Nov 28, 2007
S'pore making its mark in Saudi Arabia
Local firms seizing lucrative opportunities in sectors such as infrastructure development
THE Singapore corporate footprint is being stamped slowly but surely on the deserts of oil mega-rich Saudi Arabia. And this process looks set to gather pace in the next few years, as more Singapore firms seize opportunities in a lucrative market that is, in effect, on the other side of Asia.
Singapore Airlines is believed to be the first local business to operate there - with its maiden flight in 1979. But other Singapore businesses have struck out there in recent years, too.
They include information technology firm CrimsonLogic, infrastructure service specialist Tiong Woon and property giant Keppel Land.
Saudi Arabian General Investment Authority's country director for Singapore, Mr Meshari Al-Khaled, said IE Singapore had worked with the Saudi authorities to promote the kingdom's newly-created economic cities.
Economic cities are development clusters set up by the authorities to focus on attracting new businesses to specific sectors. Singapore e-government solutions provider CrimsonLogic got a big boost in 2002 when it won a US$22 million (S$31.7 million) deal in Saudi Arabia to build, operate and maintain an e-trade project to serve the kingdom's trade sector. The deal has helped open more doors for CrimsonLogic in the Middle East, winning it more projects.
The e-trade project SaudiEDI is a joint project undertaken by CrimsonLogic and the kingdom's Public Investment Fund.
'They've showed a strong passion to implement things and are good listeners,' said Mr Faisal Saleh Al-Mousa, the general director of SaudiEDI.
Another local firm swiftly establishing its Saudi presence is Tiong Woon.
It is making inroads in Jubail Industrial City off the eastern coast - one of the world's largest petrochemical complexes.
In January, it became the first Singapore company to be awarded an investment licence to run a 100 per cent foreign-owned business entity in the kingdom.
And its business is booming. Tiong Woon's Saudi Arabia branch manager, Mr Jason Low, said demand for his firm's 60 cranes is almost at full capacity, and his major clients include South Korean firms.
He said: 'It's a happy problem we have as the demand increases. We aim to grow our fleet of cranes from 60 to 150 in two to three years.'
Another is Keppel Land.
In September, it announced its first foray into Saudi Arabia by inking a $760 million joint venture to develop 1,000 luxury homes in Jeddah's Corniche waterfront.
The Singapore presence is growing. Other Singapore firms active in Saudi Arabia include Rotary Engineering and Hyflux. Rotary has clinched an $11 million deal to provide support for an ethylene plant, while Hyflux is in a $45 million joint venture in a recycling plant.
Yesterday, SembCorp Marine announced a US$6.6 million joint venture for a shipyard in Yanbu, a city on the west coast of Saudi Arabia.
To help local companies seeking to do more business in Saudi Arabia, IE Singapore set up an office in Jeddah recently.
Said IE Singapore's centre director for Jeddah, Mr Nordin Yatim: 'Our business presence there is at an infant stage. It's a place with lots of untapped potential, with plenty of opportunities especially in infrastructure development, logistics and oil and gas support.'
Tuesday, November 27, 2007
Surviving Saudi Arabia
Nov 28, 2007
Surviving the Saudi kingdom: Learn and adapt to customs
Its commercial capital, Jeddah, seems much like an American city, if not for its tight security and social rules, and yet the country is a land brimming with business opportunities
APART from the odd Charles & Keith shoe shop, there is not much to remind a Singaporean passing through Saudi Arabia of home.
If anything, the gleaming megamalls, posh car showrooms and fast-food joints lining both sides of the motorway make the kingdom's commercial capital - Jeddah - seem much like an American city.
However, the sight of women fully covered in black robes and restaurants split into singles and family sections quickly remind you that you are in Saudi Arabia, a land of tight security and social rules, but also one brimming with business opportunities.
Diversification is the buzzword as the kingdom seeks to lessen its economic dependence from oil and grow other sectors.
With over a quarter of the world's oil reserves and spanning 80 per cent of the Arabian peninsula, Saudi Arabia certainly cannot be ignored. Yet, it seems a mysterious land of untapped potential for most Singapore firms.
