Swedish Companies in Singapore : -What brought them there and what are the prospects for more of them?

University essay from Stockholms universitet/Företagsekonomiska institutionen

Author: Karin Yngström; [2006]

Keywords: ;


This master thesis concerns the factors behind internationalization of Swedish and Swedish related companies to Singapore and the prospects for other Swedish and Swedish related firms to establish in Singapore. The globalization and trade internationalization have changed firms’ internationalization paths. The distance factor are today of less importance than market size and industrial networks are often more important than statistical analyses and market researches. At the same time as Singapore and other market-oriented countries in Southeast Asia are showing robust growth, emerging markets like Malaysia and Indonesia are exhibiting signs of economic awakening and this affects practically all firms in the Singaporean market. Since Singapore is a small country, it is highly dependent on foreign trade and export. Many Swedish and Swedish related firms that establish in Singapore do so primarily to get access to the whole region rather than to get access solely to the Singaporean market. The Singaporean legislation is experienced as transparent and company friendly and the workforce is generally well-educated and diligent. There are no import quotas in Singapore and the custom duties are low. The country offers tax incentives to firms that operate in so called key industries but I have found that these inducements are rarely applied. There are also managerial, sociological and perceptual and resource barriers that firms must confront when entering the Singaporean market; firms that establish in Singapore must for instance regard cultural differences. Also the competitive position of Singapore as a nation is discussed in this thesis. It has been shown that Singapore’s competitiveness is strengthened by domestic rivalry. An implication is that Swedish and Swedish related firms in Singapore in the future will have to take part in the formation of cross-border industrial clusters in order to be competitive on a global front. Advantages for Swedish and Swedish related manufacturing firms in Singapore include lower production and wage costs and lower taxes. Retailers can generally enjoy the same advantages as manufacturing firms but the lower wage level must be regarded as a disadvantage for retailers. In the choice between globalization and localization; relationships and proximity to customers has turned out to be a determining factor. Swedish and Swedish related companies that establish in Singapore can enjoy various competitive advantages associated with global competition. Firms that choose to compete on international basis must however think globally and prepare to compete on a global level or they will face strategic disadvantages. Although many lines of business in the Singaporean market are growing steadily, it is also important to always prepare for counterattacks. This master thesis is summed up with a number of recommendations to Swedish and Swedish related firms that aspire to establish in Singapore. Two of these concern the need to conduct statistical analyses before the establishment and the importance of implementing a strong corporate culture based on an understanding of what motivates and encourages employees. Keywords Singapore, Business Climate, Factors behind Internationalization, Entry barriers, Global competition

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