Get into China while there’s still time

Singapore companies still have an edge in ‘integrated offerings’

22 March 2010

The window of opportunity for Singapore’s companies to get a foothold in China is fast closing, say the China- based regional directors of International Enterprise (IE) Singapore.

Particularly in the more developed coastal regions, an undifferentiated offering will no longer be sufficient for a lone Singapore company to break into the market.

Shanghai-based Liane Ong, IE Singapore’s regional director for East China, China Group, said: ‘If it’s just another product that you want to sell, the Chinese can probably manufacture it for less and quicker. But Singapore companies still have an edge when it comes to integrated offerings, a total concept.’

This is the idea that small Singapore companies, dwarfed by China’s huge market, can link arms to offer suites of solutions – such as an integrated tourism project or an integrated system of urban solutions, which Singapore can claim leadership in.

For instance, Cleantech Partners – a consortium of 19 SMEs with varied specialisations such as solar or wind energy or cleantech funding – recently signed a memorandum of understanding (MOU) with the Hangzhou authorities to jointly set up a $2 billion eco-park.

Another area where there may be opportunities yet are in ‘third-country’ collaborations, where Singapore firms can pair up with Chinese counterparts in their attempts to enter a third market.

Many Chinese enterprises have grown to the brink of overseas expansion now, but may lack international experience, says Law Chung Ming, IE Singapore’s regional director for South China, China Group. Singapore companies – especially with the ancestral link of the Chinese diaspora here with the southern provinces – can step in as collaborators to smooth that expansion too.

Another positive development for local companies looking towards China is the increased regional integration and spreading of cities across China, says Mr. Law. This could keep that window of opportunity for Singapore companies open a while longer.

‘With the kind of connectivity they are building between cities, there will be enlarged potential markets – you’re talking about a population of 50 to 60 million within a two-hour radius from Guangzhou,’ Mr. Law said. In West China too, the integration of Xi’an city and Xianyang city is another example of such mega- cities springing up across China.

Also, the growing Chinese middle class driving consumption upwards is not likely to shrink back anytime soon. ‘Singapore companies stand to benefit in two ways: when the richer Chinese consumer demands imported goods, and also when he buys locally. So companies can set up in China to catch the market there too,’ says Ignatius Lim, IE Singapore’s group director for China.

Even then, speed is of the essence. A recent Credit Suisse consumer survey showed Chinese consumers’ confidence in their domestic brands to be on the rise.

Foreign brands still hold sway for big-ticket items, luxury goods and tech products. But Chinese companies have caught up in the food-and-beverage, and household and personal care goods sectors.

And, in consumer services like telecoms, the Internet and travel, they already have a much stronger position than foreign entrants hoping for a share of the pie.

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