Economic hub
The crown jewel of Saudi Arabia's new economic strategy is the US$26.6 billion (S$38.3 billion) King Abdullah Economic City. It is the embodiment of the kingdom's drive for economic diversification and expansion. It is located 200km north of Jeddah on the west coast.
Facts and figures
LAND AREA :2.15 million sq km (roughly the size of Western Europe)
The key to success is being aware of the country's social and religious customs and adapting well to them. They can be disconcerting. The weekend is on Thursday and Friday, women cannot drive and there are no cinemas, no alcohol.
Security is tightest in the capital, Riyadh, most noticeably at government buildings and expatriate housing compounds. Armoured cars with mounted machine guns, high barbwire fences and multiple security checkpoints surrounding the entire housing estate perimeter are common fare.
Enter the compounds of the condominiums, and it is a whole different world. Most come equipped with their own grocery and laundry stores, sports facilities, and lush surroundings similar to a beach resort. Some are French-themed, with exotic street names such as Rue de Paris.
The Saudi Arabia branch manager of Tiong Woon, Mr Jason Low, said: 'It's like a mini-United Nations in compounds. You'll learn many interesting cultures and to get along with people from many countries.'
Overall, the wide income disparity in Saudi Arabia is obvious. On one hand, there are reports of a Saudi prince buying a US$475 million (S$685 million) A-380 superjumbo flying palace, and yet you can see the odd African child begging for money on the streets.
Perks
WHILE the rest of the world struggles with soaring petrol costs, Singaporeans in Saudi Arabia will bristle more at their water bills.
A litre of 95-octane petrol costs just 60 halala, or 23 Singapore cents. The same amount of drinking water costs about 1 Saudi riyal, or 39 Singapore cents.
Cars are also far cheaper. A new Honda Accord will set you back only 60,000 Saudi riyals.
Information technology technical manager Andrew Heng said: 'The money's good, cost of living's low.'
Singapore Airlines' Middle East general manager, Mr Mohamed Rafi, added: 'Living costs are comparatively lower here, due to no GST. In addition, personal income is not taxable.'
Speak to Singaporeans living in the country, and you will find a closely-knit bunch, with frequent dinner gatherings, morning coffee outings among the women, desert excursions and diving trips.
'The conservative culture in Saudi Arabia may provide an ideal place to bring up a young family,' said Singaporean medical scientist Kamal Jalil.
Renaissance
HOWEVER, others also say having to forego cinema trips and the occasional pub outing are social sacrifices they have to put up with.
A new era is dawning over the oil-dominated economy.
It faces demographic challenges - about 75 per cent of its 27 million population is below 30 years of age - and economic ones as it attempts to lessen its reliance on oil.
A key strategy is the building of multibillion-dollar economic cities - development clusters focusing on attracting new businesses to specific sectors.
And Singapore is welcome to jump on the potentially lucrative bandwagon, especially in sectors such as infrastructure development, logistics, and oil and gas support.
'We've about US$624 billion worth of economic projects to be done in the next 10 to 15 years,' said Dr Fahad Al Sultan, secretary-general of the Council of Saudi Chambers of Commerce and Industry.
Dr Hisham Jomah, Jeddah Municipality director of mega projects added: 'It's a fertile soil to plant your businesses... It's open in all directions.'
A recent World Bank report ranked Saudi Arabia 23rd among 178 economies for ease of doing business - up from 38th a year ago.
That placed it a rung above Malaysia and the highest in the Middle East.
Singapore was ranked No. 1 in the report.
Challenges
HOWEVER, there are several challenges. Common grouses include difficulty in acquiring visas for foreign workers, finding well-trained local talent and getting Singaporeans who are willing to be posted there. Temperature is also an issue - the mercury can rise above 50 degrees during summer.
Knowledge of Arabic is a bonus, especially when dealing with government offices. Most firms will hire a Saudi national as a government relations officer.
'If there's a legal dispute, you have to get a Saudi national to represent the company in court; you can't go in to state your case,' said a Singaporean working in the country.
Building bridges
RELATIONSHIPS are key to clinching corporate deals.
