Many U.S. exporters successfully use agents or distributors to serve the Singapore and other Southeast Asia markets while over 3,700 U.S. firms have set up operations in the country. Singapore firms are aggressive when it comes to representing new products and usually respond enthusiastically to new opportunities.
Price, quality and service are the three main factors for Singapore buyers. U.S. exporters should be aware that competition is strong and buyers expect good after-sales service. Selling techniques vary according to the industry and product and are comparable to the techniques used in most other sophisticated markets. It is also important for U.S. firms to visit their representatives and maintain close contact with them.
A list of services offered by CS Singapore can be obtained from our website at www.export.gov/singapore.
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American firms wishing to establish a presence in Singapore have several straightforward options to do so. They can establish a Representative Office (RO), register as a Branch of the parent, or incorporate as a Singapore company. General information on establishing an office can be found at http://www.enterpriseone.gov.sg/en/Business%20Stages/Start.aspx.
If an American company wishes to carry on operations in Singapore, it should register a branch office or incorporate a local company with the Accounting & Corporate Regulatory Authority (ACRA) – http://www.acra.gov.sg. ACRA publishes an excellent guide that takes the first time registrant through the process of establishing a branch office or incorporating in Singapore.
Setting up a Representative Office in Singapore can be a good way for American firms to explore business opportunities in Singapore or the region. ROs in banking and insurance need to register with the Monetary Authority of Singapore (MAS) and meet the guidelines or requirements lay out by the MAS. ROs in all other industries need to register with International Enterprise (IE) Singapore.
ROs can only carry out market research, conduct feasibility studies or work as a liaison on behalf of the parent company. RO may not conduct business directly or on behalf of the parent company. ROs cannot ship, transship or store goods in Singapore. American firms can either work through an agent or distributor to do so or establish their own commercial presence.
For Branch Offices, the Companies Act requires a foreign company to appoint two local agents in Singapore to act on behalf of the company. The agents must be ordinarily resident in Singapore i.e. a Singaporean Citizen, a Singapore Permanent Resident, or a person who has been issued an EntrePass/Approval-In-Principle letter/Dependent Pass.
Establishing a Singapore Business
American firms can also register a sole-proprietorship, partnership, limited liability partnership or incorporate a company in Singapore. For a sole proprietorship the process takes about one day, while more complex business entities can take up to six weeks and require lawyers and accountants to assist with incorporation documents. A point to bear in mind is that registration/incorporation of a company does not automatically mean that expatriate staff can be assigned to Singapore. Foreign staff must obtain employment passes from the Singapore Ministry of Manpower, although this is generally quite routine.
Singapore is home to a wide variety of franchise concepts with more than 500 concepts and over 30,000 franchisees operating in the country. Foreign franchises are well received and the United States is by far the largest supplier of foreign franchises in the country. There are American franchises in practically every industry. McDonald's, Burger King, KFC, Wing Zone, Krispy Kreme, Subway, Starbucks, Ben and Jerry’s, Gymboree, New Horizons, Mister Minit, Avis, Toys R Us, On-line Trading Academy, Comfort Keepers, Contours Express, and many others have operations in Singapore.
Singaporeans continue to seek out new franchise concepts to introduce into the country. The success of selling a franchise in Singapore is based on a number of factors including brand name, up-front costs and royalties, the concept’s uniqueness and the flexibility of the franchise agreement. U.S. franchisors should note that real estate in Singapore is prohibitively expensive and getting a good location is a challenge, especially for those in the retail and F&B business.
With its strategic location and well-developed infrastructure, Singapore serves as the regional showcase and distribution center for U.S. franchisors wishing to enter the markets of Asia. There have been instances where visitors from the region saw a franchise concept in Singapore and were interested in bringing it back to their own countries. In 2015, Singapore attracted over 15 million visitors from around the world. The country’s multi-ethnic society also makes it an ideal location for foreign franchisors to test their concepts and use the reaction to gauge the acceptance of their franchise in Asia. There are also opportunities for U.S. franchisors to work with Singapore companies to access markets in nearby countries. Singapore investors may buy franchise licenses for additional markets in the Southeast Asian region and not for Singapore alone.
