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Working together
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'Remember me' What do SMEs here need to do to work more fruitfully
with large enterprises and multinationals, on the one Click on the thumbnail
hand, and with SMEs from other countries on the other? above for a full size view
ST Index (Real-time)
2,783.85 56.62 Toh See Kiat Email this article
Director
Mon, Nov 16, 2009, Goodwins Law Corporation Print article
18 43 Feedback
KLCI 1,278.31 +7.35 SINGAPORE SMEs
HSI 22,943.98 +390.35 must see that it is
NIKKEI 9,791.18 +20.87 worth every cent
they spend to be part of an association of
Dow 10,270.47 +73.00 SME businesses; and these associations
Nasdaq 2,167.88 +18.86 should learn to work with each other to
S&P 1,093.48 +6.24 open up opportunities overseas. For
Friday Closing
example, they should join forces to pitch
for international contracts; combine
Singapore: Shares end 2.1% resources to market and advertise their
higher
capabilities; or link up with similar SME
associations overseas to promote mutual
Breaking News relationships and business.
Print Edition Headlines
In unity is strength.
Hock Lock Siew Hansjoerg Wagner
Editorial & Opinion Managing Director Asia-Pacific
Polycom
Stocks GLOBALISATION impacts SMEs with the same cross-boundary challenges
Stock Picks as MNCs. Whether in dealing with foreign SMEs or MNCs, what SMEs need
to do would be to find a way to collaborate and overcome geographical
IPO Watch barriers by empowering their staff to work more productively for
FX/Money Markets enhanced market responsiveness and better business performance.
Funds/Unit Trusts
The fundamental quality about SMEs is their agility. A key component to
Derivatives their continued success so far has been to harness technologies that drive
Commodities their business forward, enabling them with scalability and flexibility and
Calendar also maximising their organisational strengths.
Tools Chip Salyards
Vice-President
Biz IT BMC Software Asia Pacific Pte Ltd
Property ORGANISATIONS of all sizes face similar IT challenges, from SMEs to
Executive Money multinational corporations. So it's really in the best interest of SMEs to
Executive Lifestyle have regular dialogues with their larger counterparts to get a 360 degree
BT Living view of the market. Some of these discussions will lead to partnerships.
Some won't. But each can learn from the other's perspectives and use that
knowledge to improve their operations and go-to-market strategies.
Apec 2009 — A BT Special
Business Excellence
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More By the same token, Singapore SMEs should take the opportunity to engage
with their overseas counterparts to build the kinds of long-term
relationships that enable them to expand their business beyond our
Mon Tue Wed Thu Fri Sat Sun shores.
Dora Hoan
Group CEO
Best World International Ltd
I BELIEVE that staying open, practising innovation and sharpening
competitiveness is the key to seizing opportunities by way of strategic
partnerships, be it with a multinational or another SME.
Take the case of MNC-SME collaboration. Small enterprises seeking to
operate globally should be able to tap on these very important
collaborations by demonstrating competence.
Partnerships that begin in a humble backyard can actually gain global
visibility. Economists have noted a very interesting trend throughout the
world wherein multinationals have been setting their sights on the
dynamism of partnership with highly innovative smaller enterprises.
The MNCs learn from SMEs innovation while the smaller firms benefit in
terms of best practices for instance in areas like Corporate Social
responsibility, technology evangelization and spin-off ventures. With adept
management and transparent dealing, I am positive that mutually
beneficial relationships can come out of this.
In terms of collaboration with other SMEs, I can only draw from our own
experiences at Singapore's Association of Small and Medium Enterprises
(ASME). I felt privileged to have led this association in the year 2001. It
was then that I came to really see the power of small enterprises banding
together. It is a powerful sector and a tremendous force for good. Imagine
that SMEs represent more than 98 per cent of all businesses worldwide.
This makes them instrumental to the socio-economic development of the
entire global community.
As they work with local communities, SMEs are a force not only in
economic prosperity but also in social stability. I see that they can
definitely gain the power of leverage by integrating efforts, energies and
potentials in the process of SME development. This should be the way to
rapidly enhance SMEs' international competitiveness and enable them to
create jobs and drive global economic growth.