IE Singapore's centre director for Jeddah, Mr Nordin Yatim, said: 'Go for coffee or a shisha smoke with them, chit chat, develop mutual trust and confidence.'
Business is usually done over a lengthy meeting with several cups of Arabic coffee or a shisha smoke - part of the Saudi culture of providing warm hospitality.
'A humble, patient attitude is preferred. A high and mighty approach won't work,' said CrimsonLogic project director Jafarulah Khan.
A lot of Saudi businesses are family-run, and some rely on word of mouth in decision-making. Singapore's reputation is quickly gaining ground, and most Saudis hold it in high regard.
Singapore's Ambassador to Saudi Arabia V.P. Hirubalan said: 'The Singapore brand name has been buzzing around in Saudi Arabia and is catching on now more than ever. They see us as a success story.'
Surviving the Saudi kingdom: Learn and adapt to customs
Its commercial capital, Jeddah, seems much like an American city, if not for its tight security and social rules, and yet the country is a land brimming with business opportunities
APART from the odd Charles & Keith shoe shop, there is not much to remind a Singaporean passing through Saudi Arabia of home.
If anything, the gleaming megamalls, posh car showrooms and fast-food joints lining both sides of the motorway make the kingdom's commercial capital - Jeddah - seem much like an American city.
However, the sight of women fully covered in black robes and restaurants split into singles and family sections quickly remind you that you are in Saudi Arabia, a land of tight security and social rules, but also one brimming with business opportunities.
Diversification is the buzzword as the kingdom seeks to lessen its economic dependence from oil and grow other sectors.
With over a quarter of the world's oil reserves and spanning 80 per cent of the Arabian peninsula, Saudi Arabia certainly cannot be ignored. Yet, it seems a mysterious land of untapped potential for most Singapore firms.
Economic hub
The crown jewel of Saudi Arabia's new economic strategy is the US$26.6 billion (S$38.3 billion) King Abdullah Economic City. It is the embodiment of the kingdom's drive for economic diversification and expansion. It is located 200km north of Jeddah on the west coast.
Facts and figures
LAND AREA :2.15 million sq km (roughly the size of Western Europe)
The key to success is being aware of the country's social and religious customs and adapting well to them. They can be disconcerting. The weekend is on Thursday and Friday, women cannot drive and there are no cinemas, no alcohol.
Security is tightest in the capital, Riyadh, most noticeably at government buildings and expatriate housing compounds. Armoured cars with mounted machine guns, high barbwire fences and multiple security checkpoints surrounding the entire housing estate perimeter are common fare.
Enter the compounds of the condominiums, and it is a whole different world. Most come equipped with their own grocery and laundry stores, sports facilities, and lush surroundings similar to a beach resort. Some are French-themed, with exotic street names such as Rue de Paris.
The Saudi Arabia branch manager of Tiong Woon, Mr Jason Low, said: 'It's like a mini-United Nations in compounds. You'll learn many interesting cultures and to get along with people from many countries.'
Overall, the wide income disparity in Saudi Arabia is obvious. On one hand, there are reports of a Saudi prince buying a US$475 million (S$685 million) A-380 superjumbo flying palace, and yet you can see the odd African child begging for money on the streets.
Perks
WHILE the rest of the world struggles with soaring petrol costs, Singaporeans in Saudi Arabia will bristle more at their water bills.
A litre of 95-octane petrol costs just 60 halala, or 23 Singapore cents. The same amount of drinking water costs about 1 Saudi riyal, or 39 Singapore cents.
Cars are also far cheaper. A new Honda Accord will set you back only 60,000 Saudi riyals.
Information technology technical manager Andrew Heng said: 'The money's good, cost of living's low.'
Singapore Airlines' Middle East general manager, Mr Mohamed Rafi, added: 'Living costs are comparatively lower here, due to no GST. In addition, personal income is not taxable.'
Speak to Singaporeans living in the country, and you will find a closely-knit bunch, with frequent dinner gatherings, morning coffee outings among the women, desert excursions and diving trips.
