53% of Singapore companies anticipate overseas expansion

39% derive more than half of their sales from overseas markets.

A survey of Singapore business executives conducted by Ernst & Young and the Economist Intelligence Unit revealed strong interest by Singapore companies to grow their overseas operations and R&D investments in emerging markets, despite existing infrastructural, regulatory and talent management challenges. This study was conducted as part of a global research of over 1,000 business executives, of which close to 50 were Singapore respondents.

Majority of sales to be derived from overseas markets in five years.The survey showed that 39% of Singapore respondents currently derive more than half of their company’s sales from markets outside of Singapore. But in the near future, this picture is expected to change. 53% of the respondents anticipate that in five years, over half of their company’s global sales will be derived from overseas markets. In addition, 83% of them expect their foreign direct investment to increase over the next three years, predominantly to drive improved sales growth.

Dilys Boey, Advisory Partner, Ernst & Young Advisory Pte. Ltd. says: "It is not surprising that Singapore companies are looking to secure higher sales growth through expanding into overseas markets, given our domestic demand.

This also reaffirms the Singapore government’s position in encouraging and helping our local enterprises to internationalize. Further, with globalization, many businesses are hardly confined to operating in a single market. Companies need to operate and grow where their clients are and will be. China and India continue to be target markets for expansions with an emerging focus on new markets like Indochina and Latin America, in view of their high growth potential, burgeoning consumer demands and purchasing power."

The survey also revealed several obstacles that confront Singapore companies when venturing overseas. 37% of the respondents cited lack of key skills as the major concern. Other top issues raised include low standard or costly infrastructure at 34%, difficulties in building senior local
management teams at 29%, and corruption and weak corporate governance at 29%.

Dilys adds: "Many businesses have already turned to the global labor market to attract critical skills particularly in management experience in less matured markets. Further, local management talents are being rotated to learn from the more experienced home country managers."