Expanding your business into new markets can be a daunting but rewarding endeavor. Singapore, with its strategic location, robust infrastructure, and business-friendly environment, presents an enticing opportunity for growth-minded entrepreneurs. In this blog post, we’ll explore key strategies and considerations for expanding your business in Singapore.
Singapore Market Trends 2024
As the global economy navigates through various challenges like COVID-19 and geopolitical conflicts, understanding consumer trends is crucial for businesses to thrive. In Singapore, where economic fluctuations influence consumer behavior, staying abreast of evolving trends is paramount for strategic planning.
This comprehensive guide delves into the top consumer trends shaping Singapore’s market landscape in 2024, offering valuable insights for businesses seeking growth opportunities.
1. The Era of Conscious Consumer Behavior
- Consumers prioritize essential purchases aligned with personal values, leading to increased spending on groceries and home improvement.
- Brands must adapt marketing strategies to address conscious consumer concerns and maintain transparency in sourcing and pricing.
- Singapore’s consumer spending growth is projected to slow to 2.8% in 2024 due to inflationary pressures.
2. Shift in Grocery and Food Shopping Habits
- Traditional retailers must establish an online presence to remain competitive, offering promotions and seamless shopping experiences.
- E-commerce continues to rise post-COVID-19, with Singaporeans preferring online grocery shopping for convenience and variety.
- Leading supermarket chains like NTUC Fairprice and Sheng Siong witness increased online orders.
3. Online Payment is the Preferred Method
- Cashless payment adoption surges, with over 90% of stores in Singapore accepting digital wallets like SGQR.
- Contactless payments gain popularity due to convenience and safety amid the pandemic.
- Businesses should ensure platforms for digital payments and leverage open banking solutions for enhanced transactions and customer insights.
4. Electronics and Gadgets Keep Booming
- High demand for electronic devices persists, driven by remote work and entertainment trends.
- Businesses can capitalize on this trend by strengthening online presence and providing omnichannel shopping experiences.
- Online retail channels expand, offering competitive pricing and a wide product range.
5. Customers Want Transparency with AI
- AI integration in retail processes, such as chatbots, enhances customer service but requires transparency to build trust.
- 87% of Singaporean customers prefer knowing if they’re interacting with AI or a human, emphasizing the importance of transparency.
- Growing consumer focus on informed purchasing decisions drives demand for personalized experiences.
Advantages of Expanding Business in Singapore
Here are a few of the main benefits of doing business in Singapore:
1. A Thriving Economy
One of the main reasons to expand to Singapore is its large economy. Singapore’s economy is robust and steadily increasing, relying primarily on trade, finance, and manufacturing for growth. The services sector in particular employs a considerable majority of the country’s workforce and accounts for much of the gross domestic product (GDP). As of 2017, the gross national income stood at 54,530 U.S. dollars per capita, and Singapore’s economic growth rate stood at about 3.4 percent in 2018 and 0.73 percent in 2019.
Singapore has relatively low unemployment and inflation rates, and it maintains a surplus rather than a deficit. The government carries out a vigorous foreign investment program and provides amply for its residents, offering subsidies for education, housing, transportation, and healthcare. All these indicators demonstrate stable, dependable economic prospects.
2. Favorable Tax Conditions
nternationally, Singapore is renowned as a tax haven for businesses. Its limited taxes and low tax rates make the country an ideal location for companies to flourish.
If you’re expanding from the United States, you may be wondering about the taxes in Singapore vs. the USA. One significant difference is that companies in Singapore pay no taxes on their foreign-sourced income. In some countries, like the U.S., companies must pay taxes on all income earned, no matter where they earned it. In Singapore, though, companies are subject to taxes only on the revenues they earned in Singapore. This benefit makes Singapore an attractive option for international expansion.
Unlike many other countries, including the U.S., Singapore has no capital gains tax. Companies may sell their investments or capital assets without paying taxes on the funds they receive.
3. A Skilled and Educated Workforce
Singapore’s labor force is highly trained, and its educational attainments are some of the most impressive in the world. Higher education is widely available, and most Singaporean students receive sizeable tuition grants to their local institutions. Universities, polytechnic schools, and art institutes all maintain graduation rates above 90 percent.
Singaporean students consistently top the world standings in international academic testing, including ranking first in the world on the Programme for International Student Assessment (PISA) and accounting for all but one of the perfect scores on the 2016 International Baccalaureate (IB) exam.