'The conservative culture in Saudi Arabia may provide an ideal place to bring up a young family,' said Singaporean medical scientist Kamal Jalil.
Renaissance
HOWEVER, others also say having to forego cinema trips and the occasional pub outing are social sacrifices they have to put up with.
A new era is dawning over the oil-dominated economy.
It faces demographic challenges - about 75 per cent of its 27 million population is below 30 years of age - and economic ones as it attempts to lessen its reliance on oil.
A key strategy is the building of multibillion-dollar economic cities - development clusters focusing on attracting new businesses to specific sectors.
And Singapore is welcome to jump on the potentially lucrative bandwagon, especially in sectors such as infrastructure development, logistics, and oil and gas support.
'We've about US$624 billion worth of economic projects to be done in the next 10 to 15 years,' said Dr Fahad Al Sultan, secretary-general of the Council of Saudi Chambers of Commerce and Industry.
Dr Hisham Jomah, Jeddah Municipality director of mega projects added: 'It's a fertile soil to plant your businesses... It's open in all directions.'
A recent World Bank report ranked Saudi Arabia 23rd among 178 economies for ease of doing business - up from 38th a year ago.
That placed it a rung above Malaysia and the highest in the Middle East.
Singapore was ranked No. 1 in the report.
Challenges
HOWEVER, there are several challenges. Common grouses include difficulty in acquiring visas for foreign workers, finding well-trained local talent and getting Singaporeans who are willing to be posted there. Temperature is also an issue - the mercury can rise above 50 degrees during summer.
Knowledge of Arabic is a bonus, especially when dealing with government offices. Most firms will hire a Saudi national as a government relations officer.
'If there's a legal dispute, you have to get a Saudi national to represent the company in court; you can't go in to state your case,' said a Singaporean working in the country.
Building bridges
RELATIONSHIPS are key to clinching corporate deals.
IE Singapore's centre director for Jeddah, Mr Nordin Yatim, said: 'Go for coffee or a shisha smoke with them, chit chat, develop mutual trust and confidence.'
Business is usually done over a lengthy meeting with several cups of Arabic coffee or a shisha smoke - part of the Saudi culture of providing warm hospitality.
'A humble, patient attitude is preferred. A high and mighty approach won't work,' said CrimsonLogic project director Jafarulah Khan.
A lot of Saudi businesses are family-run, and some rely on word of mouth in decision-making. Singapore's reputation is quickly gaining ground, and most Saudis hold it in high regard.
Singapore's Ambassador to Saudi Arabia V.P. Hirubalan said: 'The Singapore brand name has been buzzing around in Saudi Arabia and is catching on now more than ever. They see us as a success story.'
Wednesday, November 21, 2007
8 tips for the super shoppers
8 Tips for the Savvy Shopper
Save hundreds on your holiday gifts with this checklist
Once you've created a gift list, clip these tips and follow them to make your shopping as hassle-free as possible:
1. TIME YOUR BUYING. Don't fall for Midnight Madness sales, which typically offer discounts on just a few products. Sales are first come, first served, which could mean hours of waiting. For "hot" gifts that might be in short supply, buy as soon as you see them. But consider waiting for others while discounts mount. Black Friday, the day after Thanksgiving, and the following Cyber Monday are the days when many merchants get serious about sales. You're likely to find online discounts, free standard shipping, or deferred interest payments. Shop in the early morning, when crowds tend to be light, and when retailer Web sites we scanned are especially inclined to offer special discounts.
2. GO ONLINE TO SAVE BIG. Use several shopping "bots" to compare product prices at dozens of retailers. Better-known bots include BizRate, DealTime, Google Product Search, MySimon, Shopping.com, Shopzilla, Amazon.com, and Yahoo Shopping. If possible, sort by product price. (Bots often put retailers that pay a fee at the top of the results list.) Download coupons at FatWallet and DealTaker.com. Those sites also provide advance information about sales at many stores and reveal which products come with rebates and which merchants offer free shipping. CouponCabin offers coupons plus discount or promotional codes, which boost savings. Store Web sites offer coupons and say what products are available at stores, so you won't waste a trip.
