Expanding an Australian Business to Singapore: Opportunities and Limitations

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Expanding an Australian Business to Singapore: Opportunities and Limitations

Singapore is an island with a 5.6 million multicultural population and located at the southern tip of Malaysia. Singapore imports 90% on food consumption. This is because Singapore owns limited land available for agriculture and the people mostly depend on the external sources for agriculture products. Also, the export of agriculture products to Singapore helps for good opportunities for international products. Thus, Australian dairy company would like to expand their business in Singapore. Moreover, Singapore is the highest importer of Australian dairy that is 82,724 tonnes in 2015 and 2016. Also, Australian is a leader in food. The main objective of expanding our business to Singapore is to make comfortable for the people of Singapore. This report will highlight the country specific factors, industry specific factors, cultural factors, similarities, and differences of culture, steps for effective negotiations, Human resource management practice in Singapore, culture challenges.

Country Specific Factors

Singapore is one of the largest ports in Southeast Asia, with land area of 687 km2, water area of 10 km2 and with total population of 5,781,728. It is one of the busiest countries in the world. Singapore is consisting of one main island and other 60 small islands. The main island is surrounded by rounded hills, and the land is generally flat. The highest point of Singapore is Bukit Timah which is located at 545 ft (166 m) and the lowest point is Strait (0 m) (Andrews and Freestone, 1972).

Singapore is one of the information and technology hubs in Asia Pacific and is the regional base office of world’s top info comm multinational including Microsoft, amazon Web services and google. It is also hub to international technology startup companies. In Singapore the info comm and communication technology (ICT) sector is the enabler for all industry sector and it has helped in boosting Singapore’s industries competitiveness through rise of productivity and transforming industries processes in industries like services, manufacturing and finance. The ICT is regulated by info – Communications Media Development Authority. Singapore is also global date management hub, which connects 15 active submarine cable systems (Guile, 2003).

Singapore is a free port country and have an open economy, 99% of the goods that are brought/ imported into country are entered through country’s duty – free. On the other hand, Singapore also charges high exercise taxes on the good such as distilled spirits and wine, motor vehicles and petroleum and tobacco products for social and environmental reasons.

In Singapore, the government follows a territorial basis of taxation system. The citizens and business companies are charged based on the total sourced income they earn i.e. personal tax rate which starts at 0% and are capped at the rate of 22% for the income source above $320,000 for the residents and for non – resident they charge at flat rate of 15% (Akkemik, 2009).

For the goods and services that are imported to Singapore it is charged with goods and services Tax (GST) at the rate of 7% on the goods value i.e. it includes the cost of the goods, insurance and the freight (CIF) adding other chargeable cost and the duty payable (only if its applicable).

Industry Specific Factors

Singapore is a business oriented with strong economy and rapidly growing developed country. On 29th of June 2015 Australia and Singapore have signed bilateral trade agreement on 15 anniversaries of diplomatic relations and are member countries of the ASEAN (Australia – New Zealand Free Trade Area (AANZFTA) and TPP – 11. Furthermore, both countries government has embarked into ten year of economic plan enhance collaboration in innovation, science, research and technology (Australian Trade and Investment commission).

Singapore has been ranked highly for ease to do any or start up any business and is one of the attractive places to incorporate and started business for both local and foreign entrepreneurs. In the year 2016, the World Bank group has rated Singapore as the best country to do business. It has also received many awards for its business-friendly policies.

To incorporate business in Singapore, it is essential to focus on the target market first, it’s important to know the target customers and maximize the efforts to appeal the demographic. Strengthen the social media presence, the fastest and cheapest way to expand the business is through use of social media. The right messages can go viral in seconds. Through use of social media platforms such as Facebook, Instagram and twitter we can easily create our product awareness and engaged customers through posting relevant links, pictures, infographics and notes. While doing business it is also important to give out rewards and incentives. Giving out vouchers, discounts, cash prizes and other perks to reliable customers and employees purchasing the goods and working hard to bring the business forward.

Singapore’s competitive labor market and manpower crunch in retail industry demand for potential candidates, thus its essential to provide expatriate education and necessary trainings to ensure effective communication and business success. Expatriate trainings include language courses, cultural communication programs, and international business development.