4. Complete Foreign Ownership for Companies
In many countries, companies and company branches must have a certain number of local shareholders. This practice gives the local country some control over the company’s operations and some share in the company’s successes.
In Singapore, however, 100 percent of an incorporated company may remain in foreign hands. This allowance makes Singapore an attractive expansion destination for many international companies because they may retain full ownership and control of their new branches.
5. Centralized Location and Easy Market Access
Doing business in Singapore allows your company easy access to many other Asian markets. Singapore is centrally located in Southeast Asia, so some of the largest economies in the region, including China, India, Australia, and Malaysia, are only a quick plane trip away.
Singapore’s port is one of the busiest in the world, with some 36 million shipping containers passing through per year, and the airport sees heavy plane traffic as well. Singapore’s location and shipping and travel capacities mean you can source materials easily, get your products quickly to their final destination, and facilitate the robust relationships your business relies on.
6. Minimal Corruption
Anti-corruption laws in Singapore are strict — accepting a bribe incurs a stiff penalty. Additionally, public servants tend to receive high compensation and, therefore, have low incentive to solicit bribes or otherwise engage in corrupt activities.
As a result, companies can go about their business with minimal risk of becoming ensnared in bureaucratic red tape or losing revenues to corrupt officials. Their operations become more efficient and profitable, and they can have faith in the regulations and financial policies that exist.
Popular Marketplace for Business in Singapore
Out of all the major industries, marketplace or more familiar called with e-commerce is one of them that has been growing immensely for the past two decades. It has become quite a popular e-commerce hub, making ways for businesses to expand their network, reaching all over the place. Now that there is enough insight on Singapore’s economy and eCommerce industry. Let’s learn about the top places you can explore to start your business operating worldwide.
1. eWorldTrade
Starting with eWorldTrade, a leading eCommerce platform offering valuable services all over Singapore and other countries. This marketplace has everything that businesses seek: the best B2B services, H2H assistance, and digital services.
Moreover, it has millions of verified buyers, so if you are an export business, then you can find buyers for multiple categories. eWorldTrade is a licensed company, so the trade is completely safe with them. Also, regarding their digital services, once the business partner buys the plan, they can enjoy all the promotional services the platform has to offer.
2. Shopee
Shopee is another top eCommerce marketplace in Singapore, allowing businesses to consider connecting in one place.
The marketplace is huge and has millions of sellers, suppliers, and buyers from all over the world. Join the platform as a seller, buyer, wholesaler, or supplier and make the most of their monthly discounts.
Furthermore, Shopee aims to deliver quality and honest services by adopting new technologies and methods to improve its eCommerce services.
3. Lazada
Lazada is a top name when it comes to eCommerce platforms. They have been making the most of technology and utilizing it to transform the business operation. Enjoy seamless eCommerce services and expand your network all over the world.
Moreover, businesses are guided all the way long so that they can easily set up their products without any hassle. Even if you are a start-up, you will be provided complete guidance and security. Their customer services are also available 24/7 so that business operations at Lazada can never go wrong.
4. Zalora
Another on the list is Zalora, a Singapore-based online marketplace that primarily sells all the latest lifestyle and fashion goods. It has been offering its quality services for a decade and has been known as the top fashion retailer in the whole of Singapore.
Zalora has many franchise stores that are located in Taiwan, Indonesia, Brunie, and Malaysia. The platform has earned much revenue by simply keeping the quality consistent.
5. Qoo10
A Singapore-based eCommerce marketplace with millions of products uploaded every day. Qoo10 was founded in 2010, and since then, it has transformed quite a lot. A great place for all sorts of products, be it agricultural, electronics, clothing, beauty, and home appliances.
Moreover, this marketplace has expanded its businesses and has connected with many leading enterprises to make sure that companies all over the world can make the most of the eCommerce services.
Also, they have flexible payment methods so that businesses can make easy transactions. All the payments are encrypted, ensuring the client’s bank details are saved.
6. eBay
eBay serves as an eCommerce marketplace that has unique tools for business partners. As a seller, you can list the items using these tools and make a store easily. Also, this marketplace provides many benefits to both customers and clients who have been utilizing the marketplace services for many years.
This marketplace has been completely transformed into a massive marketplace where millions of sellers, suppliers, manufacturers, and wholesalers are offering quality products.
7. Taobao
A cross-border eCommerce company that is serving as a huge marketplace in Singapore. Overseas businesses have been using this platform largely to expand their network in China and other leading countries in Asia.