Robert Meyer
Managing Director
Halcyon Investment Corporation Pte Ltd
ACCORDING to the EDB and SPRING, Singapore has roughly 140,000
SME's. The total aggregate annual revenue of these enterprises is
approximately S$105.5 billion, or, S$753,000 per average SME. In USD
terms, that means that the average annual sales revenue generated per
SME is USD540,000. Let's assume that the Economic Value Add ("EVA")
roughly equates to the Gross Margin on Sales, and let's further assume
this number to hover around 25%, and the average EVA per SME comes
out at USD135,000. Divide that by the average headcount per SME of 7,
and the EVA per person generated per average SME in Singapore is a
shade over USD19,000. This number obviously trails our per capita GDP of
USD32,000.
Why does SME productivity trail our national average? This problem is
obviously complex and requires deeper analysis, as is presently conducted
by the Economic Strategies Committee ("ESC"). However, one issue
comes to mind from the start: Large Cap's and MNC sell their products into
the global marketplace, whereas SME's tend to focus on the local and
regional markets. Singapore's lack of domestic size and the relatively
small Asean market are natural growth boundaries to SMEs.
Considering these size constraints, it appears logical that SMEs need to
beef up. Consolidation and joint ventures are suitable strategies for SMEs
to reach a size and scale that will allow them to invest and expand into
becoming a globally competitive company. I suspect that the next decade
will see a wave of consolidation sweep through the local SME band.
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For many entrepreneurs and individual owners of SMEs, a critical question
will need to be answered: Would you rather have full control and
ownership of a small pie, or a slice of a much bigger one?
R Dhinakaran
Managing Director
Jay Gee Enterprises Pte Ltd
SMEs can interact with larger companies by participating more actively in
trade exchange programmes, visiting business delegations and other trade
fairs which are often leveraged by larger companies. These focused
delegations must include SMEs as a minimum fraction of the total
delegation size to allow mutual interaction between the larger and small
enterprises.
While there are some incentives in the form of tax benefits available to
encourage businesses to make more exploratory trips overseas, these
benefits could be larger for SMEs alone by means of more generous
grants.
Corporate communication and branding strengths are other areas where
SMEs differ from larger companies. This is where the trade associations
and business federations can offer help to the SMEs. Branding and
positioning as a cluster can sometimes address the resource constraints for
individual SMEs. The branding effort is very important in reaching out
effectively and has often been used to market SMEs to larger companies
and overseas. The cases of Silicon Valley in their early days is proof of the
benefits of collective marketing by SMEs and start-ups.
Raj Singh
Director and Founder
Safety@Work Consultancy Pte Ltd
THE key to fostering an amicable relationship with companies from
abroad, whether big or small, begins with the attitude of staff in the
company. Apart from focusing on work performance of staff, the top
management personnel of a company should also learn to educate,
motivate and inspire their staff internally so that they may, in turn, strive
hard for the company.
Externally, SMEs may look into value-adding to their services by
collaborating with other SMEs and tapping on each others' strengths. An
example would be on how Safety@Work partnered a fellow piping
company to deliver a comprehensive package to best fit the client's needs.
Teresa Lim
Managing Director
IBM Singapore
In today's globalised business world, a key characteristic of successful
businesses is the ability to leverage and tap on global networks and
expertise. This is not an instinctive move, however it is vital in order to
remain competitive and viable. Successful organisations promote the
culture and values which emphasises collaboration as essential and
expected. Collaborative innovation is constantly stressed by our leaders as
vital to IBM's success.
WE believe that SMEs can be empowered to collaborate better by
leveraging Web 2.0 tools and technology such as instant messaging, social
computing and community-based tools to share content and expertise with
MNCs and SMEs in other parts of the world. These solutions help people
work smarter and drive business benefits by deepening client and partner
relationships, making smarter and faster decisions, spurring innovation,
and reducing costs. For example, IBM's Lotus solutions will keep IT
expenditures low while spurring collaboration for business success. A
combination of an open and collaborative organisational climate and
solutions will help SMEs work more fruitfully with any organisation,
regardless of size and location.
To forge stronger partnerships with large enterprises/MNCs, SMEs need to
find a niche where their solutions are of value and fit into the overall
business strategy of the MNCs. They need to ensure that their unique
value propositions are economically attractive and/or offer an effective
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route to market for the MNCs.
On the other hand, MNCs need SMEs to support them as there will always
be pieces in the business strategy puzzle that are better served by SMEs.
