Singapore firms share boon and bane of overseas expansion

While there has been a push for Singapore firms to expand overseas, venturing abroad presents its own set of challenges. These range from unfamiliar markets and regulatory environments, to bureaucracy and competition.

But firms that have done so told Channel NewsAsia that they have gained wider economic space and greater diversification. Their comments follow the call by the Singapore Business Federation (SBF) on local firms to spread their wings into the region.

Civil engineering firm Huationg first ventured abroad three years ago. It has made inroads into Myanmar, but the path has not been all that smooth.

“When we first imported goods into into Myanmar, we had our equipment stranded at the port for eight months. The local bureaucracy, the law and regulations are very different from Singapore; they favour the locals. So as a foreign company, we have had to contend with a lot of known and unknown barriers,” said Huationg CEO Jimmy Chua.

Huationg is now more familiar with Myanmar, and it is eyeing opportunities elsewhere in Southeast Asia. The company’s business overseas accounts for less than 10 per cent of its revenue currently.

Sakae Holdings, which now has outlets in 10 countries, said it would be a much smaller company today had it not expanded abroad.

“Today we’ve got 50 shops in Singapore. So if we started and remained here, we’d have 50 shops in one place. If we started in a country that has 200 to 300 million people, we should have 2,000 to 3,000 shops,” said Sakae Holdings Chairman Douglas Foo.

“So that’s the difference between operating in Singapore, and a much larger marketplace. Because (with) the same effort that you get in operating in a bigger market, you can do a lot more, because there’s lot of breadth and depth,” he added.

OVERSEAS EXPANSION DOES NOT MEAN FEWER JOBS IN SINGAPORE

Companies that have gone abroad stressed that their move will not necessarily result in fewer jobs at home.

The owner of the ChildFirst pre-school chain Ednovation, for example, said much of its content is developed in Singapore, and it needs to continue innovating to compete against bigger players.

Ednovation started expanding into the region in 2007. Already, it has 60 ChildFirst pre-schools across China, Singapore and the rest of Southeast Asia.

From being a chef in a restaurant, to a doctor or nurse in a clinic, the children at ChildFirst pre-school can role play dozens of jobs in modern society. Ednovation said it is through such “purposeful play” that the children learn language, maths and social skills outside the typical classroom environment.

Such a curriculum requires constant creative input. “Our headquarters are (located) in Singapore. We’re a Singaporean company. I would say anything that has to do with creativity would always remain in Singapore. Whether it’s in the finance area, or in the R&D area, in the curriculum, anything that really involves creativity we will always keep in Singapore. Because that’s our competitive edge, and we want to retain it here,” said Ednovation managing director, Dr Richard Yen.

According to latest statistics, Singapore invested more than S$600 billion abroad in 2014, and the figure has been growing at an average annual rate of about 12 per cent in the last decade.

Source: CNA

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