Culture factors

Different countries will have different cultural factors where both parties give more importance to the individual culture. According to Chaney (2014), culture refers to the custom and social behavior of society. Singaporean culture is a combination of Asia, European and Middle Eastern cultures. Where Australian culture is based on western culture. Singapore is a multicultural society where people’s interactions between different races are normal. Despite, the local customs and culture Singapore are different from a mixture of different ethnic influences. Adekola and Sergi (2007), explains that different cultures believe and act differently. The business deal in Singapore is conducted in English and straightforward manners depend on different countries (Australian Trade and Investment Commission). Therefore, Australian believed in high regard in Singapore and there is no culture problem.

Religion plays an important role in people’s lives and even at work. Many multinational companies adapt their working hours as per the religion that people focus on. According to Masovic (2018), the multinational company should give more attention to religion when the company decides to open in a given country. Besides, when multinational companies operate their business, they should be aware of the religious holiday. Besides, the exporter should be aware of the product that is going to export is acceptable or not. Therefore, the product that our company going to export in Singapore is a highly acceptable and important product that the people in Singapore consume.

The diversity of languages between different countries is challenging for multinational companies. Although the English language is accepted as a universal business language, the companies should be aware of their local language where they are going to operate their business. This is because business communication will be difficult by nonverbal communication. According to Masovic (2018), multinational companies are facing difficulties by nonverbal communication because they give different meanings depending upon the countries. However, Singapore has four official languages. They are Mandarin, Malay, Tamil, and English. The foreign country will face some difficulties in the beginning because Singaporeans use Singlish to communicate. Singlish is a mix of English with other languages. After Singapore became an independent republic in 1965 English language became the main language and people speak English within their families and now, they used English as their common language. Gopal (2009), states that effective language communication with other foreign countries will help to build goodwill and growth of the business. Besides, Australian also gives more importance in English. Therefore, in terms of language expanding our business in Singapore is not a big deal because we can communicate effectively.

Cultural Similarities and Dissimilarities Between Australia and Singapore

The country Australia and Singapore shares few similar cultures, which is advantageous for exporting of diary product from Australia to Singapore particularly in cutting down the expenses. One of the common religions of both the countries are Christianity and share similar holiday times. When someone offers the business card, it should be examined carefully before placing it away and it is impolite if the card is directly put into pocket once it is presented. Both Singapore and Western Australia has equivalent time zones and can make official calls during normal hours, as it will be same time in both the countries.

Along with the culture similarities, both the countries have some differences which the diary product business should emphasis to successfully operate the business. Singaporeans are very relationship oriented in business. Australians are very straightforward in business; they do not need to build a relationship before doing business. A handshake normally serves as the appropriate greeting between two people. Singaporeans may bow slightly while shaking hands. Australian greetings are casual where a handshake and a smile is suitable.

Singaporean in order to maintain harmonious relations, they depend on indirect communication and they are more focused to posture, expression and tone of voice to get the meaning. Australians are direct in making conversations where they give importance to directness compared to diplomacy.

Singapore business dress is a long-sleeved shirt and tie for men and lightweight attire for Businesswomen. The standard dress for management level businessmen is dark suits and ties and business suits with either skirts or trousers for women.

Effective Negotiations

Different kinds of culture values exist in every country, which determine the individual’s behavior in a society. Negotiation skill plays a vital role in doing business and it is important for an entrepreneur to own that skills for effective operation of the business. In negotiation focusing on common ground is essential instead of focusing on differences. How effectively a businessman negotiates an agreement or contract for the business can influence the difference between failure and success (Kett, Szerlip & Watson, 2001).

Denniss (2004), states that for the establishment or expansion of business in Singapore, it is essential to build a long-lasting relationship with them because they are very relationship oriented when it comes to doing business. Once the relationship is developed, it is easier to get into business contract with them because building relation is critical challenge faced by people who are new to negotiation. Successful negotiation comprises of good interpersonal and communication skills, which is used together to attain a desired result. As a result, a good negotiator can close the best agreements, resulting to the progression of an organization.

