Stepping out to opportunities

George Abraham has more than 25years’ experience in the Asean region in forging links and enhancing business prospects of Asian companies, and representing these organisations at international forums. He is now chairman of an international business consultancy, and also sits on several government advisory and feedback committees in Singapore.

In addition, he promotes the effective networking and mentoring of budding entrepreneurs as director of The Indus Entrepreneurs (TiE), Singapore chapter. As the Asean regional representative for the Federation of Indian Chambers of Commerce and Industry (FICCI), he helps companies of various sizes look for new opportunities across the region.

When exploring new opportunities beyond their home turf, Asian entrepreneurs often limit themselves to familiar markets, says Mr Abraham. Because of inadequate market intelligence, immature networks and strong intra-Asia competition, Asian entrepreneurs are not fully exploiting the potential of their ventures through cross-border partnerships and alliances.

Young Asian companies can create great value by exploring such relationships instead of prejudging others as possible competitors in new markets. Innovative technologies and applications from cross border partners can give them a crucial edge. This is especially true for companies in the Asean region that must contend with the increased price competitiveness of products and services from China and India.

‘‘The increasing degree of competition is not just in consumer goods, but also in capital goods and industrial equipment,’’ says Mr Abraham, adding that this trend is blasting open previously closed sectors.

New sectors and partners

When internationalising, the majority of companies across the Asean region have traditionally preferred to strike out on their own, establishing wholly owned subsidiaries and branch offices. Leaders of these companies have maximum confidence in their capabilities and networks to cope with any situation.

But as Mr Abraham points out, this might not be the most effective option for the new generation of companies, because of both the nature of the industries they participate in and the level of domestic government support for those industries. Countries such as Cambodia, Laos,

Burma and Vietnam have long welcomed investment, but were historically focused on labour-intensive industries, placing them lower in regional value chains. This situation hasn’t changed much over time, and these countries still attract lower value added activities than Malaysia, Indonesia and Thailand, which now serve as regional springboards for high-technology entrepreneurs.

While tracking investment opportunities for companies in the region, the FICCI has noted that companies at various stages of growth differ in their investment and expansion activity across China, India and the Middle East. Larger and more mature Asean companies tend to move into infrastructure, hotel and commercial development projects, while smaller companies and startups favour the service industry and, lately, information technology. These sectors receive considerably more attention from local governments in new initiatives, subsidies and grants. It is also easier for companies to co-develop and market products and applications in software, hardware and services.

To address the concerns of entrepreneurs, organisations such as International Enterprise Singapore (IE Singapore) and the Standards, Productivity and Innovation Board (Spring) in Singapore have introduced a host of initiatives and incentives for companies looking to internationalise their operations. Knowledge is power.

But these alone have proved insufficient. ‘‘Despite government-led assistance,’’ says Mr Abraham, ‘‘what is still needed is a change in mindset. New Singaporean companies tend to be too risk-averse, opting for familiar markets and refusing to explore new opportunities.’’ For example, many of them are apprehensive of engaging with India, but are open to options in China and the rest of Asean. A number of trade associations and chambers of commerce have now started to lead delegations of entrepreneurs to unfamiliar regions. These trips aim to deliver market intelligence, as well as foster new links between the business communities of the countries. The FICCI recently led a delegation of 23 Singapore companies to Kolkata in the Indian state of West Bengal to show the immense range of opportunities available and to remove misconceptions about doing business in India, particularly in communist-led
West Bengal.

A success story from one of these missions is a Singapore-based ceramic tile manufacturer whose apprehension about India had prevented him from entering the market. Besides meeting FICCI officials in Singapore to better understand the Indian marketplace, he also enlisted the organisation’s help to setup meetings with potential partners and officials in various Indian cities. Today he has a sales office in Mumbai and is planning a manufacturing facility in another city.

Thanks in part to such entrepreneurs, India was Singapore’s 14th-largest trading partner in 2004. Bilateral trade has nearly tripled within the past decade, from S$4 billion in 1995 to S$11.8 billion in 2004. The increasingly close relations between India and Singapore have been underpinned by dramatic growth in bilateral trade and investment, helped by organizations such as the FICCI.

There are two clear steps in reducing companies’ risk aversion in internationalisation, Mr Abraham concludes. First of all, entrepreneurs need as much information as possible about a new market before diving in head-first. This could come from new networks, field trips or trade brochures. Second, entrepreneurs should take advantage of the various incentives available from both local and destination governments.

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