Calis

Spreading wings overseas
January 16, 2007, Business Times, SME SPOTLIGHT

Young Singapore companies are growing their overseas arms at an early stage in their business

SINGAPORE start-ups are venturing overseas early in their business cycle, with four in 10 having some form of presence overseas, a survey has found. The survey - released last week by DP Information Group and strategic partner Action Community for Entrepreneurship (Ace) and sponsored by Sirius Venture Consulting - polled 582 companies that had been in business for three years or less at the time of the survey.

It found that 43 per cent of respondents had ventured into overseas markets, and among those with an overseas presence, more than half generated up to 30 per cent of their turnover from abroad.

'This shows that the government's unswerving effort to encourage Singapore companies to internationalise may have paid off,' the survey report said.

Among the 252 start-ups who reported having an overseas presence, 73 per cent have been operating for at least two years.

'The majority of these companies spend their first 12 months stabilising their business,' said Chen Yew Nah, managing director of DP Info. 'However, 41 per cent of new businesses enter the international marketplace in their second year, while another 32 per cent do so in their third year of operation.'

Of the companies that do venture overseas, 67 per cent do so through exporting goods, while 12 per cent choose to establish a physical presence through an overseas subsidiary, branch or office. Another 11 per cent prefer to establish an overseas alliance when entering a new market, the survey found.

Early start

Inderjit Singh, deputy chairman of Ace, said it was noteworthy that a high proportion of start-up companies have expanded overseas in their attempt to foster growth.

'This shows that start-ups are internationalising faster than their earlier business counterparts as a result of rapid globalisation,' he said. 'This definitely looks promising.'

He added that International Enterprise Singapore, the agency which is spearheading Singapore's efforts to develop its external economic wing, should take note of this trend.

'There is a need also to take not only the more established companies, but also our start-ups overseas to gain market and business exposure,' Mr Singh said, adding that Ace will continue its efforts in encouraging more start-ups to embrace a 'global mindset' from inception.

Another aspect the survey looked into was the sources of business for start-ups. It found that 64.1 per cent of survey respondents regard referrals from existing customers as an important source of potential business, while 36.4 per cent rely on referrals from business partners. Another 27.8 per cent use the Internet or newspaper for advertising purposes.

'Of course, many do not have the resources to engage in advertising and promotional activities, so they prefer to adopt a networking approach, with 48 per cent stating they need government assistance in this area,' Ms Chen said.