Competition is an act of self-interest, but cooperation might well represent the longer runway of enlightened self-interest. The spirit of the latter attitude is apparent in the decision by a group of small and medium-sized enterprises (SMEs) to work together for mutual benefit instead of competing over the same turf. They are part of an Enterprise Singapore initiative which is bringing SMEs together to succeed collectively in targeted projects. Collaboration allows for the sharing of ideas, reduces the cost of expensive, problem-solving, new technology, produces greater economies of scale and contributes to collaborators gaining competitive advantage over others. Collaboration allows SMEs to thrive locally and grow globally.
That is an urgent challenge as SMEs find themselves buffeted by US-China trade tensions, which have affected export competitiveness and reduced overseas sales for many. According to a report that cites these reasons, other causes for concern are high manpower costs, increased domestic competition, difficulty in hiring and retaining staff, and cash-flow problems. Another survey found that battling competitors was a major challenge for most smaller firms. It found that 74 per cent of respondents saw industry competition as a significant issue, while 40 per cent pointed to manpower shortages. Competition is natural to market economics, but its intensification in a small city-state without a hinterland has to be kept within the bounds of survival.
The challenge of increased domestic competition lends itself to the kind of remedial collaboration envisaged in the Enterprise Singapore project. For pest control firms, for example, working together with other SMEs could mean coming up with solutions specific to the Singapore market, which is defined by an urban, densely populated, and high-rise building setting. Certainly, each company would look out still for its interests eventually, but it would be easier for them to realise those interests through collective endeavour where possible, instead of dissipating their resources through beggar-thy-neighbour competition. At the end of the day, SMEs must not let go of their fundamental place in the economy. That would make it impossible for them to participate in the emerging geography of Asian success, in which SMEs play a path-finding role.
The digital economy is the new frontier. An industry study has found that getting more of South-east Asia's small businesses into the digital economy could significantly raise the region's gross domestic product. The region's digital economy is worth about US$200 billion (S$273 billion) today, or 7 per cent of total Asean GDP. More integration could send that figure rocketing by an additional US$780 billion to US$1.13 trillion over the next few years. Singapore's SMEs must survive locally to plug into the future of Asean.