Singapore has long been an attractive country for Western companies to set up their regional base in. Over the years, companies such as Unilever, Facebook, Google, P&G, Dyson, Amazon, Snap and Uber have chosen Singapore to be their regional base, be it for Asia Pacific or Southeast Asia. Hence, it comes as no surprise that foreign firms are eager to invest in Singapore. According to a recent report by IMD, Singapore ranked second and first in the knowledge and technology factors respectively, coming in second overall to the US. The ranking said that Singapore's focus on high technology, internet infrastructure and business laws drives its success. The country, however, trailed behind on future readiness (12th), largely due to lower adaptivity to technological change (adaptive attitudes sub factor) and a drop in business agility from last year.
In recent times, however, Singapore seems to have gained appeal as the hub for Chinese companies amidst the geopolitical tension between China and the US, and the ongoing unrest in Hong Kong. Last month, Tencent chose Singapore as the base for its Southeast Asia regional hub, and according to Channel NewsAsia, the new office will house its international game publishing business. Tencent also explained that the Singapore regional hub will enable it to "capture potential from the rapid pace of digitisation", CNA said.
Meanwhile, TikTok's parent company ByteDance is also reportedly priming Singapore as the main foothold for Asia as part of its global expansion. According to Bloomberg, ByteDance seeks to spend "several billion dollars and add hundreds of jobs" over the next three years in Singapore. The decision came shortly after the company selected Oracle to be its tech partner in the US. In May this year, Alibaba also bought half of AXA Tower, which is reportedly worth US$1.2 billion according to the Financial Times, as it ramps up operations in Southeast Asia. AXA Tower is the current headquarters of Lazada and it will be redeveloped once all existing tenancy agreements expire, FT added.
Factors that make Singapore stand out to Chinese firms
Singapore has always played an important role for Chinese tech companies, both in terms of talent and financing, such as Temasek Holdings, Mark Greeven, professor of innovation and strategy IMD Business School in Switzerland and Singapore, told Marketing. Its geographic location is also a springboard into other large markets such as Malaysia and Indonesia. Greeven noted that the on-going tech tension probably accelerated this trend, and Chinese tech companies are also increasingly deepening their focus in Asia.
"Although Asia was always the first plan for Chinese tech, with the headwinds in the US and Europe, Asia is certainly coming into further focus - Singapore being an important hub. Also, think for instance about the role of Singapore in global logistics - it is no surprise that Cainiao, Alibaba’s logistics arm, is active in Singapore," he said.
Besides being well-placed geographically in Southeast Asia with a growing middle class, Wladmir Silva, APAC chief development officer, head of consumer, Grace Blue Partnership said Singapore has also become a great transportation hub with a reliable airport and port. Additionally, decades of economic and political stability, a well-educated population and having English as an official language are also other factors that make Singapore an attractive location for foreign investment.
"Singapore has immensely benefited from the politically challenged Hong Kong - not only because of the social unrest of recent years. The conflicting duality of being part of China but having a Western ‘upbringing’ present increases the potential for conflict and, consequently, risk," he explained. Despite all these, Silva said there will naturally be growing competition from neighbouring countries and as such, Singapore needs to always think about how it can prepare for the future to maintain its competitive advantage.
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Eyes on the eCommerce throne
Stability might seem like an important factor for businesses but in the case of Chinese tech firms, this does not matter. Joseph Chua, chief commercial officer of Aiken Digital which has operations in Shanghai and Singapore, said COVID-19 has only accelerated a pre-existing trend of consumers and brands shifting towards eCommerce and outside of China, Southeast Asia leads this wave of digital adoption. So for Chinese brands, it is now the time to begin extending their reach beyond their domestic market and Southeast Asia is the ideal first stop, Chua explained.
Furthermore, he added that many Chinese platforms see Southeast Asia as the most likely market to adopt Chinese consumption habits, as exemplified by the rise of digital payments and more recently, live-streaming.
For Singapore, the combination of a relatively stable economy and clear links into the region’s biggest brands offer Chinese brands the perfect platform to drive the future of eCommerce in the region and eventually globally.