Most high growth industries thrive on a strong ecosystem of synergistic
partnerships between SMEs, large enterprises and MNCs - locally,
regionally and globally.
Jim Li Hui Hong
President
JSB Tech Private Ltd
IN over 15 years of managing and growing my manufacturing companies
and interacting with large multinationals in the region, I have seen the
outsourcing trend evolve from an aggressive 'arm's-length' approach to a
collaborative relationship. These changes were driven by the need for
interdependency within a competitive supply chain and the necessity of the
MNC's subsidiary to survive. Forging a tighter collaborative relationship
with MNC customers helped us to move up the product value chain.
Starting from simply providing manufacturing services and then to focus
on producing specialized components while concurrently enhancing our
product development capabilities in establishing company own products
brand targeting at niche global market.
In the fast changing macroeconomic environment, speed and effective
implementation of a company's strategic intentions are vital to SME
business success. It is important for Singapore SMEs with regional
perspectives to tap into local networks of SMEs in the region by forming
partnerships which will potentially speed up new market access, lower
entry barriers and mitigate risk.
Loi Pok Yen
Group CEO
CWT
IT is inevitable that there remains a certain level of of apprehension when
two complete strangers enter into a relationship. This holds true whether it
is a marriage, a joint venture or a business relationship. Therefore, the
only surefire way of ensuring an enduring and fruitful partnership is simply
build trust.
Liu Chunlin
CEO
K&C Protective Technologies Pte Ltd
LARGE enterprises including MNCs would like to deal with companies which
can provide one-stop services with proper systems to assure quality,
business ethics, environmental responsibility, corporate social
responsibility, and so on.
SMEs may not always comply or fit into this neatly. Hence one way is for
companies to band together in alliance to offer headache-free one-stop
services and to brush up on standards to gain the accounts of large
enterprises.
In terms of dealing with SMEs in other countries, the idea of banding
together will certainly hold great prospect as large enterprises would have
market foot print in a regional zone. Cross-national SME collaboration to
present a consistent mode of doing business will certainly be attractive to
large enterprises which want to move fast instead of dealing with myriad
parties.
But cross-national SME collaboration will certainly pose a higher level of
challenge as one has to deal with cross-national operational and cross-
cultural communication issues. I am sure that many of us can testify to
such difficulties on a daily basis in our business dealings.
Pramod Ratwani
President & Executive Chairman
Consilium Software Inc
LOCAL SMEs must be able to offer unique value propositions which will be
compelling for large enterprises, multinationals and also foreign SMEs in
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terms of market knowledge, existing customer relationships; enhancing
their product and offerings so that the combined offering gets a
competitive edge and help with execution of go-to-market strategy. The
other is cost arbitrage which SMEs offer, acting as subcontractors for large
projects, managing outsourced work of MNCs and providing resources on
short or long-term basis.
These alliances, if managed with trust and transparency, can lead to
bigger initiatives such as joint ventures or even being acquired by a bigger
player in future, resulting in a significant jump in value for shareholders of
SMEs.
Choe Peng Sum
CEO
Frasers Hospitality Pte Ltd
IN order to realise their full potential, Singapore's SMEs need to clearly
understand the demands of operating in a 'global village', that the
quantum leap in the development of communications and transportation
enables most companies - either large multi-nationals or local SMEs - to
choose their partners from any corner of the world.
In business today, there are no geographic boundaries when it comes to
selecting business partners or suppliers. So, from the outset, SMEs must
have a single-minded vision of working to international standards; and
position themselves as competent players on a global stage.
And in selecting partners from other countries, they must ensure that they
are working with like-minded individuals or companies that share their
quest for excellence in product and service.
Lim Soon Hock
Managing Director
Plan-B ICAG Pte Ltd
SMEs must be able to value add. In the words of Minister Lim Swee Say at
a recent Economic Strategies Committee Meeting, SMEs must be able to
offer capabilities and capacities that are 'cheaper, better and faster'. What
this means is that SMEs should continuously invest in human capital as well
as systems and processes, so as to make it easy for large enterprises and
multinationals to do business with them. It is important that SMEs
embrace professional management to be able to work more fruitfully with
large enterprises and multinationals to meet, if not to exceed, their
exacting standards.
Local SMEs should tap more fully the larger pool of human talent from
their counterparts in other countries, through a compete and
complementary juxtapositioning, as they strive to be cheaper, better and
faster.
