S'pore companies go off the beaten track abroad

Mid-sized firms view Middle East, Africa and Latin America as attractive markets

Angola, El Salvador, Kazakhstan and Algeria. Most people here would be hard pressed to locate these countries on a map - but that's not stopping Singapore companies from venturing into such uncharted territory.

More Singapore companies are going beyond the region into far-flung emerging markets in Africa, Latin/Central America, Eastern Europe, as well as some of the lesser-known markets in the Middle East.

Many of these are small to mid-size companies, such as Crimson Logic, Portek International and Freemen Asia Pacific, from a variety of industries such as food and retail to education to IT and engineering.

Although IE Singapore cannot say how many companies have ventured into such virgin territory, deputy CEO Alphonsus Chia says the agency has noticed that 'even in far-flung and unfamiliar markets such as Latin America, Russia and Africa, there are Singapore companies, albeit a small number, that have gone ahead and done well'.

In fact, there has been 'an increasing trend of Singapore companies expressing their interest in exploring opportunities into new non-traditional markets,' says Cody Lee, assistant director of the global business division of Singapore Business Federation (SBF).

'This is evident from the increase in participants at our events relating to such markets and enquiries from companies seeking our help on how to venture into such markets,' he adds.

IE Singapore has recently opened offices in Sao Paulo, Brazil, and Doha, Qatar, to cater to the needs of Singapore companies going into Latin America and the Middle East. Singapore is, in fact, already the second-largest Asian direct investor in Mexico and Brazil - two of Latin America's hottest economies.

Singapore companies that have gone into Latin/Central America in the past two years include condensed-milk maker Etika International, garment maker Ocean Sky International, Raffles Education Corp and Portek.

Eastern Europe, too, is becoming more attractive to Singapore companies. So IE Singapore is beefing up its Moscow office to serve Singapore firms going into Russia and neighbouring countries, while SBF is leading a mission to Ukraine and Hungary next month.

Recent examples of Singapore firms that have gone into - or plan to go into - this region include Apex-Pal, Freemen Asia Pacific, which owns shoe chains prettyFIT and Beetlebug, and IT firm Crimson Logic. Even a PR firm - Ubersprint - has ventured to Kazakhstan.

SBF's Mr Lee points out that the African continent has also caught the eye of Singapore companies. In fact, SBF just led a mission to two countries in northern Africa - Algeria and Tunisia - in April.

'We are now witnessing more interest in the Arab countries in the North African region,' Mr Lee says. 'In addition, many of our exporters, particularly manufacturers, are looking at Sub-Saharan Africa.'

Singapore firms that have recently gone into - or plan to go into - north Africa include Crimson Logic, Portek, Etika, Apex-Pal and Tolaram Group.

Mr Lee notes that as the nearer traditional markets mature and competition intensifies, margins get lower, so 'there is a need to find new markets'.

According to Gary Low, executive director of the Association of Small and Medium Enterprises (Asme), far-flung emerging markets are a better choice because 'these markets are less popular with the bigger players'. The SME Development Survey, released by DP Information yesterday, says that when Singapore companies go overseas they face a bigger threat from global players rather than local companies in these overseas markets. There is, therefore, a need to find new markets that are still not dominated by bigger international companies.

Apex-Pal's CEO Douglas Foo agrees. 'In some of these places which are less common destinations for other companies, we will enjoy first-mover advantage,' he says. Portek's chairman Larry Lam feels that 'venturing into non-traditional markets is where (Portek) can provide the greatest value-add'.

Freemen's managing director Sophia Ng says: 'As retail markets in these places are less developed, they are hungrier for new and strong brands with promising potential. Thus it is usually easier to break into these territories.'

SBF's Mr Lee says that 'while the common perception is that these markets are poor and thus have limited demand, businessmen who have sold their products and services in Africa for example have reported comparatively higher margins than in other markets they are in'.

Sometimes, Singapore companies venture to these places because their products and services are suited to emerging markets, so they always are on the lookout for such markets.

Crimson Logic provides IT solutions to facilitate government-citizen interaction. 'Over the years, it became apparent that there is a growing need for our unique domain knowledge in developing regions,' says its spokesman.

Other companies like Ocean Sky go into lesser-known territory to try to cut their costs. Its CEO Edward Ang says areas hi s company has expanded into are 'strategically located, and are near to both (Ocean Sky's) suppliers and customers, translating into savings on freight and shipping costs as well as a shorter turnaround time'.

Asme's Mr Low also points out: 'Lower operational costs in these non-traditional markets are often a pull-factor for Singapore companies.