Global ambitions, young beginnings

ROUNDTABLE PANELLISTS:

• Christie Chu, head of emerging business and commercial banking cash, global commercial banking, OCBC
• Deborah Heng, country manager Singapore, Mastercard
• Jonathan Yuen, head of legal basix, Rajah & Tann Singapore
• Tan Soon Kim, deputy chief executive officer (global markets), Enterprise Singapore
• Yeo Yee Chia, assistant chief executive of the innovation and enterprise group, A*Star
• Terence Ang, partner and head of advisory, RSM Singapore

Why should young businesses consider having global ambitions at an early stage?

Christie Chu: Planning for overseas expansion at an early stage allows business owners to strategise accordingly, deploying their resources and developing capabilities with that goal in mind early on, rather than having to devise a new strategy from scratch midway through.

In fact, the acceleration of digitalisation, along with the resulting wealth of data-driven market insights, has made it easier to expand overseas compared to 10 years ago.

Jonathan Yuen: Singapore’s economy is so open and deeply connected that, generally speaking, every business is by definition a regional or global business.

Unless the business has a clear strategy to limit itself to the local market, they’d have to start thinking regionally or globally from the onset, and structuring their growth with that in mind.

Terence Ang: Planning to expand globally at an early stage might allow young businesses to gain a competitive advantage. Benefits may include a larger and more diversified customer base, access to resources and talent and lower costs.

Tan Soon Kim: When developing products and solutions for a global audience, companies can incorporate deeper considerations – such as adaptability, supply chain resilience and revenue diversification – into their growth plans. Going abroad also provides exposure to new ideas, trends and innovative solutions.

Deborah Heng: In addition to strategic considerations, embracing global ambitions early allows small and mid-sized enterprises (SMEs) to optimise their operations and supply chains.

Yeo Yee Chia: As businesses – particularly deep-tech startups – seek growth, they should consider three primary reasons for venturing abroad: attracting customers, establishing supply chains, and securing investments.

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When firms start with global ambitions in mind, how does this shape their broader strategy?

Yuen: It’s a whole different mindset. In planning growth, the business will take into account the much larger possibilities and addressable market segments – but will also have to calibrate for higher risks and uncertainties.

Businesses with global ambitions tend to be more flexible and open to new situations, with a larger risk appetite. This drives more aggressive growth strategies and higher tolerance for uncertainties.

Heng: Comprehensive market research is critical, from competitor landscape, target customer segments, market demand and potential growth, to cultural and social nuances, and regulatory environment.

Research also helps in assessing the investment and resources needed to go overseas. While a company might not intend to go abroad in the near term, having such ambitions early will help them make decisions that facilitate eventual expansion.

Yeo: When firms embrace global ambitions from the onset, their strategies become more targeted and effective. Their products or solutions are designed with a broader appeal, opening up larger customer bases and leading to increased revenue and valuation.

A global strategy sharpens a firm’s selling proposition, guides investor engagement, and assists in designing effective supply chains and development nodes. Businesses that think globally from the start set themselves on a path for long-term success in the international market.

What practical concerns should SMEs consider when going abroad?

Chu: One of the most common issues is unfamiliarity with processes, standards and regulatory frameworks of foreign markets. This can be managed by leveraging the resources and knowledge of local legal advisers and government agencies.

In business operations, practical issues include cross-border payments and transactions, and in-market supply chain and logistical capabilities. These can be managed by working with suitable service providers.

Yuen: Businesses need to do their homework and work with skilled advisors to determine their “go versus no-go” conditions. Frequently, regulatory and legal issues may pre-determine whether a business can even operate in the foreign market, and under what conditions.

Matters such as business licensing, permit applications, employment law considerations and appropriate business structuring can make or break a planned entry into a foreign market.

Ang: Identifying reliable and competent local partners – such as distributors, suppliers, or agents – is crucial. Evaluate their track record, reputation, financial stability, and local market knowledge to ensure they align with your objectives and can provide the necessary support.

Expanding overseas can be capital-intensive. Assess the financial implications and determine the most suitable financing options, such as bank loans, venture capital, government grants, or partnerships.

