“Diversification can reduce risk, by not being dependent on one market.”
Wanting to export products and services is sometimes partially based on subjective, pride-related reasons, and not well thought through. But naturally, there are also very valid objective reasons for expanding your company regionally or globally, as expansion is a natural route of a successful business.
Why should you expand your business?
It offers new revenue potential of new markets and new customer types, especially if you would be the first go-to-market. Diversification can reduce risk, by not being dependent on one market. If one market is underperforming, another more successful geographical market can cover its losses. The expansion also offers a larger talent pool, enabling to have access to the right people for the right positions. Besides international talents with highly contributing skills and backgrounds, local staff fits in with the national cultures and able to offer local expertise and knowledge. Global reputation and branding are other advantages that come with global expansion. It is a result of being able to serve your international customers across the region and will appeal to potential new regional customers. Expanding abroad can offer a competitive advantage to your competitors by being present in a country, they are not. Finally, operating in other countries can reduce considerably labor and other operational costs, especially regarding labor-intensive core functions such as manufacturing and software development.
Risks of expanding your business:
Risks of expanding into other countries certainly must be contemplated as well. These can be unable to find the right staff, inability to manage and control local team remotely, unfamiliarity with tax and labor regulations, the unpredictability of political and economic conditions, and misjudgment of the market potential, customers, operational costs, and competitors in the targeted expansion country.
There is support for Singapore firms to go overseas, but some just don’t want to. Although more local companies report a presence overseas than last year, many are still reluctant, says SBF CEO Ho Meng Kit in Channel News Asia Commentary. Since the 1989’s recession, Singapore’s government recognized the importance of external markets. Besides several government-initiated support programs, the latest trends of the digital economy, better technology, and improved transportation links did considerably contribute to meet expansion goals. Main ASEAN expansion markets being Malaysia, Indonesia, and Thailand.
“We have more than a quarter-million SMEs in Singapore. Indeed, many of them will continue to be domestically focused. Only a portion of these will have products or services that can succeed in international markets”. Mr. Ho Meng Kit
Reluctance is rooted in earlier mentioned risks, and not wanting to leave the relatively comfortable and certain home market. Going abroad for some SMEs probably is too much of a jump in the deep.
So how can the Singapore government convince doubting businesses that have the potential of global growth often headed by more globally oriented young leaders?
Several tools and means are currently made available such as:
- Market Readiness Assistance (MRA) Grant which assists with market expansion up to SGD100,000 per company per new market.
- Go Global Initiative to support with assessing market readiness, research in-market opportunities, building capabilities for internationalization, exploring in-market opportunities, match with partners and projects, grooming your talent, co-funding your market expansion and leveraging financing programs.
Besides government support, dedicated companies and business software products can further minimize the risks of expansion. Think of advisory services regarding taxes, labor regulations, license, visa, and company registration, as well as market research, recruitment, payroll, housing, office setup services. Business software products can make life easier when starting in a new country because they can provide built-in compliance related to local accounting and labor regulations.
Cadena’s “PayTime” payroll, time attendance, and HR package combines multiple countries and entities capabilities in one platform and is therefore ideal for Singapore SMEs’ in their journey to conquer Southeast Asia and beyond. Run your payroll centrally from your head office in Singapore, based on operational time attendance and leave data from your country subsidiaries. Don’t worry about compliance and changing labor and tax laws, as they are included in PayTime’s customer support services. All your regional staff can easily engage with the central system through mobile-friendly employee self-services.
Looking forward to assisting your overseas expansion ventures into Southeast Asia!
Find Paytime on the hrtech.sg Marketplace & 2021 Singapore HRTech Marketmap
Read about why HRMS software is critical for an SME.