They should also capitalise on their local knowledge and customer
relationships to expand their geographical foot print and fast-track their
regional expansion. In this respect, it is important for local SMEs to think
global and act local, and not be overly Singapore-centric in terms of what
works for us.
That said, the challenge would be to have a common vision on how
businesses ought to be conducted without compromising business ethics
and corporate governance, while not leaving money on the table, within
the context of a larger geographical foot print.
David Low
CEO
Futuristic Store Fixtures Pte Ltd
Business internationalisation results in global trade explosion. With global
markets growing, it is no longer sustainable to operate as a stand- alone
organisation without partaking in collaborative efforts with counterparts,
be it of similar or different scales of operations. The commercial world is
continuously seeking for greater value creation at lower business
transaction costs and this proves a greater need for global synergies. The
large corporations and MNCs go through restructuring and inter-
departmental integration to keep themselves lean to face these
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challenges. With these moves from the big boys who very much dictate
the direction for SMEs, how do SMEs reinforce their presence when they
are likely lean to being with?
Agility to change is key. SMEs need to be fast in their policy changes in
tandem with the large corporations, and swiftly fill the missing gaps that
come with large corporations restructuring, without necessarily profiting
monetarily. This direction needs to be communicated very clearly within
each SME in order for change to be accepted internally and thus be able to
forge vertical links with large corporations. These vertical linkages will
result in greater global market access, a long-term benefit that SMEs have
to recognise.
In the same light, SMEs here will have to forge horizontal links with SMEs
in other countries in order to beef up their international presence. We
have the Singapore Brand of trust to bank on, coupled with a talent pool of
intellectuals with diverse cultures who are very much regionally if not
internationally exposed to complement SMEs in other countries' strengths
of human and technology capital.
Bearing in mind that the definition of an SME differs globally, we are still a
very small-sized economy in comparison with our American and European
counterparts. Hence, humility is imperative when SMEs promote
themselves to their peers in a foreign land.
At the end of the day, no matter how small a scale of operation, SMEs
here have to adopt a global outlook and form strategic alliances both in
local and foreign markets.
David Leong
Managing Director
PeopleWorldwide Consulting Pte Ltd
The Singapore business ecosystem is limited by its sheer small size.
Singapore has no natural resources and lacks a sizeable domestic market;
hence the only rational choice is to attract large enterprises and
multinationals to come to our shore to set their bases here. Many SMEs
grew in the early 1980s to 1990s on the back of a manufacturing boom
brought on by the likes of Seagate and HP. The SMEs played second fiddle
and supported these large enterprises and MNCs by providing contract
manufacturing of parts and services. They grew on the momentum
developed by these large enterprises which provides goods and services to
the world. Such clustering of manufacturing focus is necessary - petrol
chemical, pharmaceuticals, semi-conductors, etc - and Singapore excelled
by working hand-in-glove with these MNCs.
The other strategic thrust will be for Singapore's SMEs to reach out and be
connected to the global economy especially in growth countries such as
China, India, Brazil, Russia and also by plugging into the Asia-Pacific
growth opportunities. For growth, Singapore SMEs must also work with the
SMEs in these countries and be plugged into their business eco-system and
to become the lifeline of their economic growth. It is through such
economic strategy that Singapore is linked up with the global economy.
Deb Dutta
Vice-President, Asia-Pacific
Brocade
SMEs today are well poised to play the 'outsourced partner' to large
enterprises. In these times where saving cost is high on corporate agenda,
outsourcing to SMEs - be it for services in non-core areas of the business
and even in production of goods - will certainly help in saving operation
cost for enterprises. SMEs on the other hand, have to demonstrate
capabilities and skills to establish strategic alignment and partnership to
meet the needs of larger enterprises and MNCs. This needs attitude,
investment and top down commitment. Very few organisations
demonstrate these traits!
For SME organisations that demonstrate the right traits, the government
can help in facilitating financing options. Easier credit (which is a definite
bottleneck for these organisations today) allows them to focus on the
aspects mentioned above while enabling them to take on, deliver more
and optimise their capacity! SMEs are the largest contributors to the GDP
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in most economies. Given the right 'nurturing' and support, they are often
in a best position to scale, much faster than larger setups.
