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Value-add main criterion for admitting foreign entrepreneurs

Saturday, May 31, 2014 - 06:00

Singapore

AN "accident", is how Casa Italia chief executive Phippo Hardegger describes founding his gelato company in Singapore.

Unable to secure an Australian visa, the Swiss was persuaded by a friend to come here instead. Finding regulations that do not hinder, and a government forthcoming with the information he needed, sealed the decision, he says.

"Everything is so clearly regulated, people keep to their contracts, and you have pretty much no corruption here," he says. "It's just extremely convenient."

Previously named Gelateria Italia, the firm has opened 15 stores in three years of existence. A lot of attention here is paid to local startups, but foreign entrepreneurs like Mr Hardegger contribute significantly to the vitality of the entrepreneurial scene too.

While there are no official statistics tracking the population of foreign entrepreneurs here, a number of them are on the EntrePass scheme, which permits them to start businesses in Singapore.

According to the Ministry of Manpower, the number of EntrePass holders fell 23.1 per cent, from 1,300 in 2012 to 1,000 last year, but some observers feel it is the quality and not the quantity of these entrepreneurs that matters.

"The number is not the issue. The issues are the quality of the business, its leadership and its value to Singapore," said Victor Mills, acting chief executive of the Singapore International Chamber of Commerce. "Singapore looks for quality, not quantity."

MOM revised EntrePass requirements last September to ensure it attracts "foreign entrepreneurs who can inject innovation and vibrancy into Singapore's business scene", said an MOM spokesman. Most EntrePass holders operate in commerce or finance and business services. Last year saw 2,000 EntrePass applications and, as has been the case since 2003, half were approved.

There are other possible reasons for the fall in EntrePass holders. Singapore now competes for foreign entrepreneurs with countries that may be closer to the entrepreneurs' homes, said Singapore Management University associate professor of strategic management Tan Wee Liang.

Insead professor of entrepreneurship Philip Anderson reckons, however, that "the most logical explanation is simple economics - Singapore is expensive. If the cost of living continues to rise, we will probably see a shift in foreign entrepreneurs". But he adds that "on balance (Singapore) is attractive for entrepreneurs who seek to reach a pan-Asia market".

As Asia's safest and most attractive living space, Singapore is "Asia-lite", and easy for foreigners to fit into, said Mr Mills. Wong Poh Kam, director of the National University of Singapore Entrepreneurship Centre, added that culturally, linguistically and racially diverse Singapore is an "ideal test-bed" for those eyeing Asia.

Hiroshi Tatara, who founded Japanese food group RE&S here in 1988, also sees Singapore as an ideal "showcase" for presenting a business to potential partners. Twelve million tourists a year visiting such a "small territory" means good exposure to partners interested in expanding a concept regionally, he said.

One foreign entrepreneur who started a business here that has since gone regional is Norbreeze Group's Danish chief executive, Anders Peter Juel Sauerberg. Since its 2004 founding, the watch group has come to also carry jewellery and lifestyle products in 50 stores in Singapore, Malaysia and Hong Kong.

Norbreeze began by importing "affordable-luxury" watches after Mr Sauerberg spotted a mid-range void in market offerings here. It now expects turnover to exceed $70 million this year before growing over 40 per cent in each of the next three to five years.

Mr Hardegger is similarly optimistic. "Our target is to have the first global gelato chain in the world," he says. In this, his challenge has been finding people committed to the service industry. "The people who apply for these jobs are coming out of school ... they're not used to work."

"If something is not 100 per cent according to what they like, they just walk out of your store," he said, so front-end staff must make gelato at the factory for a "feel for what they sell".

Norbreeze tackles similar challenges with its "Danish management style, which is the opposite of micromanagement", says Mr Sauerberg. "It's empowering people, having a clear vision of what you want to do, (letting) people get on with their jobs."

Besides its corporate culture, the "secret sauce" in Norbreeze's customer service is its in-house training, he says. Three sales trainers shape each store's training based on monthly evaluations by the company's "mystery shoppers".

Finding the right people is also Stone Apple Solutions' biggest challenge, says the IT service provider's chief executive, Madhujeet Chimni. But chief operating officer Bharadwaj Chivukula says staying at technology's forefront helps Stone Apple woo talent.

"When you're in technology, you want to be working on the latest releases," he said. "You'd rather be with an organisation that is in the limelight ... nobody likes to be idle." In this, Singapore has been an ideal host.

Mr Chimni and Mr Chivukula, who were already based in Singapore, started the company in 2009 with a third partner. From just its founders - all three of whom are Indian nationals - the company now employs 1,400 staff.

Even as it scaled up for "critical mass", Stone Apple has tried to "stay niche, and at the same time stay relevant to the enterprise community," said Mr Chivukula. Its specialities include enterprise resource planning and business intelligence and analytics. Mr Chimni believes Stone Apple's focus is an essential part of the growth story of the company, which generated a turnover of $80 million last year in 12 countries stretching from Australia to the US.

Scaling up and reaching global markets is the challenge for Singapore-based businesses, says Prof Wong. In this respect, he believes businesses run by foreign entrepreneurs knowledgeable of their home market may actually have an advantage over companies managed mainly by locals.

"Because of this, we are now seeing many of our young tech start-ups being founded by a team of entrepreneurs from different parts of the world," he said.

He expects foreign entrepreneurship here to rise. "Asia is driving global economic growth, so entrepreneurs here are in the right place at the right time."

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