Moreover, the marketplace has millions of products listed by sellers and suppliers all over the place. This platform is known to deliver quality services no matter where the consumer lives.
Problem and Challenges Expanding Business in Singapore
Here are some problems you may face when expanding your business in Singapore:
1. High Costs
In fact, business premises rent is among the highest in the world. High costs for electricity, the Internet, and labour costs contribute to the high costs of maintaining a business in Singapore. A person who is moving a business from another country will quickly realise this upon arrival and will soon adopt cost-saving measures.
2. Long Working Weeks
While many western countries have started adopting flexible work hours and are moving to a 35-hour week, Singapore remains stuck to the traditional 5 workdays week that runs from 9 to 5 each weekday. In fact, Singaporeans work for an average of 45 hours a week, making it the second hardest-working city in the world preceded only by Tokyo. The work-life balance in the city-state does not score well compared for instance to cities in Northern Europe, so if you are used to a more laid-back lifestyle Singapore will challenge you.
3. Strict Business Incorporation Procedure
Singapore has consistently been recognised among the world’s best places to do business and remains among the top choices for business investors. Compared to other countries considered as business hubs, Singapore offers one of the easiest and quickest processes of business registration, which attracts investors to start a business in Singapore.
However, all Singaporean businesses are registered only if they meet strict eligibility criteria, follow the established registration procedure, and are issued with a certificate of incorporation by the registrar of business. Deviating from these rules is not acceptable and authorities follow them strictly.
4. Tax Compliance
Corporate income tax in Singapore has consistently been falling since 1997, which had a corporate tax rate of 26%. Today the rate for corporate income tax is only 17%, and the tax legislation is relatively straightforward. his low tax rate is an important factor that is attracting investors around the world to start a business in Singapore and has become an investment destination.
Singapore authorities follow strictly businesses’ tax compliance and apply harsh sanctions to non-compliant businesses without exceptions.
5. Paying Taxes
The amount of income tax that companies and individuals have to pay depends on their tax residency status in Singapore. Tax residents are taxed at progressive tax rates while non-residents are taxed at 15% and are not entitled to tax reliefs. Corporate income tax is only 17%.
Paying corporate taxes must be done online and Singapore requires companies to register for a CorpPass or SingPass to access the IRAS or the Central Provident Board portals. Companies seeking to get a Singapore tax residency certificate will need also to pass the “management and substance” test imposed by the IRAS.
Individuals however benefit from more flexible payment options. They can sign up for GIRO to benefit from 12 monthly interest-free instalments. Other payment methods include AXS station, AXS e-station/m-station, SAM Kiosk, SAM web/mobile or internet banking.
6. Labour Shortage
Singapore has always welcomed foreign workers in sectors ranging from construction to investment banking, and 40 percent of the tiny city-state inhabitants are from overseas.
But in recent years unease has been growing with local residents blaming expats for pushing up living costs. The government responded by making it more difficult to hire in certain sectors and making companies prioritise local recruitment. This, however, resulted in shortages of labour force and employers report that 54% of the jobs remain unfilled, almost double what it was a decade ago.
AsiaCommerce Ready to Help Your Business Expansion in Singapore
Considering the diverse challenges that come with expanding your business in Singapore, it’s essential to have a reliable partner by your side. That’s where AsiaCommerce comes in.
Our SEA Market Entry service is designed to help you navigate the complexities of entering the Southeast Asian market seamlessly. Whether you’re a startup looking to make your mark or an established business seeking new opportunities, our comprehensive suite of solutions is tailored to meet your unique needs.
With AsiaCommerce, you gain access to a team of experts who specialize in market research, partnership arrangement, and sales program development. We understand that each market in Southeast Asia presents its own set of challenges and opportunities. That’s why we conduct in-depth research to provide you with valuable insights into local consumer behavior, industry trends, and regulatory requirements. Armed with this knowledge, we help you forge strategic partnerships with key players in your target industry, ensuring a smooth entry into the market.Furthermore, our consultation services extend beyond market entry strategy. We offer guidance and clarification on product branding, helping you position your offerings effectively to resonate with your target audience. Whether you’re navigating cultural nuances or grappling with regulatory compliance, AsiaCommerce is here to support you every step of the way. With our expertise and personalized approach, you can overcome the challenges of expansion smoothly and unlock the full potential of the Southeast Asian market. Visit our service page now to get further information for your business expansion.