Sharon Lim
Executive Director
Pacific Time Pte Ltd
FIRST and foremost, SMEs need to get rid of the mentality that they are
necessarily inferior to the large MNCs and cannot work on an equal footing
with the corporate behemoths. On the contrary, many SMEs are more
agile, innovative, more driven and know specific markets better than
MNCs. The key here is for SMEs to know precisely where their own values
lie and the type of MNCs that they can work with to target new markets
and segments. There is a grain of truth in the saying that SMEs sell mainly
to SMEs. By understanding their own value and how it complements the
MNCs weakness, it can reach new markets - beyond its own traditional
SME space. For example, many SMEs have great niche and creative
products, but with limited distribution reach. By selecting and working with
the right MNCs, it can leverage on the large sales force and distribution
reach of MNCs. The fact that MNCs frequently buy smaller companies to
acquire their distribution, product mix, intellectual property or customers
is the proof that SMEs provide true value to MNCs. As the saying goes, it's
not the biggest that survives, but the most adaptive to change. It's true in
the Jurassic jungles as well as in the corporate jungle.
David Ang
Executive Director
SHRI
The world is changing. Every organization will have to adapt and adjust to
a recovering economy.
The fundamental concept for running an organization is that it has to be
entrepreneurial, innovative and prudent in cost and human capital
management.
Going forward, the traditional definition for SMEs should evolve to include
small and medium-sized organisations (SMOs) which play a significant role
in the economy of a country, giving significant employment to the
workforce. SMO should thus include NGOs and not-for-profit organisations
as they also play a significant role in the country and the globalised world.
This group of SMOs is gaining more attention from large enterprises and
MNCs in the form of large philanthropic centres and foundations. Thus,
SMOs should work more with these larger enterprises and MNCs to evolve
their respective entrepreneurial models so as to create more employment
and fulfill their social and commercial objectives.
Therefore, just as assistance and programmes were given to assist the
small and medium-sized companies, much focus will have to be given to
these SMOs to enable them to connect and work more fruitfully with these
other large enterprises and multinationals. Governments and agencies
should include the SMOs in their schemes, and grants should be made
available to the small and medium-sized companies. The recent
recommendation at the Apec forum to assist SMEs should be extended to
include the SMOs too.
Joshua Yim
CEO
ACHIEVE Group
SMEs are usually run by a small team. They are very nimble and can
make business decisions quickly whereas multinationals tend to be bound
by processes and accountability structures that can hamper their decision-
making efficiency. The difference in dynamics is like navigating a bumboat
versus an oil tanker. With this knowledge, SMEs can fine-tune their
approach to business relationships, which are important regardless of
whether you are an SME or MNC.
However, I believe that relationships play a more significant role when
you are dealing with SMEs as opposed to MNCs, as the latter is more
constrained by business processes.
Going back to the point about MNCs having a longer decision-making
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process due to their bureaucracy, having a strong relationship with the
head honcho of the MNC will certainly shortcut the process.
Su-Yen Wong
Managing Director, ASEAN
Mercer (Singapore) Pte Ltd
IN order for SMEs to work more fruitfully with large enterprises and
multinationals, they need to 'think big'. Growing to the next level and
'playing with the big boys' will require conscious effort and investment to
develop their operations and an infrastructure that will enable the business
to scale. For example, in the area of human resources, one of biggest
issues faced by SMEs is attracting and retaining talent, which is core to any
business. Many SMEs tend to feel that people are more attracted to work
for large organisations. However, this is often because the SME does not
yet have a formalised approach to HR, and instead has a more ad-hoc
approach to people issues. This tends to lead to a situation where
employees feel that there is a lack of transparency and little opportunity
for career development when working for a small business.
Size notwithstanding, SMEs have the ability to provide a compelling
experience to their staff, for example an expanded portfolio and
responsibilities, flexible working arrangements, visible contribution to the
growth of the company etc. Once SMEs identify what their company
strengths are, they should capitalise on it by articulating an employee
value proposition and implementing selected people processes by
leveraging the experiences of successful large organisations or other SMEs
that are relevant to their business.
Implementing structure and processes for employee development even in
the smallest organisations will go a long way towards attracting and
retaining employees. This in turn reflects upon the company's culture,
commitment to quality, and level of sophistication, which would be a key
differentiator when it comes to working with larger companies and SMEs
from other countries.
