Time For Local Companies to Spread Their Wings
SINGAPORE: The nation’s budget for this year (2017) was unveiled against a backdrop of political and economic uncertainty, while seeking to address some of Singapore’s immediate concerns. The Budget was also a clarion call for local companies to go forth and take full advantage of the growing overseas markets.
In fact, a survey conducted by Internationalisation Entreprise (IE) recently on 700 local companies revealed that going global was the key engine of growth and transformation for Singapore companies. To date, more than half the companies in Singapore have footprints in China and Malaysia, while there is increasing interests in Vietnam, Myanmar and India.
Expanding overseas can help Singapore businesses diversify risks and lower the cost of products and services, while internationalising could also create career opportunities for Singaporeans taking on overseas leadership roles. A report by Boston Consulting Group pointed out that businesses in Singapore need to shift their mindsets and move out of their comfort zone, or they risk missing out on the vast opportunities in emerging Asia.
As part of the Government’s efforts to assist local companies so they are better able to grow abroad include the International Partnership Fund. Under this fund, the Government will invest $600 million to co-invest with Singapore companies to help them scale up globally. Singapore companies have for years been constantly encouraged to spread their wings into foreign markets, but of late, this has become increasingly necessary to survive.
By venturing abroad, local companies will be able to not only boost their revenues, but also exploit business opportunities that Singapore may not have to offer. Many companies, including popular curry puff chain, Old Chang Kee to logistics firm, YCH Group heeded the government’s call for internationalisation and have since been successful.
Venturing overseas is a major undertaking, particularly for smaller companies which have limited resources, but it is a journey they may be forced to embark on – sooner rather than later. According to reports, Malaysia, which is just across the border offers numerous opportunities for these Singaporean companies looking to expand.
However, one thing businessmen agree on is that they should continue to keep Singapore as their headquarters.
This is because they believe that Singapore is still a competitive place for companies to place their decision makers.
There are numerous advantages to venture abroad. Apart from helping them diversify risks, gain new revenue streams, companies can also broaden their customer base which will help them boost their growth prospects. In fact, the survey carried out by IE on the 700 companies also revealed that their overseas revenue grew by 4.2 per cent year to year in 2015 – outplacing the total revenue growth of 1.3 per cent.
Internationalism will also help companies gain from cheaper labour, natural resources and rental costs, while they can also use income raised from foreign markets to expand further.
Other benefits of internationalisation include enabling companies to tap a greater pool of talent and offer faster career advancement paths to locals. While the benefits of venturing abroad seem endless, one thing companies have to consider carefully first is which countries should they consider. There are numerous factors which businesses need to take into account first before making the decision to spread their wings.