Hiring and managing a local workforce – including understanding employment laws and cultural nuances – is important. Local employees can provide valuable insights and help bridge cultural gaps.

Tan: Companies should start by researching their target market: identifying key audiences, scoping out potential competition and demand, and determining product-market fit.

They should be ready to adapt products or services for their destination markets. What works in Singapore may not always be relevant overseas.

Heng: Understanding and complying with regulatory and legal requirements is crucial. Companies cannot risk non-compliance, which could result in reputational damage and even a loss of operating licence, in addition to huge financial losses.

SMEs must also address complex cross-border payments, manage currency fluctuations and handle differing banking frameworks across diverse markets.

Is it worth pursuing one-off projects overseas?

Yuen: In general, businesses should not prematurely discard what appear to be one-off projects. Every completed project in a new market will serve as a positive credential, or at least a valuable learning moment.

In addition, each project will bring growing brand recognition and deepen the customer acquisition and education process.

Tan: We encourage companies to take a long-term view as it does take time to see returns.

SMEs without a deep understanding of the landscape overseas can start with pilot projects to assess the potential of new markets. Such projects add to their track record and give a good idea of what it is like to do business overseas, where their value proposition lies, and what model could work best.

Before setting up a physical presence, SMEs can use exports or e-commerce to test new markets. With this, they can get feedback and adjust their products to suit local needs, before deciding to set up a distribution office or even a manufacturing facility.

What sort of help can SMEs seek when expanding regionally?

Yuen: SMEs need to partner trusted and skilled advisers such as banks and law firms that have established local presences and deep knowledge of the local market, regulatory and legal conditions.

Ang: SMEs can seek help from government assistance programmes, business incubators, trade associations, professional service providers, networking events, export assistance organisations, financial institutions, and local business networks.

Tan: EnterpriseSG has 36 overseas centres that can share insights on the business environment, advise on foreign regulations and practices, and point SMEs to partners or business leads.

We also organise business missions and seminars, such as the Africa Singapore Business Forum in end-August.

For more targeted assistance, we have schemes such as the Enterprise Development Grant to pilot or test-bed products overseas, and the Market Readiness Assistance grant for business development, promotion and set-up costs related to entering new markets.

Chu: Companies can collaborate with a suitable, trustworthy local partner with an established track record. The partner can offer local market insights, help navigate cultural differences, provide access to local networks and build relationships with local stakeholders.

Heng: Local partners can also provide potential synergies. While identifying the right joint venture partner requires in-depth due diligence, it often fast-tracks entry into a new market.

Yeo: They can tap on partnerships such as EnterpriseSG’s Global Innovation Alliance (GIA), which connects Singapore startups and SMEs with innovation hubs and key demand markets. For example, local enterprises targeting China can leverage the A*Star Partners’ Centre, a GIA partner in Suzhou.

What risks should SMEs consider when entering markets such as in Asean or China?

Chu: Asean is a diverse region comprising several countries with varying cultures and laws, while China is a large and complex market. The risks and concerns to consider when expanding to these regions are much the same as entering other foreign markets, such as unfamiliarity with local laws, processes and customs, and figuring out day-to-day business operations.

Bear in mind also that the risk of intellectual property infringement and geopolitical tensions can increase when expanding to other markets from Singapore.

Ang: SMEs should be familiar with the target market’s regulatory and legal frameworks for trade, investment, intellectual property (IP), employment, and other activities. Compliance can be complex and time-consuming, requiring proper due diligence and legal support.

Asean and China markets are highly competitive. SMEs need to conduct thorough market research. They should develop a competitive advantage and a strong value proposition to differentiate themselves.

IP rights can be a significant concern. SMEs must understand the local IP laws; file for appropriate patents, trademarks, or copyrights; and have strategies to protect their IP from infringement and unauthorised use.

Building strong relationships with local partners, distributors, suppliers, and customers is crucial for successful market entry. SMEs should invest time and effort in establishing trust, understanding local business practices, and nurturing long-term partnerships.