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The direct marketing industry in Singapore began in the early 1990s and now includes direct mail, telemarketing, television sales, mail order, call centers, fulfillment and e-commerce firms. The Direct Marketing Association of Singapore represents both users and service providers. The direct marketing industry is well supported by service companies including: Singapore Post, Singapore Telecom Call Center, Teledirect, TNT International Mail, Ogilvy One and MMS Consultancy, among many others. The Singapore government also actively supports the industry by assisting companies (through financial incentives) in using direct marketing for their trading activities through its Direct Marketing Program.
The Direct Selling Association of Singapore (DSAS), a self-regulatory body, was established in 1976. It provides a forum for all direct-selling companies in Singapore to discuss problems of common concern and to codify a high standard of business practices throughout the industry. The DSAS has adopted a Code of Conduct by which member-companies in the Association must abide by in every aspect of business. Through the Code of Conduct, DSAS aims to further inculcate the spirit and practice of ethical direct-selling within its member-companies, setting examples for others to follow.
Foreign investors are not required to enter into joint ventures or cede management control to local interests. In Singapore, local and foreign investors are subject to the same basic laws. Apart from regulatory requirements in some sectors, the government screens investment proposals only to determine eligibility for various incentive regimes. Singapore places no restrictions on reinvestment or repatriation of earnings or capital.
Licensing is also a viable alternative in Singapore. With one of the strongest IPR protection schemes in Asia, a well-developed legal framework and an advanced manufacturing base, Singapore is an attractive location for American licensors.
Singapore is a signatory to the WTO Agreement on Government Procurement. The U.S.-Singapore FTA provides increased access for U.S. firms to Singapore’s central government procurement. U.S. firms generally find Singapore to be a receptive, open and lucrative market. The Singaporean government procurement system is considered by many American firms to be fair and transparent. However, some U.S. and local firms have expressed concerns that government-owned and government-linked companies (GLCs) may receive preferential treatment in the government procurement process. Singapore denies that it gives any preferences to GLCs or that GLCs give preferences to other GLCs. Procurement recommendations are made at the technical level and then forwarded to management for concurrence. Bidders should work closely with the project manager to determine the relative importance of decision criteria such as technical capability and price. Bidders must meet the specifications set out in the tender. Post mortem hearings or meetings for losing bidders are not required or common. Government procurement regulations are contained in Instruction Manual 3, available from the Ministry of Finance. The Singapore Government also advertises its tenders on its website at www.gebiz.gov.sg.
Singapore's distribution and sales channels are simple, direct and open to the participation of foreign firms established in Singapore. Because of Singapore’s role as a regional hub, most local distributors will also have knowledge of regional distribution rules and regulations. Most consumer goods are imported by stocking distributors who resell to retailers. Some goods are imported directly for sale in the importer's own retail outlets.
Price, quality and service are the main selling factors in Singapore. Prospective exporters to Singapore should be aware that competition is strong and that buyers expect good after-sales service. Selling techniques vary according to the industry or the product involved, but they are comparable to the techniques used in any other sophisticated market.
Singapore is one of the first countries in the world to enact a law that addresses issues that arise in the context of electronic contracts and digital signatures. The Electronic Transactions Act (ETA) (Cap 88) was enacted to provide a legal foundation for electronic signatures, and to give predictability and certainty to contracts formed electronically. The Singapore ETA follows closely the UN Commission on International Trade Law (UNCITRAL) Model Law on Electronic Commerce, which sets the framework for electronic laws in many countries. The full text of the ETA can be found at the Singapore Statutes Online website:
There are many specialized trade magazines in Singapore and scores of trade fairs that can be used to promote U.S. goods and services. The major English-language daily newspapers are the Straits Times and the Business Times. They are available at http://www.straitstimes.com and http://www.businesstimes.com.sg. The major Chinese daily is Lianhe Zaobao (http://www.zaobao.com). Leads for local advertising and promotional service agencies can be found at http://www.yellowpages.com.sg. Major trade fair organizers include Singapore Exhibition Services (http://www.sesallworld.com/), Reed Exhibition Services (http://www.reedexpo.com.sg/), Experia Events (http://www.experiaevents.com) and Koelnmesse (http://www.koelnmesse.com.sg).
