address their needs will have a competitive edge.
No annual award better honours the bold ambition of Singapore’s young businesses under ten years old than the Emerging Enterprise Award. This year, 2017, marks ten years of the award’s celebration of business innovation, resilience and excellence in SMEs - the bedrock of the Singapore economy.
Since 2008, the award has been empowering startups and young enterprises with both recognition and resources to take flight and achieve stellar growth.
The search is now on, for Singapore's top emerging enterprises of 2017. APPLY NOW. Applications close on June 2.