3. BE LEERY OF BANK GIFT CARDS. They're more likely to expire and tack on fees than cards offered by individual retailers. Some cards depreciate in value from month to month if unused. If you give a gift card, pass along the receipt, too, in case the card is lost.
4. GET A GIFT RECEIPT. If the recipient lacks a receipt, they may be issued a gift card or store credit for the lowest price the item ever sold for, not necessarily what you paid. They'll also need the receipt for warranty service. Purchases made in November and December are often eligible for extended return or exchange privileges.
5. BE SURE YOUR GIFT IS WANTED. A recipient returning electronics gear in an opened box might pay 10 to 15 percent of the purchase price as a restocking fee. Computer software, music CDs, and movie DVDs generally can't be returned or exchanged for another title once the seal is broken.
6. APPLY FOR REBATES. Four of 10 people eligible for rebates forget to collect the necessary paperwork, follow the wrong procedure, or wait too long to file. If you're entitled, act fast. You'll typically need the product serial number, a sticker or label,an original receipt, UPC code cut from the carton, and an official form. Rebates issued as debit cards, a growing trend, typically expire in 60 or 90 days.
7. AVOID PRIORITY SHIPPING. Using last year as a barometer, the deadline for free shipping from major retailers will expire about Dec. 18, though standard shipping might be possible for a day or two longer. Ordering one-day service can add $20 or more and doesn't guarantee delivery within 24 hours of clicking on "place order." The arrival date is calculated from the moment the package is shipped, so factor in two or three days of processing time.
8. SAY NO TO EXTENDED WARRANTIES. Most products don't break during the first three or four years of ownership. If breakage does occur, the repair cost is typically similar to the warranty cost. For added protection at no cost, buy with a credit card. You can extend the manufacturer's original warranty free for up to one year with most gold and platinum cards (check with the issuer).
Source: Yahoo
Save hundreds on your holiday gifts with this checklist
Once you've created a gift list, clip these tips and follow them to make your shopping as hassle-free as possible:
1. TIME YOUR BUYING. Don't fall for Midnight Madness sales, which typically offer discounts on just a few products. Sales are first come, first served, which could mean hours of waiting. For "hot" gifts that might be in short supply, buy as soon as you see them. But consider waiting for others while discounts mount. Black Friday, the day after Thanksgiving, and the following Cyber Monday are the days when many merchants get serious about sales. You're likely to find online discounts, free standard shipping, or deferred interest payments. Shop in the early morning, when crowds tend to be light, and when retailer Web sites we scanned are especially inclined to offer special discounts.
2. GO ONLINE TO SAVE BIG. Use several shopping "bots" to compare product prices at dozens of retailers. Better-known bots include BizRate, DealTime, Google Product Search, MySimon, Shopping.com, Shopzilla, Amazon.com, and Yahoo Shopping. If possible, sort by product price. (Bots often put retailers that pay a fee at the top of the results list.) Download coupons at FatWallet and DealTaker.com. Those sites also provide advance information about sales at many stores and reveal which products come with rebates and which merchants offer free shipping. CouponCabin offers coupons plus discount or promotional codes, which boost savings. Store Web sites offer coupons and say what products are available at stores, so you won't waste a trip.
3. BE LEERY OF BANK GIFT CARDS. They're more likely to expire and tack on fees than cards offered by individual retailers. Some cards depreciate in value from month to month if unused. If you give a gift card, pass along the receipt, too, in case the card is lost.
4. GET A GIFT RECEIPT. If the recipient lacks a receipt, they may be issued a gift card or store credit for the lowest price the item ever sold for, not necessarily what you paid. They'll also need the receipt for warranty service. Purchases made in November and December are often eligible for extended return or exchange privileges.
5. BE SURE YOUR GIFT IS WANTED. A recipient returning electronics gear in an opened box might pay 10 to 15 percent of the purchase price as a restocking fee. Computer software, music CDs, and movie DVDs generally can't be returned or exchanged for another title once the seal is broken.
