Smaller firms venture overseas

Smaller firms venture overseas

SINGAPORE - Small firms are setting their sights on overseas markets - and not just to have new places to sell to. Driven by plentiful land and cheaper labour, they are also taking the decision to move their manufacturing and research and development operations to other countries in the region. And though these companies may differ in their market preference depending on their purpose for going overseas, many are contemplating foreign operations from the outset, says Tan Chor Sen, OCBC's head of emerging business. "As it is, there are young companies that are already overseas from day one," he says.

Mr Tan cites the example of a speaker manufacturing firm that had not only sold to Singapore at its inception but planned to distribute its products regionally. Today, the five-year-old company sells to more than 60 countries worldwide.

"This is something which is not unusual, but we're beginning to see more and more during the last two to three years," he says. "And we will see more as it goes, for various reasons."

Traditionally, small and medium enterprises (SMEs) expand overseas to seek new markets for their products. Their success can be measured by the amount of revenue that comes from outside Singapore.

A survey conducted by trade agency IE Singapore in May last year found that overseas revenue accounts for nearly three-quarters of overall sales for Singapore firms, compared with 65 per cent a year earlier.

More SMEs are moving their manufacturing overseas as well, Mr Tan notes.

"In the initial years you see them in China, but also you're beginning to see them in South-east Asia. There are companies which set up manufacturing operations here, but within a short period of two years they have to move because there's not enough land," he says.

And while local labour woes have hogged headlines recently, "sometimes it's not just labour, it's that they don't have enough land. So they have to move overseas," he adds.

In South-east Asia, Malaysia and Indonesia are popular choices for manufacturing operations.

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