Pricing is very competitive. Major department stores and retail chains offer fixed-price merchandise, while the smaller shops expect buyers to bargain. Hard bargaining is common in the commercial and industrial sectors as well, where buyers usually want a discount and vendors inflate their initial offers accordingly. Credit terms of 30-60-90 days are common. Buyers will often retain 10% of the sales price for major electronic equipment purchases until the vendor has installed the machine and it is performing according to specifications.
Typical Product Pricing Structures: Depending on the type of product, importer mark-ups range from 20-40%, while retail mark-ups are often more than 100%. Industrial goods are brought in by stocking distributors, who add on at least 20% before sale to end-users, or by agents whose commissions generally run about 7-10%. These mark-ups are approximate, and will vary widely, depending on the product and the contractual relationship in question.
Good sales and customer support are vital in Singapore. The market is so price competitive that client-focused sales support or customer service can make a big difference. Singapore distributors respond well to training on new products, and if properly supported by the U.S. manufacturer will do a good job cultivating old customers and developing new ones.
The Singapore Business Federation (SBF, http://www.sbf.org.sg) is the apex business chamber that champions the interests of the Singapore business community in trade, investment and industrial relations. It represents 21,500 companies, as well as key local and foreign business chambers, that contribute significantly to the Singapore economy.
Its formation was to foster a more comprehensive organization and representation of the business community’s interests in Singapore and abroad.
As the apex business chamber, SBF presents a strong collective voice that:
Represents the business Acts as the bridge between the business community and government in Singapore to create and enhance a conducive business environment
Represents the business community in bilateral, regional and multilateral fora for the purpose of promoting trade expansion and business networking in Singapore and abroad
Helps companies build competitiveness and resilience through capacity building initiatives and services
As Business Voice & Value Creator, SBF is committed to advocating key issues that impact the Singapore business community, helping enterprises develop capabilities and venture overseas.
American Chamber of Commerce in Singapore
The American Chamber of Commerce in Singapore (AmCham, http://www.amcham.org.sg) is the leading international business association in Singapore, with over 5,000 members representing more than 750 companies. American companies’ direct investment in Singapore exceeds an estimated US$180 billion. Its mission is to promote the interests of AmCham members in Singapore and the region by providing insights, advocacy and connections through its programing and publications. AmCham represents its members at the highest levels of government in Singapore and Washington, and advocates on policy issues concerning them.
The business limitations are confined primarily to the professional services such as the legal, accounting and tax services, and engineering and architectural services. Details can be found in the “Investment Climate Statement”.
Entities wanting to carry out business in Singapore must register with the Accounting and Corporate Regulatory Authority (ACRA). CS Singapore offers the International Company Profile (http://www.export.gov/singapore/servicesforu.s.companies/internationalcompanyprofile/index.asp) service to American firms wishing to check the bona fides of existing or potential partners. Alternately, U.S. firms can run a check on Singapore companies by accessing the ACRA database via www.acra.gov.sg. Other credit agency includes Infocredit D&B (http://www.icdnb.com.sg).
Legal Services: A list of service providers can be found at The Law Society of Singapore website: http://www.lawsociety.org.sg/forPublic/FindaLawFirmLawyer/FindaLawFirm.aspx
Accounting and Tax Services: A list of service providers can be found at the Institute of Singapore Chartered Accountants website: http://iscadirectory.isca.org.sg/
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