by Tom Field

Advice for Technology Executives on Doing Business in Singapore

Jul 01, 20026 mins
IT Leadership

“The Gateway to Asia” is how the marketing brochures promote Singapore. But Brian Chen, CTO of the Infocomm Development Authority (IDA), the government’s own IT shop, offers a more practical description: “Singapore is Asia 101,” he says.

Or Asia Lite. Or Asia for Beginners. As opposed to countries such as China and India, where large labor forces are at least partially compromised by creaky IT infrastructures or cranky governments, Singapore is the plug-and-play marketplace?a super-wired country where, as the Singaporeans would have Westerners believe, the e-business is brisk and the living is easy.

“This is the place you go to get your feet wet in Asia,” says Chen, who was born in Fujian Province in China, was educated as an engineer in the United States, and worked for Motorola in China just prior to joining the IDA in early 2000. And as Chen sits in IDA’s spacious, elegant lounge in the Suntec City Tower Three in Singapore’s Marina district (where pop rocker Christopher Cross had performed two days before), Singapore certainly seems to offer Westerners a home away from home. “It’s an easy adjustment,” Chen concludes.

Singapore has attracted Western interests since 1819, when Sir Thomas Stamford Raffles of the British East India Co. stumbled upon the tiny island (246 square miles) and quickly established it as a trading post for the British Empire. With its central location (a short swim south from Malaysia) and its deep harbor, Singapore by 1869 had become a thriving port for Western coal merchants, ship builders and traders.

Fast-forward to the 1990s. Not only had the port become the biggest, busiest, most IT-savvy in the world (see “The Port of Singapore” on Page 96), but the city-state was now home to thousands of multinational companies, including Citibank, Microsoft and Sun Microsystems?the East India Companies of the late 20th century, looking to take advantage of the following:

  • A stable, business-friendly government offering huge tax incentives (10 years 100 percent tax free if a business establishes a regional headquarters) and local partnerships.
  • A largely English-speaking, Westernized environment complete with shopping malls and U.S. restaurant chains.
  • A sophisticated telecommunications infrastructure, including a state-of-the-art broadband network reaching 99 percent of the population.
  • A heterogeneous community of 4 million that’s 78 percent Chinese, 13 percent Malay and 7 percent Indian, making Singapore an ideal test market for a good slice of Asia.

“For a U.S. company coming into this marketplace, Singapore is very cosmopolitan, a melting pot of cultures,” says Vincent Sim, senior marketing manager for Microsoft’s MSN business unit, which opened its Internet portal to Singapore in 2000. In two years, MSN was able to attract 800,000 local e-mail subscribers, and in 2001 it used Singapore as a laboratory to launch a successful series of live concert webcasts. “We find we can test new services in Singapore and then cross-share the learnings across Asia,” Sim says.

Of course, along with Singapore’s business opportunities come a unique set of challenges, including the following:

  • Skilled labor and available housing are both scarce and expensive.
  • The government is heavily involved in everything from recruitment to regulation?that is, it’s your business partner, like it or not.
  • The business-friendly government is not so friendly in other ways; it restricts expression, entertainment and political dissent to a degree that feels oppressive to most Westerners.

But despite those problems (see “Singapore Speed Bumps,” Page 90), Singapore today is host to about 6,000 multinational companies, all seeking the seemingly unlimited opportunities presented by the legendarily promising Asian market. What experienced global players have learned is that the key to getting good grades in Asia 101 is to know the rules of engagement with Singapore’s government and culture, to develop local partnerships, and to work around the island’s challenges.

Who You Know Tells How Far You’ll Go

Business partnerships are valuable anywhere, but in Asia, where long-term relationships are revered, who you know very much affects how far you’ll go. Singapore’s IDA has developed a partnership model designed to help multinational companies gain a toehold in Asia and give homegrown companies an entry into the global marketplace.

The Infocomm Local Industry Upgrading Pro- gramme (iLIUP, pronounced like eye loop) is the cumbersome name of this program, an initiative that tries to pair local entrepreneurs in joint ventures with multinational companies. The objective: to blend the technology, know-how, and sales and global marketing power of the multinational companies with the man power, entrepreneurial energy and local market knowledge of the homegrown enterprises. Since iLIUP started in 1995, roughly 160 Singaporean companies have been assisted by 20 multinational mentors (17 of them from the United States) including Apple, Compaq, IBM and Oracle.

Among the current participants in iLIUP are Sun Microsystems and iGine, an up-and-coming Singapore-based vendor of e-commerce software. For more than a year, Sun and iGine have been united in a partnership that serves both companies’ business needs. The first fruit of the relationship is WeB2Biz, a new e-business engine developed by iGine for Sun’s partners and customers. According to Philips Lai, strategic business development director for Sun’s global sales organization, WeB2Biz has helped cut Sun’s order-processing time from 12 minutes to 15 seconds. And by leveraging Singapore’s state-of-the-art telecom infrastructure, Sun has been able to test new Java and wireless products that can’t yet be deployed in most of the world. “[This partnership] gives us access to new markets, new technologies and new offerings,” Lai says.

But there’s a bigger picture here. Clearly, for a company like iGine, a partnership with a brand name like Sun is a once-in-a-business-lifetime opportunity to take its show out of Singapore and mount it on the world stage. For Sun, iGine presents a red-carpeted chance to establish an intimate relationship with a homegrown Asian company that in turn can give Sun the credibility, experience and references it needs to penetrate the entire Asia-Pacific marketplace.

“Doing business in Asia is not easy,” says Chang Huong Tan, CEO of iGine. “The opportunity is here, but if you don’t get into the right relationships, [market penetration] can’t work at all. And these relationships can take years to develop.”

Sun’s Lai agrees that the iLIUP partnership pays dividends throughout Asia. “Other countries look at what happens in Singapore,” he says. “A strong reference from here does help. It’s a door opener.”

Please Come to Singapore

Suresh Prabhu, chairman of Apex Systems, an insurance industry software vendor with offices in India and Singapore, strongly encourages global leaders eyeing his marketplace. “Don’t look at coming to Asia as a pain in the butt,” he says. “Look at it as a way to expand your business.”

Yes, the governments, cultures and customs impose barriers, he says, but not insurmountable ones, not when weighed against the benefits of entering the Asian marketplace and leveraging local resources.

“Look at what’s possible in Asia that will help your bottom lines,” Prabhu says. “Look at the skills available in places like Singapore and China.”

All success requires, says Prabhu, is “a mind-set change.”