On a global scale, brands are hungry for partners, products and talent that can leverage both the Eastern and Western digital ecosystems. According to Chua, if Singapore can prove to be the digital epicentre of the region by attracting these Chinese giants, it will only serve as a greater pull for Western brands to invest in Singapore. Not surprisingly, this is a great time for Aiken as a business, as having operations in both China and Southeast Asia allows the agency to translate the nuances of the Tencent and Bytedance ecosystems to non-Chinese brands who are not well-versed in them, Chua said. That said, he explained that there might not be a seismic shift of ad spend to these new players, particularly as the adoption of WeChat and TikTok is fragmented across the region.
Also, media budgets are in decline across the board this year. Hence, Chua believes that these new entrants in Singapore offer a way for brands to take a more strategic view of how they spend their dollars across the entire region, China included. "These budgets have historically sat separately, but now can be considered holistically alongside eCommerce revenue both inside and outside of China through deeper integration with Chinese media brands," he added.
Looking past the 4Cs in Singapore
Singapore has always been using its brand pillar of stability as a major cornerstone, together with is ability to keep both China and the US on friendly footing. Dick van Motman, dentsu international's former global CEO, creative and content, said the stability is now being executed through a lens of IP protection and the significant focus on attracting deep tech capabilities, which will create a resource ecosystem that is conducive to the platform players but also gaming, esports and analytics, among others.
But the challenge will remain for Singapore to offer a comprehensive offering that can cover ideas-led, data-inspired and tech-enabled marketing.
"Someone I worked with closely said before data will tell you where the person is, media will get you there, but what happens when you are in front of him or her depends on creativity," van Motman said. Hence, Singapore needs to add an extra "C", which stands for "chaos", to the long-standing 4Cs - credit card, car, country club and condominium. Van Motman explained that doing so will allow for an 'organic-ness' that will allow for new creativity to flourish, else the ideas, data and tech will never meet.
In addition to the chaos, Singapore also needs to overcome a big challenge in today's world which is the speed of obsolescence. Grace Blue Partnership's Silva explained that this is valid not only to students but to all levels of the workforce. Although Singaporeans are talented and have easy access to travelling, Silva said his biggest concern is the lack of overseas professional experience in Singapore's young workforce. Despite the love for travelling, due to many factors, most Singaporeans do not live and work abroad.
The ability to immerse themselves in one or more different cultures would give Singaporeans a considerable edge.
Meanwhile on the education front, Silva explained that in the past, there was a push educational approach. It is of immense importance that Singaporeans become responsible and adopt a pull approach.
According to him, the knowledge and experience that were valid last year may not be in demand next year, especially in the tech industry which evolves at the speed of light. Data science and analytics, data visualisation, cybersecurity, AI and machine learning, cloud computing are skills that are in huge demand these days, and the trend is likely to continue for five to 10 years. He added that quantum computing, blockchain, computer vision, predictive medicine and autonomous driving to be some of the technologies that individuals should learn to stay ahead of the pack.
Today, marketing is highly technological. Hence, professionals should build skills on SEO, content marketing, social media marketing, data analytics and customer optimisation, to name a few.
Similarly, Aiken's Chua also believes that quality talent in AI development is hard to come by across the region and Singapore is no different.
Last month, IBM partnered SkillsFuture Singapore to introduce "i.am-vitalize", a skills programme targeted at mid-career professionals as part of SGUnited Mid-Career Pathways Programme - Company Trainings. The new skills programme comprises two tracks - AI and cybersecurity. The Singapore University of Technology and Design is also currently offering a degree programme in Design and Artificial Intelligence which was launched in January this year. The programme aims to address the need for a new breed of talents with specific skills, as the demand for more AI talents who are able to combine expertise in design innovation with AI tech grows.
"We are beginning to see the green shoots of government initiatives to support training in AI development, but continued investment in higher education is required to make Singapore a true pioneer of AI progress," Chua said.
When it comes to the type of skills Aiken is looking to hire, he explained that its business model relies on flexibility and adaptability to solve for different business problems and models. This differs from today's narrative that specialists are more employable in times of recession, as businesses are focused on more tactical project work than long-term strategic thinking, he said.
"Without a strong core of ‘professional generalists’ able to apply their experience to new technologies and processes, then how can we ever hope to help clients embrace innovation? This philosophy will always be at the heart of our culture," he added.
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