SINGAPORE: According to trade agency International Enterprise (IE) Singapore,
local companies are likely to continue expanding their regional footprint in
2013.
IE Singapore also expects
companies in infrastructure development and in consumer lifestyle to lead the
way in overseas investments.
Companies will typically consider
several key factors and risk elements first, before making the move to expand
overseas.
Among the issues that they will
take into account include manpower needs, competition landscape and local
knowledge of target markets.
Teo Eng Cheong, CEO of IE
Singapore said: "Overseas markets are obviously very different from that
of Singapore. To go to these markets, you must know about the government rules
and regulations, you must know about the consumer trends, you must know about
the potential partners and potential customers. So knowledge is something that
companies find it difficult to build up over time."
Eu Yan Sang, a Singapore-based
company that specialises in traditional Chinese medicine, has over 300 retail
outlets in six countries in the region.
Revenue from its overseas
operations accounts for about 75 per cent of its annual turnover.
The company said increasing its
regional footprint will be a key strategic goal in 2013.
Eu Yan Sang recently expanded its
operations into Australia, and said it will be opening more outlets in China
over the next two years.
Richard Eu, group CEO of Eu Yan
Sang International said: "In terms of the considerations, of course the
size of the market is very important. The type of people that we have to run
the operations is also important -- who we can find to manage the business down
there. In some countries, that includes looking for the right local
partners."
Meanwhile, for Singapore-listed
golf equipment provider, Transview Golf, its foray into overseas markets has
resulted in its retail and distribution network expanding across nine countries
in the region.
Currently, just over half of the
company's turnover come from its overseas operations.
Yet, Transview said its biggest
challenge in investing in emerging markets are understanding and navigating the
regulatory environment.
Kelvin Lee, financial controler
of Transview Holdings Limited said: "It's important that we have a local
partner with good local knowledge, so we don't get ourselves entangled in the
local rules and regulations. Because in a lot of these countries, their rules
and regulations are not clear-cut."
Most Singapore companies have
headed for China to expand.
China is now the top destination
for overseas investments, according to Singapore's Department of Statistics,
because of its large market size and potential.
Data from the China Embassy show
foreign direct investment to China by Singapore companies last year have
increased 19.6 per cent on-year to US$5.4 billion for the 10 months between
January and October 2012.
Going forward, IE Singapore said
investments by Singaporean companies in China will likely move westward to
cities like Chengdu and Chongqing.
IE Singapore said investment
focus and interest by Singaporean companies is likely to shift slowly and
steadily away from China's coastal cities, such as Shanghai and Guangzhou, due
to market saturation and increased competition from global multinational
companies and state-owned companies.
Meanwhile, Southeast Asia will
also be another preferred investment destination - mainly due to rising
consumerism and high growth rate in the region.
In particular, Indonesia,
Malaysia and Thailand are the three most popular investments in Southeast Asia,
but companies are increasingly paying more attention to emerging markets, such
as Myanmar and Cambodia.
- CNA/xq
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