Human Resource Management Practice in Singapore

Singapore is known for its laborers as steadfast, knowledgeable and dedicated workforce. The Government of Singapore has ordered laws to oversee and ensure the interests of both employees and employers. It is significant for employers to abide by the terms and conditions detailed in the employment contract. Possibly you want to draw up an agreement independent from anyone else, yet its smarter to utilize a legal counsellor or HR specialist who has the mastery to help you around there. If you are covered by the Singapore Employment Act, you should at least meet the necessities set out in the Act. When hiring a foreign worker, it is must that a valid work permit is secured as mandated by the Singapore employment act. Working rights are mentioned in the permit. Singapore has them all: assorted ethnicity, different ages and sexual characters. The Government supports reasonable and dynamic HR rehearses among recruiting specialists.

Cultural Challenges

Australia is a low power distance country while Singapore is a high-power distance. High power distance people believe in power and authority as fact of life. They consider that people are not equal in this world. According to Tan and Chong (n.d), leaders are the sole decision makers and subordinates must follow them without conflict. Thus, the subordinates should accept the instruction given by their leaders. On the other hand, low power distance countries prefer consultation within subordinates and managers. They openly work towards resolving disputes stating their own reasons and come to a satisfactory conclusion. Leaders encourage independent thoughts and contributions to coming to a satisfactory conclusion.

People from Singapore likes to start the work late in the morning and stay up late night in the office whereas in Australia, people start their office early and go back home to spend time with their family.

When it comes to socialising and food, Australians would base the event around Friday afternoon over few drinks. Food also plays a huge social role within the company. But in Singapore, everyone stops for an hour to socialise over food. Since it is a multicultural country, employees bring food from there nationality and people gather, socialise and get to know each other outside of team meeting.

In Singapore, employees are paid on a monthly basis whereas in Australia, you will get your wage weekly (every week), or once in 2 weeks (fortnightly). Thus, the employee that we hire from Australia to work in Singapore will have difficulty in adjusting their salary. This is because the Australian worker they don’t have habit of receiving money monthly. We choose to expand Australian Diary Company to Singapore because of its ideal location for global business, strong trade and investment makes Singapore the most competitive and the world’s easiest place to do business. Also, Singapore has a free trade agreement.

References

Adekola, A., & Sergi, B. S. (2007). Global Business Management-A Cross-Cultural Perspective.
Akkemik, K. (2009). Industrial development in east asia : A comparative look at japan, korea, taiwan, and singapore (Series on economic development and growth, v. 3). New Jersey: World Scientific. (2009).
Andrews, R., & Freestone, C. (1972). A geography of indonesia, malaysia, singapore (2nd ed. (rev. and enl.) ed.). Hawthorn Vic.: G. Philip & O’Neil.
Chaney, L. (2014). Intercultural business communication (Pearson new international edition, Sixth ed.). Pearson.
Denniss, R. (2004). Paid annual leave in Australia: An analysis of actual and desired entitlements. Labour & Industry: A Journal of the Social and Economic Relations of Work, 15(1), 1-16. doi:10.1080/10301763.2004.10669301.
Gopal, N. (2009). Business communication. New Delhi: New Age International. (2009).
Guile, M. (2003). Culture in singapore. Port Melbourne, Vic.: Heinemann Library.
Kett, A., Szerlip, B., & Watson, T. (2001). Passport Singapore: Your pocket guide to Singaporean business, customs and etiquette. Novato: World Trade Press. (2001).
Masovic. A. (2018). socio-cultural factors and their impact on the performance of multinational companies. Volum 7 issue 14.
Tan, W., & Chong, E. (n.d). International Journal of Project Management. Power distance in Singapore construction organizations.
https://www.austrade.gov.au/Australian/Export/Export-markets/Countries/Singapore/Doing-business
https://www.austrade.gov.au/australian/export
https://culturalatlas.sbs.com.au/singaporean-culture/singaporean-culture-business-culture#singaporean-culture-business-culture
https://www.todaytranslations.com/consultancy-services/business-culture-and-etiquette/doing-business-in-australia/
https://www.worldbusinessculture.com/country-profiles/australia/culture/business-dress-code/

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