6. APPLY FOR REBATES. Four of 10 people eligible for rebates forget to collect the necessary paperwork, follow the wrong procedure, or wait too long to file. If you're entitled, act fast. You'll typically need the product serial number, a sticker or label,an original receipt, UPC code cut from the carton, and an official form. Rebates issued as debit cards, a growing trend, typically expire in 60 or 90 days.
7. AVOID PRIORITY SHIPPING. Using last year as a barometer, the deadline for free shipping from major retailers will expire about Dec. 18, though standard shipping might be possible for a day or two longer. Ordering one-day service can add $20 or more and doesn't guarantee delivery within 24 hours of clicking on "place order." The arrival date is calculated from the moment the package is shipped, so factor in two or three days of processing time.
8. SAY NO TO EXTENDED WARRANTIES. Most products don't break during the first three or four years of ownership. If breakage does occur, the repair cost is typically similar to the warranty cost. For added protection at no cost, buy with a credit card. You can extend the manufacturer's original warranty free for up to one year with most gold and platinum cards (check with the issuer).
Source: Yahoo
Grants for F and B business
Nov 21, 2007
Grants for F&B business to help raise service standards
WHAT are some of the assistance programmes for the food and beverage (F&B) industry that I can apply for?
You can consider the Food and Beverage Capability Development Programme or the Customer-Centric Initiative for Food and Beverage.
The Capability Development Programme aims to help enterprises develop innovative concepts, products and processes that will raise efficiency and service levels.
Funding, which is on a case-by-case basis, extends up to 50 per cent of the qualifying costs of projects.
These include consultancy fees, salaries of employees involved in the project, cost of equipment, materials and consumables.
The Customer-Centric Initiative helps locally based businesses improve service levels and benchmark themselves against industry standards.
The projects could involve:
Mystery diner audits and customer satisfaction surveys;
Identify service gaps and implement improvements;
Post-implementation assessment of service; and
Certification under Singapore Service Class.
Businesses can use the service standards developed under the initiative to audit and measure their service levels.
Service standards are available for casual dining restaurants, and pubs and clubs.
Funding is on a case-by-case basis. Typically, the initiative will fund up to 50 per cent of the qualifying costs, which include:
Consultancy fees;
Workforce Skills Qualification training for employees;
Cost of equipment, materials and consumables; and
Cost of audit, assessment or certification.
Contact EnterpriseOne for more information.
Answers from EnterpriseOne. For more details, go to http://www.business.gov.sg/
Grants for F&B business to help raise service standards
WHAT are some of the assistance programmes for the food and beverage (F&B) industry that I can apply for?
You can consider the Food and Beverage Capability Development Programme or the Customer-Centric Initiative for Food and Beverage.
The Capability Development Programme aims to help enterprises develop innovative concepts, products and processes that will raise efficiency and service levels.
Funding, which is on a case-by-case basis, extends up to 50 per cent of the qualifying costs of projects.
These include consultancy fees, salaries of employees involved in the project, cost of equipment, materials and consumables.
The Customer-Centric Initiative helps locally based businesses improve service levels and benchmark themselves against industry standards.
The projects could involve:
Mystery diner audits and customer satisfaction surveys;
Identify service gaps and implement improvements;
Post-implementation assessment of service; and
Certification under Singapore Service Class.
Businesses can use the service standards developed under the initiative to audit and measure their service levels.
Service standards are available for casual dining restaurants, and pubs and clubs.
Funding is on a case-by-case basis. Typically, the initiative will fund up to 50 per cent of the qualifying costs, which include:
Consultancy fees;
Workforce Skills Qualification training for employees;
Cost of equipment, materials and consumables; and
Cost of audit, assessment or certification.
Contact EnterpriseOne for more information.
Answers from EnterpriseOne. For more details, go to http://www.business.gov.sg/
Franchising as a means to create wealth
Nov 21, 2007
Franchising a growing option for overseas expansion
Firms find it more feasible than direct investments, as it reduces business risk
KINDERGOLF was expanding fast, but it wanted to do so faster.
About three years ago, the firm, which teaches golf to children between the ages of two and seven, chose the franchising route to take its brand overseas.
