Venturing abroad for most Singapore firms usually means tackling nearby markets such as Indonesia, Vietnam or China while destinations like Africa, India and Latin America just seem too daunting.
Yet these markets could be fertile ground for local firms looking to diversify and become more resilient, noted an Enterprise Singapore (EnterpriseSG) spokesman.
The government agency assisted around 80 companies in projects in Africa, India and Latin America between January and May - 50 per cent more than in the same period in 2019, before the pandemic hit.
The sectors with the most potential in these markets include innovation and technology, manufacturing, built environment and sustainability, EnterpriseSG officials told The Straits Times.
Mr Benjamin Lai, regional director of EnterpriseSG's centre in Mexico City, noted how the interest in manufacturing had been tepid until a few years ago.
He said Singapore firms were telling EnterpriseSG that their customers wanted them to start manufacturing in Mexico or to set up there.
The opportunities in manufacturing for Mexico are fairly broad, he added, citing food production, automotive components and plastic injection moulding.
EnterpriseSG has 36 overseas centres, each covering a region. The most recent was set up in Nairobi, Kenya, in 2018 following growing interest from Singapore firms looking to enter East Africa.
"A diversified global presence enables us to help our companies make the first move or adjust to developments quickly," it said.
EnterpriseSG's regional directors in these centres work with firms in areas such as facilitating business opportunities, sharing policy updates and helping companies fine-tune their strategies for entering new markets.
Most of the smaller Singaporean firms venturing into these markets do so with the help of local partners, which include joint ventures (JV) and distribution partners.
Ms Jean Ng, regional director of EnterpriseSG's centre in Accra, Ghana, said the JV model is most common in West Africa, primarily because of the need for a local partner to assist in navigating matters like distribution and local regulations. She cited the oil and gas sector, which has regulations requiring foreign firms to enter a JV with a local company in order to qualify for projects in the industry.
Mr Lai also believes it is important for Singapore firms to find a local partner in Mexico City - whether for a specific project or by hiring someone directly.
But there are some inevitable limitations with a partnership approach, as Ms Sabrina Ho, regional director of EnterpriseSG's centre in New Delhi, pointed out. She noted how most of the risk in such partnerships is undertaken by the local partner, which means the Singapore firms would have limited exposure to ground operations.
"We recommend that companies communicate with their local partners regularly, and consider short-term trips as well, to learn about... the market landscape," she said.
Ms Ho said some firms and start-ups have worked on building a small in-market presence by deploying executive leadership in India, or by rehiring Indians who have returned from Singapore.
Such an approach tends to build a more meaningful and longer-term presence in the market, but Singapore players tend to prefer the partnership approach as it allows them to establish operations more quickly, she added.
Ms Ng, who is based in Ghana, noted the importance of firms knowing their target audience and how to position their brand.
She cited how packaging size can also make a major difference. "You may come here and realise that a canister of potato chips will not sell because the price point is too high. But if you package into a pack size of 50g... you could sell huge volumes. That is the sort of feedback our companies must be... willing to take."
At the same time, she acknowledged that it takes time and patience for a business to enter a new market, noting how two companies in the built environment sector took about a year to finalise discussions with local partners after they met at an engagement mission in Ghana and the Ivory Coast.
"Such discussions take a while before they come to fruition, so (having the) patience to have multiple conversations and to find your local partner are key to successfully entering markets in Africa."
Ms Ho in Delhi cited how EnterpriseSG has been stepping up on working with partners such as trade associations in India and Singapore, going beyond facilitating business-to-business engagements and networking sessions.
"We work with them to help prime Singapore companies ahead of market entry, as well as build a network of Singapore-based Indian corporates and other contacts for Singapore companies to directly engage, even without entering India directly," she said.
The easing of border restrictions is allowing EnterpriseSG to resume its physical business missions and visit trade shows.
Its schedule is already gearing up: It is backing a mission led by the Singapore Precision Engineering and Technology Association to Mexico in October and a built environment one to Ghana and Ivory Coast in the same month, and there is a mission to India for furniture firms in early 2023.
Source: The Straits Times © Singapore Press Holdings Limited. Reproduced with permission.