How Singapore is leveraging on the rise in Asian Consumerism.
Asia’s Growing Markets
With its strategic location right in the heart of Southeast Asia, Singapore is the ideal location for lifestyle and retail brands to tap the rising consumer boom in Asia. For many years now, the region has been the key growth engine for the global economy, enjoying exceptional growth rates that will create a major consumer market of 3.2 billion in the middle-class segment by 2030. Rising discretionary incomes amongst the region’s newly-minted middle class are expected to power the growth of Asian consumerism. It is forecasted that Asia will account for more than 80 per cent of the growth in global middle-class spending by 2030, which amounts to US$55 trillion. A good case in point is China, which already accounts for a quarter of the world’s demand for luxury goods. With the emergence of these affluent Asian consumers – with their demand for products and services that cater to their needs and preferences – more international brands and companies are setting up operations in the region to better understand and be more responsive to the market.
Singapore, the Gateway to Asia
Singapore is one of the major business and trading hubs of Asia, which means it is well-positioned to be a launching pad for companies looking to expand into the region. The Republic boasts of excellent connectivity to the region and beyond, with a strong logistics and supply chain management industry supporting the wide array of businesses and industries operating here. Singapore is also an important location for the world’s top logistics companies, with 20 of the top 25 global logistics players running operations here, on top of being the preferred logistics and supply chain management hub for leading manufacturers such as Dell, Hewlett-Packard, Infineon, LVMH, Novartis, Panasonic and more.
As an open economy built on trade, Singapore is set to benefit further when the ASEAN Economic Community (AEC) is implemented by end 2015, with 10 ASEAN countries morphing into a single market for goods, services, talent and investment. In addition, the Republic is also party to some 18 multilateral and bilateral Free Trade Agreements (FTAs), while continuing to pursue greater trade facilitation such as the Trans-Pacific Partnership (TPP).
Products for Discerning Asian Consumers
Singaporean consumers are amongst some of the most sophisticated and discerning in the region, with the island city’s consumer retail scene a well-developed one too. For lifestyle and retail brands stepping into the Asia for the first time, the country – with its multi-cultural population – can provide the pan-Asian perspective that is necessary for business growth in this region. These international brands can also tap on Singapore’s consumer insight capabilities, which will allow them to better customise their products and services to the diverse markets in Asia. In 2012, Singapore launched the S$77 million initiative, Institute on Asian Consumer Insight (ACI), with the aim of being the thought-leader in understanding pan-Asian consumer needs and preferences. The institute conducts research and education programmes, helping consumer businesses identify the similarities and differences among Asian consumers. Brands can then develop growth strategies based on these insights.
Currently, Singapore is home to the research and development (R&D) centres of many major consumer businesses such as Procter and Gamble, Johnson & Johnson and Nestlé. With Singapore’s full ecosystem of research, innovation, manufacturing and marketing capabilities, this means international firms here are better able to fine-tune their products for individual Asian markets, while shortening their speed to market in the same instance. For international brand owners, the Republic’s strong intellectual property (IP) protection and status as regional legal, arbitration and mediation hub also makes it an attractive location. Singapore is a signatory to major Intellectual Property Rights (IPR) conventions and treaties and in recent years, has been expanding its talent pool to meet the needs of the IP sector.
Made in Singapore, For the World
Besides attracting international businesses to set up their manufacturing, R&D and marketing operations here, the Singapore government has also been actively encouraging homegrown companies to spread their wings and expand to overseas markets. International Enterprise (IE) Singapore is the government agency tasked with driving Singapore’s external economy, spearheading the overseas growth of Singapore-based companies and promoting international trade and helping firms become globally competitive companies (GCCs). IE Singapore is also helping businesses become global exporters, by tapping on its network of overseas centres in over 35 locations across both developed and emerging markets.
Steadily through the years, Singapore brands have made inroads into many overseas markets, establishing a reputation in segments such as consumer electronics (Osim, Creative Technology), furniture (Scanteak), food and beverage (Ya Kun, Brotzeit), services (Spa Esprit Group), fashion (Kwanpen), consumer healthcare (Tiger Balm) and many more. Realising that Singapore’s limited domestic market size places a constraint on their growth prospects – and attracted by the vast potential in the region and beyond – more Singapore companies in recent years are investing more time, effort and resources to bring their businesses and products overseas.
Better by Support and Design
For Singapore companies with plans to strengthen their businesses and go international, there are a number of government assistance programmes that they can tap on. On the more basic level, all Singapore firms are being encouraged to increase their productivity levels and innovation capabilities in all aspects of their businesses, amidst tightening manpower supply and higher operating costs. For these improvements, they can leverage on the Productivity and Innovation Credit (PIC) scheme and the Innovation and Capability Voucher (ICV) scheme. In the case of the PIC scheme, companies can receive either significant tax deductions or cash payouts on their investments in a wide range of qualifying activities such as the acquisition and licensing of IPR, registration of patents, trademarks and designs, research and development, and product and industrial design projects.
For businesses and retailers looking to develop new capabilities, there is the Capability Development Grant (CDG) from SPRING Singapore. The CDG aims to help companies across ten development areas, including service excellence, brand marketing and strategy development, and intellectual property and franchising, by defraying up to 70 per cent of consultancy, training, certification, and equipment costs. In particular, SPRING Singapore has been urging retailers to adopt omni-channel retailing - which includes e-commerce, digital marketing and other retail technologies - increasing their competitiveness while opening up opportunities for overseas sales. In 2015, IE Singapore also enhanced its Market Readiness Assistance (MRA) grant programme to support Singapore companies venturing abroad across a whole range of areas such as overseas market set up, marketing and public relations.
Better by Support and Design
For consumer brands and retailers – whether international or homegrown – looking to expand to Asia and beyond, it is clear that Singapore provides a wide range of competitive advantages, making it the ideal launchpad into the region. Businesses already based here should consider how best to tap on these support schemes to go regional. Meanwhile, those planning to set up here will quickly discover why Singapore has been consistently ranked by the World Bank as the easiest place to do businesses in the world.