A large proportion of local companies are seizing the opportunities going overseas presents. Eight in 10 businesses reported a presence in an overseas market in 2019, the National Business Survey (NBS) by Singapore Business Federation (SBF) has found. Yet there are companies that still hesitate to take the risk. Why is this so and what prevents businesses here from venturing abroad? A 2015 Boston Consulting Group report uncovered that compared to companies in the region, those in Singapore are more risk-averse and less aspirational about internationalisation.
Several barriers to entry may make entering new overseas markets feel like it is a mammoth undertaking. In this blog we address some common beliefs that hold companies back.
1. Expanding overseas is only for large corporations
In a 2019 Visa Global Merchant e-commerce study, 23% of small businesses surveyed did not believe that having an international presence would be vital to a company’s success, compared to 5% of large companies. Although the size, knowledge and resources of a larger company can be beneficial, smaller companies can be equally successful when they take their brand to foreign shores.
Due to the limitations of Singapore’s small domestic market, small- and medium-sized enterprises (SMEs) might also be hurting long-term survival and growth by not expanding overseas. With internationalisation, the size of your market is increased and this drives down costs because of economies of scale. Additionally, when a business is the first to introduce a new product to the market, they enjoy a higher market share over those who enter the market later. In this way, you can establish your brand early and build brand awareness and loyalty.
2. Brick and mortar stores are necessary
Some SMEs are deterred from selling their products to new markets as they feel they need to invest an inordinate amount of time and money in setting up physical stores overseas. However, this need not be the case. COVID-19 has changed consumer behaviour, and companies need to adopt the right strategies to survive post-pandemic. Digitalisation, e-commerce and the prevalence of remote work has made it possible for companies to retail their business internationally without needing to set up brick and mortar stores or take frequent business trips down to these countries for meetings.
To be sure that their cross-border e-commerce is successful, companies need to adopt the right strategies to ensure they satisfy their target audiences. For example, 55% of consumers prefer to buy only in their own language – so ensure you localise website content such that it resonates with users. Also offer the right payment methods, choose the right logistics company for last mile deliveries and provide good customer service. This ensures your integration into a new market will be a successful endeavour.
3. Navigating a foreign business environment is too difficult
Selling to international markets does come with a new set of rules and regulations businesses need to decipher and understand. These include licensing, customs, new currencies, tax requirements, regulatory compliance, as well as cultural differences and language. The list is long, but that should not discourage you.
By leveraging the resources available, businesses can confidently navigate foreign terrains skillfully and become adept at doing business here. The Singapore government and trade associations and chambers (TACs) guide companies along their internationalisation journey by providing access to support and resources. Enterprise Singapore’s ready network in over 35 international markets helps connect SMEs to local partners, distributors, incubators and tech parks.
Some countries set up Free Trade Zones (FTZs) in specific cities to encourage foreign investment. For example, when considering opportunities in China, setting up in such zones in business hubs like Shanghai and Guangdong ensures you gain access to benefits like lowered taxes. International trade partnerships between countries also eliminate tariffs and reduce tedious paperwork. These conditions make it favourable for SMEs to consider expansion.
Expanding abroad with Opal’s online remittance service
Now that you are more confident about expanding your business abroad, partner with a payment solutions provider that covers all your banking needs. Opal offers best-in-class financing solutions and an all-in-one destination that addresses all your financial-business needs. Our multi-currency account allows you to send and receive foreign currencies, viewing all your transactions in a single easy-to-access dashboard. Our international money remittance services also allow you to transfer funds to employees, partners and suppliers in the most cost-effective way. It is 40% cheaper than banks and is a safe and secure way of remitting money online.
Start your journey of overseas expansion with us today.