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Trade deal not changing Singapore firms' outlook yet
THE initial trade deal signed on Wednesday in Washington may spark hope of improved Sino-US relations, but Singapore companies across sectors are unlikely to change their outlook just yet, with some having already adapted to the fallout anyway.
"Any positive step is a good sentiment booster for trade, and we hope 'global trade' will be a reality once again," said Aman Gupta, managing director of metals trader Gupta International, after China committed to purchasing more US goods and the US rolled back some tariffs, among other pledges.
But, "honestly, it's just the beginning and a lot needs to be done," said Mr Gupta, whose business supplies raw materials like metals and coils from China to customers in the US.
Other firms like Hua Yu (S) and Asia Polyurethane Manufacturing are also waiting for the dust to settle before making any moves.
"People will not rush into any action yet. They will see what manoeuvres or changes in strategic position are made, then take the next step," said Asia Polyurethane Manufacturing chief executive, Erman Tan.
Association leaders like Ang Wee Seng, executive director of the Singapore Semiconductor Industry Association, do not think the initial deal will boost companies' sentiment either.
Mr Ang said the deal is "definitely a step forward but unfortunately, the terms don't affect the tech realm". Hence, the sector will likely continue to see a "pretty muted" year ahead.
Ho Meng Kit, who heads the Singapore Business Federation, said companies are "taking the long view that this is not something that will go away, and this is broader than a trade dispute".
But regardless of how the trade conflict eventually pans out, some of the local firms have already moved to reduce their exposure to the frictions.
Mr Gupta explored new markets like India and Turkey last year after his customers in the US wanted to scrap their orders from China and he had to source supplies from other countries. "So far, it's in the positive direction and we are hoping in 2020, we will have at least a 20 per cent jump in revenue from last year," he said.
Another firm that has repositioned itself is Ademco Security Group, which provides security solutions and services.
When American customers - which are a big proportion of its client base - cut projects in China or put them on hold last year, Ademco turned to target large, Chinese enterprises instead. "No choice, have to pivot when it's necessary and try to gain those large local clients," said Toby Koh, the group's managing director.
In addition, anticipating that American customers might move operations to Vietnam and India, the company shifted its focus to those countries. It's gotten some of the "spillover projects" and is beefing up its teams there.
In a way, the trade spat has turned up an opportunity for Ademco. Mr Koh said: "As these situations change and morph, there are business opportunities and gaps that Singapore companies that work a little faster and take calculated risks can capitalise on, such as those other markets we hadn't considered because of our focus on China and US previously."
For Asia Polyurethane Manufacturing, when sales to China slid, it took the chance to invest in developing higher value-add products with less elasticity in demand to help the firm grow faster with better margins, Mr Tan said.
Calling the trade war a wake-up call, he said it "forces you to think out of the box, get out of your comfort zone, re-look the business model and how partners interact with you, to progress in the fast business environment".
- Additional reporting by Leila Lai
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