SMEs partner big firms overseas to do well

SMEs partner big firms overseas to do well

Teaming up with big corporations which already have a strong presence overseas may smooth out the hurdles that are otherwise too large for some companies to overcome.

Arranging such partnerships is now one of the priorities of trade agency International Enterprise (IE) Singapore, which has had some success of doing so in China.

It has helped a number of small and medium-sized enterprises (SMEs) to band up with CapitaLand in its Datansha urban renewal project in Guangzhou, and Mapletree in its Nanhai Business City project in Foshan.

Companies that have teamed up with CapitaLand include nursing home operator Orange Valley, DP Architects and landscaping firm Singapore Garden City. At least five other firms are in talks with the developer, said IE Singapore director for China Liane Ong to The Straits Times.

"This achieves two objectives - bigger companies can find tenants to value-add to their developments and, more importantly, we can provide direct downstream opportunities for small and medium-sized enterprises to enter China.

"They can share the network, complement each other's strengths and bring in the strong attributes of our Singapore brand. Working with fellow Singapore companies also provides more reassurance and familiarity in an otherwise foreign environment," said Ms Ong.

DP Architects China director Tan Chee Yong said the firm's partnership with CapitaLand in China, which started in 2000, has enabled the firm to take root in the market.

"Before that, we had tried to enter on our own but it was not easy. Coping with the regulations was a challenge, but we were also surprised by the cultural differences when dealing with local officials, consultants and contractors.

"Being a partner of CapitaLand gives us a bigger leverage because it's a trusted brand and has an established track record in the country. It also means the projects are financially secure," said Mr Tan.

Mr Goh Chye Boon, Mapletree chief executive for China, said these partnerships are a "win-win". At the group's Nanhai Business City, where it plans to develop an education hub, Crestar Education and EtonHouse International Education have been brought in to be providers.

"Singapore's quality education system is widely admired in China and these partnerships make business sense… as they collectively give us a strong Singapore brand name," Mr Goh added.

Singapore companies are urged to seek their fortune overseas as the economic restructuring and slowdown at home have made growth difficult, especially for SMEs.

This was part of Budget 2016's focus, with the Government extending the Double Tax Deduction for Internationalisation scheme to March 2020. The deduction is applicable for expenses on overseas business development and study trips.

But Association of Small and Medium Enterprises president Kurt Wee said plenty more can be done. "Singapore businesses are still not as well-known for hunting as a pack, as compared with, for instance, Japan or Korea," he said.

"We do have companies that have gone overseas with our multinationals but many have also lamented that the MNCs have not shown a preference for our SMEs.

"For instance, many still find themselves having to compete in open tender for overseas projects, and they seldom have the cost advantage to do so," he added.

Ms Ong stressed that partnerships need to be commercially viable and so they do not always come about readily. Flexibility and innovation will still determine SMEs' success in overseas markets like China, she added.

This article was first published on August 23, 2016.
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