François Lançon
President
Nortel Asia-Pacific
SMEs look to achieve a fine balancing act. They need to appear like big
companies in order to be taken seriously by multinationals, while losing
nothing of the entrepreneurial spirit and agility that gives them an
advantage over larger organisations. The web has transformed many
SMEs' abilities to reach further than their local market. Technology
continues to be one area where SMEs can see significant return on
investing in leading edge solutions. IP-based technologies help integrate
voice and data solutions, allowing SMEs to offer seamless service and
support to customers. These solutions can significantly reduce SMEs'
communications costs and enhance business efficiencies. This in turn puts
them on a level playing field with larger organisations, helps to support
simpler business transactions between them, and creates the increasingly
international opportunities today's connected world offers. Finally, SMEs
which invest today put themselves in pole position over the laggards as
the economy rebounds in 2010.
Teng Yeow Heng Michael
Managing Director
Corporate Turnaround Centre Pte Ltd
UNFORTUNATELY, many of our SMEs are still run by their founders or their
family members who are basically entrepreneurs and do not have the
experience of working with other large enterprises. These SMEs also do
not have professional managers or PMETs who have experience in working
with MNCs and large enterprises to complement their entrepreneurial skill
sets.
As for the overseas SMEs, I see the second wave of foreign investments
coming to Singapore from the west. The first wave was the MNCs which
are now moving out of Singapore. These western-based SMEs are forced
out of the US and EU because of the deep recession there and are now
seeking opportunities in the Far East. SMEs in Singapore which understand
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doing business in the East and the West will be well positioned to partner
with these western SMEs to venture into the Asian market.
However, I urge SMEs to recruit PMETs with such experiences to help
jump-start their partnership with western SMEs as well as dealing with the
foreign MNCs. In the past, it was difficult to recruit these professional
managers and PMETs as they preferred to work with the foreign MNCs and
enterprises. Now, many of them are laid off as these large foreign
enterprises moved out of Singapore and unlikely to find employment with
MNCs. Thus, these PMETs will find working for SMEs far more attractive
now.
Also, NUS-SBF-Spring has a Business Advisory Programme to place many
of these PMETs to SMEs in Singapore and the programme is funded by
Spring. Both SMEs and the PMETs should take advantage of this excellent
programme.
Luke Lim
Chief Executive Officer
A. S. Louken
THERE are three key elements for SMEs to compete successfully
internationally - branding, continuous effort to develop the company's
intellectual property for growth, and scalability.
In a recent SMEs survey that we have conducted, 85 per cent of
respondents understood that branding is one of the most important
aspects for internationalisation, in order to work alongside MNCs and other
SMEs locally, regionally and globally. Most of our clients who have
ventured overseas successfully took effort in brand building and consider
branding an important strategy for their overseas ventures.
Next is the continuous development of intellectual property. Without it,
competitors can easily overcome a company's or SME's competitive
advantage. Building their intellectual property can refer to ensuring that
they become better in what they do best, and not making it easy for
anyone to copy the business proposition outright. Such intellectual
property may include network of partners, product know-how and
business processes.
The scalability component is essential for growth. A success in Singapore
may not guarantee an overseas success, as not all business attributes can
be transported overseas. Hence, SMEs need to enhance attributes that can
be brought over to the international market to retain their competitive
edge, and innovate to build new elements to make up for those that
cannot be migrated to provide sustainable value proposition to customers
in the host countries.
Darren Thomson
President and Chief Executive Officer
Manulife (Singapore) Pte Ltd
SMEs come in all shapes and sizes but they survive for the same reason
and that is they offer customers something different. Normally, this
manifests itself in service excellence because they offer flexibility and a
more personal service for which they can charge a premium. Invariably,
the failure of an SME is in its inability to keep pace with change either
because the owners suffer from marketing myopia or, as we have seen in
the current business climate, the source of funding dries up.
Suppliers and customers have a great habit of finding each other. In my
experience, that happens most efficiently when suppliers know two things
very well - firstly, they know the customer they are looking for; and
secondly, they know themselves and their own capabilities even better.
My suggestion would be that an SME asks itself these two questions and if
it is not satisfied with the answer, do something about it - quickly !
Brad Gray
VP of Asia South
Juniper Networks
UPGRADING of technology is the major key to enhancing the international
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