The franchising option - licensing other entrepreneurs to use a firm's business template - is cheaper than pouring the company's own cash into expansion.
Back in 2004, revenues at the home-grown firm were growing at 20 per cent a year, on healthy demand for golf lessons.
Founder and chief executive Donna Lee was keen on the franchising concept, so the firm took the plunge with a United Square outlet, then went regional through franchised businesses in Indonesia and Malaysia.
'In terms of expansion, it reduces your capital outlay,' she says, as each franchisee pays its own way.
Typically, a franchised outlet will use the branding and products of the original business. The franchisor receives franchise fees from them. KinderGolf had three self- owned outlets before franchising. It now has 12 outlets - four self- owned and eight franchised.
Next year, it will add a franchised outlet in California, said Ms Lee, whose business has been growing by 30 per cent to 40 per cent a year since it embraced franchising.
Firms such as KinderGolf are now more keen on using franchisees to take their brands abroad, as opposed to expanding there themselves, a new survey has found.
Conducted by Franchising and Licensing Association of Singapore, Singapore Business Federation and FT Consulting, the survey has found that 77 per cent of 61 Singapore-based firms strongly agree or agree that franchising is more feasible for overseas business expansion than adding their own outlets.
The survey participants, mainly existing and potential franchisors, say franchising is a highly viable option for overseas business expansion, as it reduces the business risk of investing in a foreign market.
China was identified as the top country targeted for recruiting new franchisees within the next year. This was followed by India and the United Arab Emirates. Still, franchising has its challenges.
'You need to make sure you get the right franchisees,' said Mr Patrick Chai, chairman and chief executive of Blush!, the local lingerie retailer.
'Some franchisees hope to make a quick return and are not willing to follow your strategy to grow the business further,' he said.
'Then others do not have staying power, as maybe they do not have enough reserve capital,' he added.
Blush! has franchises in Singapore, Malaysia, Dubai, Indonesia and Macau.
Franchising a growing option for overseas expansion
Firms find it more feasible than direct investments, as it reduces business risk
KINDERGOLF was expanding fast, but it wanted to do so faster.
About three years ago, the firm, which teaches golf to children between the ages of two and seven, chose the franchising route to take its brand overseas.
The franchising option - licensing other entrepreneurs to use a firm's business template - is cheaper than pouring the company's own cash into expansion.
Back in 2004, revenues at the home-grown firm were growing at 20 per cent a year, on healthy demand for golf lessons.
Founder and chief executive Donna Lee was keen on the franchising concept, so the firm took the plunge with a United Square outlet, then went regional through franchised businesses in Indonesia and Malaysia.
'In terms of expansion, it reduces your capital outlay,' she says, as each franchisee pays its own way.
Typically, a franchised outlet will use the branding and products of the original business. The franchisor receives franchise fees from them. KinderGolf had three self- owned outlets before franchising. It now has 12 outlets - four self- owned and eight franchised.
Next year, it will add a franchised outlet in California, said Ms Lee, whose business has been growing by 30 per cent to 40 per cent a year since it embraced franchising.
Firms such as KinderGolf are now more keen on using franchisees to take their brands abroad, as opposed to expanding there themselves, a new survey has found.
Conducted by Franchising and Licensing Association of Singapore, Singapore Business Federation and FT Consulting, the survey has found that 77 per cent of 61 Singapore-based firms strongly agree or agree that franchising is more feasible for overseas business expansion than adding their own outlets.
The survey participants, mainly existing and potential franchisors, say franchising is a highly viable option for overseas business expansion, as it reduces the business risk of investing in a foreign market.
China was identified as the top country targeted for recruiting new franchisees within the next year. This was followed by India and the United Arab Emirates. Still, franchising has its challenges.
'You need to make sure you get the right franchisees,' said Mr Patrick Chai, chairman and chief executive of Blush!, the local lingerie retailer.
'Some franchisees hope to make a quick return and are not willing to follow your strategy to grow the business further,' he said.
'Then others do not have staying power, as maybe they do not have enough reserve capital,' he added.
Blush! has franchises in Singapore, Malaysia, Dubai, Indonesia and Macau.
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