When venturing abroad

PARTICIPANTS:

Question: Is going international a must for companies?

Chris Chen: I do not think it is a must, but it should at least be given some thought as Singapore's market is small and going overseas has potential benefits. Singapore is an ideal headquarters due to its branding, global reputation, efficient banking ecosystem and supply of talented manpower. We are well positioned to branch out from here!

Daniel Chan: It depends on the company's objective and business model. For us, it was compulsory to go overseas as we deal with infrastructure equipment and the overseas potential was enormous, especially with initiatives like the China-led Belt and Road Initiative.

Toby Koh: The reality today is that business is global so you need to be prepared to become an international player. Having a foothold in different countries instead of being dependant on just one market also means that risk is diversified. In addition, internationalisation is a value accelerator, demonstrating a company's growth prospects to potential customers and investors.

Tan Chor Sen: Singapore's domestic market is limited so businesses must look outwards if they are looking for sustainable growth. Overseas markets can drive business expansion. China's sheer size is a draw, but closer to home, consider frontier markets like Myanmar, or tap the demographic dividends of young and dynamic markets like Indonesia and Vietnam.

Q: Why did your company decide to go international?

Chris Chen: It was a necessity as the products that we traded were both sourced from, and exported overseas. Because our industry is related to palm oil, we started off in countries like Thailand, Malaysia and Indonesia. Proximity is also important; maintaining close ties with clients is integral in our line and can only be achieved via constant face-to-face meetings.

Daniel Chan: We ventured into Southeast Asia, China, Africa, India and Russia because these are developing markets that require our equipment for infrastructure projects. By penetrating more markets, our group's revenue and growth also stabilised as the risks that come with relying solely on one market were mitigated.

Toby Koh: There was a growing demand overseas for credible security professionals. Our early ventures began with projects awarded by existing MNC clients who were expanding into regional markets and needed support to protect their overseas interests. With this presence came awareness and from there, we were able to establish strategic joint venture partnerships with leading local companies. We currently have a regional presence in more than 20 cities in South-east Asia, China and India.

Q: What challenges did you face when entering a different market?

Chris Chen: Cultural differences will always be a key challenge. Korea was a tough market to penetrate as they typically prefer to deal via a local Korean agent instead of directly with a foreign counterparty. Language barriers and even time difference were other challenges.

Daniel Chan: One challenge was finding the right dealers and partners who shared our vision, conviction, and willingness to work as a team. Another was price competition and we ended up differentiating ourselves on quality and after-sales service to customers. The last challenge relates to payment, especially in markets like Africa where some of their currencies are not recognised by international banks. Hence, it can be difficult for our customers in Africa to provide us with Letters of Credit or make USD payments because of currency exchange control.

Toby Koh: When we first tried to enter China in 1995, our Chinese partner "ran off" with our money. It was a painful but valuable lesson. Now, we prioritise getting the right partner whenever we enter a new market. Identifying suitable market opportunities, engaging like-minded local partners and sourcing the right talent within each of those overseas markets are other challenges. They can be overcome by keeping a finger on the pulse of the market, constant interaction with industry players, networking and participation in trade fairs.

Tan Chor Sen: Many companies grapple with how to build a team. It is a delicate balance between sending staff from Singapore who know the company culture and are generally trusted, and hiring locally to add that expertise related to local business and the regulatory environment. The latter can be particularly difficult for small companies. The recent development of social media has made it easier to find people with the right experience.

Q: What pitfalls should Singapore companies be aware of when they look to internationalise?

Chris Chen: Identifying the wrong foreign partner to work with could be disastrous. This is especially challenging when there are complicated legal and regulatory systems to navigate, from company incorporation to banking systems. The right structure must be set up to ensure supervision and control from Singapore while giving the foreign partner or entity enough freedom to expand in the overseas market.

Daniel Chan: Different markets have different ways of conducting business. It takes patience and time to learn the local culture - it would not be wise to impose Singapore's pace or way of doing business. Looking for the right local partner or dealer can speed up the process of bridging this culture gap.

Toby Koh: Never underestimate cultural differences and do not expect to do business in the same way as it is done in Singapore. Due diligence is key and the people factor is also critical; embrace a multi-cultural workforce to get new ideas, viewpoints and insights into foreign cultures and business environments.

Tan Chor Sen: Finding the right partner has been raised several times already and this is indeed a common challenge faced by many of our customers. Bankers have the benefit of being familiar with the local business communities. We can help clients tap our local customer base in our core markets like Malaysia, Indonesia, China and Myanmar to help validate or recommend potential partners, vendors and suppliers.