Singapore’s growth engine: riding the waves of regionalisation and Globalisation 4.0

Singapore businesses face a critical question in a world that is becoming increasingly Brittle, Anxious, Non-linear, and Incomprehensible (BANI): can we adapt and thrive in the era of Globalisation 4.0?

The answer is a resounding yes, but it requires a strategic shift towards regionalisation and internationalisation. We believe that Singapore is uniquely positioned to capitalise on these trends, but success hinges on a proactive and data-driven approach.??

This article dives into key takeaways from IndSights Business Leaders Forum Panel: “Growth Opportunities for Singapore Companies in Internationalisation and Regionalisation.” The forum panelists shared their expertise and experience, including what they thought were the essential pillars for Singaporean businesses to build a sturdy foundation for overseas success.?

READ MORE: IndSights Research Business Leaders Forum 2024

Why regionalisation and globalisation matter for Singapore

Globalisation is driven by technology and the movement of ideas, people, and goods. As the world is increasingly dominated by the US (United States) and China, the new frontier of globalisation is the cyber world . The digital economy, now further enabled by artificial intelligence, is becoming a force to reckon with through ecommerce, digital services, and 3D printing.

Globalisation 4.0 presents a unique opportunity for Singaporean businesses to expand their reach and tap into new markets. However, to truly thrive, companies must adapt and innovate. IndSights offer some key considerations for Singaporean businesses to navigate the exciting – and potentially lucrative – world of regionalisation and globalisation, through the key takeaways from our panel discussion.

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The four pillars of internationalisation and regionalisation

Building bridges and collaborate for success

Regional markets present unique challenges and opportunities. To truly thrive, Singaporean businesses must navigate regional complexities with a collaborative mindset.

Our esteemed panelists highlighted the importance of building bridges with local partners as local expertise is invaluable. Collaborate with partners who can guide you through regulations, cultural nuances, and client relationship building – essentially becoming your trusted guide in the new market. For instance, ride-hailing giant Grab’s success in Southeast Asia, where its strategic partnerships include local players like Yamaha Motors in Vietnam for motorbike rentals and Maybank in Malaysia for cashless payments, enabled Grab to navigate local regulations and cater to specific market needs.

Proactive planning and strategic partnerships are the keys that can help Singaporean companies to position yourselves for cost-effective and sustainable success in diverse markets.

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Building trust: the key to unlocking international success

International business thrives on trust. Trust goes beyond mere transactions, and it includes forging strong bonds with local partners to unlock a treasure trove of cultural insights and market dynamics.? Panelists at IndSights’ Business Forum regarded this as arguably one of the most important strategies for doing business overseas.

Singapore Success Stories:

• Carousell: Established in Singapore in 2012, Carousell has grown into a leading regional marketplace across Southeast Asia and Taiwan . Its success is attributed to their focus on building a user-friendly platform and fostering trust among buyers and sellers, which was achieved by understanding the needs of the market. It emphasised building trust through initiatives like buyer protection programs and secure payment options.
• Sheng Siong Group: This Singaporean supermarket chain has expanded into China over last few the years . The company emphasised understanding local customer preferences and offering products at competitive prices to gain trust and brand loyalty.

Singapore companies that prioritise trust-building initiatives gain a significant advantage. By fostering genuine communication and cultural sensitivity, businesses pave the way for smoother market integration and more sustainable growth.

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Lay the groundwork: research and understand the market

There is no one-size-fits-all approach to internationalisation. Before diving in, Singaporean businesses must meticulously lay the groundwork for success. Our Business Forum panelists recommended that business leaders conduct in-depth research on areas such as the target market’s political climate, regulations, and potential economic factors. It is crucial to get on the ground, meet with potential partners and clients, and immerse yourself in the local business environment.

The PESTLE framework can be a useful tool for businesses to analyse the external factors that can impact their operations. PESTLE stands for:

• Political: includes government policies, regulations, and stability. For example, Enterprise Singapore offers grants to help companies with market research and feasibility studies with a Market Readiness Assistance Grant .
• Economic: considers economic factors like inflation, interest rates, and growth.
• Social: looks at social trends, demographics, and consumer preferences. For instance, you can develop solutions that not only tailor to local needs but also meet the region’s price sensitivity.
• Technological: includes technological advancements and how they affect the industry.
• Legal: considers laws and regulations that can affect the business.
• Environmental: refers to environmental factors like climate change and sustainability.

By examining each of these areas, businesses can gain valuable insights into the overall landscape of an overseas market. PESTLE is particularly handy for researching new markets for expansion. It allows businesses to identify potential threats, and PESTLE analysis can highlight opportunities, like new technologies or lax environmental regulations. By understanding these factors, businesses can make informed decisions about entering a new market and develop strategies to mitigate risks and capitalise on potential benefits.

