Overcoming Singapore's expansion challenges
By leveraging technology and smart partnerships, Singapore can transcend its size and grow into Asia.
Singapore has always been a trading nation, by necessity more than design. The small island on the tip of Malaysia does not have natural resources or the size to be self-sustaining in the traditional sense, rather it has had to trade its way to prosperity. This has meant developing itself as a hub for others to come and do business, something it has succeeded in, becoming the foremost financial hub in the region and home to the world’s top companies who have chosen Singapore as their regional HQ.
Yet whilst it has done a good job attracting others, the performance of homegrown Singaporean companies expanding – and succeeding – abroad has been mixed. Despite government support and efforts to assist and advise local firms to internationalise, only 14% of SMEs planning to expand abroad in 2018, with most content to remain in Singapore .
This is not sustainable in the long-run. While rich, the 5.6 million people market in Singapore only allows for so much growth, and while the economy has been doing relatively well, and changes to global trade will have outsized effects. Furthermore, the sheer size and potential of Asean is too big to ignore. With a population of over 620 million and an economy of $2.6 trillion, the region will have the fifth largest economy by 2020, according to the World Economic Forum .
One of the main challenges Singaporean firms face when operating abroad are cultural differences, unspoken rules, values and norms. These may seem minor but in many countries they could mean the difference between success and failure, and they are too often an excuse for inertia and inaction, with Singaporean business owners preferring to stay where they are.
So how can Singaporean firms make a success in neighbouring countries? Government handouts and support will not be enough, our entrepreneurs need to overcome cultural barriers through smart partnerships, and leverage technology to ease the transition to another country and create a competitive advantage.
Partnerships are vital for a successful expansion and picking the right one is essential. What a good partner does is provide the local cultural knowledge and expertise that is so important to success and allows the Singaporean firm to concentrate on its own strengths and service offerings. The challenge, of course, is finding the right foreign firm that fits your own values and goals. This is easier said than done, but there are certain things to look for. For example, a firm that has a footprint overseas will know what it is like to work in a different market and will display the necessary flexibility and patience.
Technology is another area that Singaporean companies should excel in and use to their advantage. Singapore is home to many sophisticated firms, global and local, that can develop technological solutions and products. The BPO industry is a good example of this. BPO is not an industry that is synonymous with Singapore, with India and Philippines, and to a lesser extent Vietnam and Malaysia, dominating the global BPO market. Yet it is Singaporean companies that are partnering with local and international firms and leveraging technology such as Artificial Intelligence (AI) to disrupt the industry and secure its future by reducing costs and improving and increasing service offerings.
Expansion and growth is never easy, even within one’s own country, yet for a country such as Singapore, there is little alternative. To some extent, technology has removed borders, with FinTech firms removing cross-border investment barriers, the internet allowing for work to be done anywhere and social media opening our eyes to different cultures. Nevertheless, it has proven to be possible with legacy examples leading the way, such as Singtel, an established telecommunications company in Asia, Australia and Africa, WOHA, a Singaporean architecture firm which has handled projects in the APAC region, as well Charles & Keith that has ventured into not only Asian but European and Middle Eastern markets as well. Therefore, Singaporean entrepreneurs should leverage their strengths in these areas of technology and use the right partner and the right solutions to grow.