Additionally, the panelists emphasised the importance of calculated risk-taking. Waiting for guaranteed demand can be a losing proposition. Instead, by leveraging data-driven insights and predictive analytics, Singapore companies can become first movers.

The information from the groundwork, comprehensive research and local engagement, will increase the chances of success in expanding overseas, enabling companies to develop adaptable growth strategies, maximise market penetration, and in new markets.

The digital imperative: thriving in a connected world

The digital revolution is the lifeblood of modern businesses. While Singapore’s “Tiger economy” status has long been established, regional players like Malaysia, Indonesia, Vietnam, and Thailand are catching up at an alarming pace through rapid digital leapfrogging.

Kearney, a global management consulting firm, found about 50 percent of companies are at least piloting some AI initiatives. Singapore shows a high level of AI adoption, ranking among the top in especially in the more advanced stages, i.e. stage 3 to stage 5. However, countries like Malaysia (highest proportion in AI adoption Stage 3), Vietnam (highest proportion in the AI adoption stage 4), and the Philippines (highest proportion in the AI adoption stage 5), already have more companies in the respective adoption stages.??

To stay ahead of the curve, Singaporean businesses must embrace digitalisation wholeheartedly. Companies must leverage a skilled local workforce to bridge the digital divide and gain insights into the evolving digital landscape.

Furthermore, implementing strategic automation across various functions is key to optimising cost-efficiency and enhancing agility. IndSights found that in year 2023, Digitalisation was one of the top five strategies adopted by businesses, where 30 percent of companies reported that they were developing digital capabilities and/or automation solutions.

DOWNLOAD NOW: Year-in-Review 2023 Report

In addition, IndSights found that 68 percent of businesses indicated that they will continue to invest in digitalisation including skills upgrading over the next year. The same survey also found 46 percent of businesses say they are planning to adopt open-source AI tools like ChatGPT in the next 12 months. By embracing digital tools and automation as enablers, Singaporean businesses can free up resources for innovation and secure lasting competitiveness in the dynamic global marketplace.

READ MORE: Business Sentiment Survey Jan-Mar 2024

Digitalisation: AI is the game changer

While a strong digital presence is no longer a differentiator, it is a fundamental enabler for any business venturing into new markets. The true edge comes from leveraging AI, including:

• Predictive analytics: AI can analyse vast datasets to identify emerging trends and predict future market demands. This foresight empowers companies to make strategic decisions about product development, market expansion, and resource allocation. An example of this is Style Theory SG , which is a fashion rental subscription service based in Singapore. It utilises predictive analytics to forecast fashion trends and customer preferences by analysing data on customer interactions, such as browsing history, item selections, and feedback, Style Theory can predict upcoming fashion trends and curate their inventory accordingly. This helps them stay ahead of the curve in terms of offering in-demand styles to their subscribers, ultimately driving customer satisfaction and retention.
• Personalised user experiences: AI personalises user journeys by tailoring offerings and marketing messages to specific customer segments. This can significantly enhance user experience and drive customer loyalty. Homage is a Singaporean startup that provides personalised caregiving services for elderly individuals and their families. It utilises AI-powered algorithms to match caregivers with clients based on factors such as care needs, preferences, and compatibility. By analysing data on caregiver qualifications, availability, and client requirements, Homage’s AI system can recommend the most suitable caregivers for each client, ensuring a personalised and high-quality caregiving experience.
• Unlocking new markets: AI’s capabilities in image and speech recognition can streamline internationalisation processes. For example, AI can translate content for local audiences or analyse social media conversations to understand regional preferences – invaluable tools for conquering new markets.

For many Singaporean companies, particularly Small Medium Enterprises (SME), manpower shortage is a major hurdle. AI can automate repetitive tasks, freeing up valuable human resources to focus on innovation, strategic planning, and customer relationships.

Proactive growth: owning the future in diverse markets

In today’s rapidly evolving global landscape, Singapore businesses are renowned for their adaptability and agility. Moving forward, success lies in proactive growth, where seizing opportunities and leveraging innovative technology are paramount.

The confluence of regionalisation and Globalisation 4.0 presents a unique opportunity for Singaporean businesses to flourish in the face of a BANI world. To stay ahead of the curve, Singaporean businesses must act decisively, take calculated risks and harness the potential of digital technologies.

Singapore businesses are well-positioned to thrive in the era of Globalisation 4.0. Through collaborative, data-driven strategies that prioritise trust, market insight, and digital transformation, Singapore companies can unlock the full potential of regionalisation and/or reinforce your positions as global frontrunners.

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This article is contributed by Moses Ku , Senior Research Manager, IndSights Research.