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| Republic
of Singapore |
| Marketing
and Distribution |
Market Characteristics
Singapore has an open economy with strong service and manufacturing
sectors and excellent international trading links derived from its
history. In applied technology, per capita output, investment and
labour discipline, Singapore has key attributes of a developed country.
Singapore's economy is based on free enterprise with strong government
participation and guidance.
Doing business with Singaporean importers is open and straightforward.
Product quality is important but prices must be competitive. Advertising
is an important element of marketing in Singapore and publications
such as Asian Retailer, Retgail Asia and the Straits Times which is
one of Singapore's daily newspapers, are commonly used by the trade
to promote brand name products.
The Singapore retail sector is well developed. Retail chains attempt
to exploit different market niches. Retailers and supermarkets generally
charge slotting or listing fees for shelf space. The supplier may
be expected to pay an extra discount in relation to the amount of
freezer or dry shelf-space needed.
Suppliers must also negotiate with the retailer on the retail sales
price. As a general rule, retail price margins range from 15-20 percent
for dry products and 25-35 percent for frozen products. Retailers
will also require that the supplier pay promotional fees. The normal
charge is S$330. The supplier is expected to absorb a price reduction
of 10-20 percent off the retail sales price.
Price, quality and service are the main selling factors in Singapore.
Prospective exporters to Singapore should be aware that competition
is strong and that buyers expect good after-sales service. Selling
techniques vary according to the industry or the product involved,
but are comparable to the techniques used in any other sophisticated
market.
There are many specialized trade magazines in Singapore and scores
of trade fairs that can be used to promote goods and services.
Pricing is very competitive. Major department stores and retail chains
offer fixed-price merchandise, while the smaller shops expect the
buyers to bargain. Hard bargaining is common in the commercial and
industrial sectors as well, where buyers usually want a discount and
vendors inflate their initial offers accordingly. Credit terms of
30-60-90 days are common. Buyers will often retain 10 percent of the
sales price for major electronic equipment purchases, until the vendor
has installed the machine and it is performing according to specifications.
Good sales and customer support are vital in Singapore. The market
is so competitive in terms of price, that good sales support or customer
service can make all the difference. Singapore distributors respond
well to training on new products and if properly supported by the
manufacturer, they will perform a good job cultivating old customers
and developing new ones.
Export firms generally find Singapore to be a receptive, open, and
lucrative market. The Singaporean government's procurement system
is considered by most firms to be fair and transparent. Bidders must
meet the specifications set out in the tender and offer the lowest
price in order to be successful. Government procurement regulations
are contained in Instruction Manual 3, which is available from the
Ministry of Finance.
More than 300 large and small trading firms import processed and pre-packaged
food products. Importers cum agents cum distributors bring in foreign
products. There are not many firms that act solely as agents or importers.
Significant portions of fruit imports are imported by large organizations
such as the Singapore Fruit Exchange. Importers of fruit, meat and
poultry also act as agents and distributors and often assist end-users
by helping to finance marketing efforts. Most fruits and meats are
sold at area hawker centres (food stall), which because of their low
overhead, allow Singaporeans to purchase these products at very reasonable
prices. Higher end products are sold through supermarkets and restaurant
outlets.
Distribution and Sales Channels
Singapore's distribution and sales channels are simple and direct.
Most consumer goods are imported by stocking distributors who resell
to retailers. Some goods are imported directly for sale in the importer's
own retail outlets. Depending on the type of product, importer mark-ups
range from 20-40 percent, while retail mark-ups are often more than
100 percent. Industrial goods are brought in by stocking distributors,
who add on at least 20 percent before sale, to end-users or by agents,
whose commissions generally run to about 7-10 percent.
Most exporters use agents or distributors to serve the Singapore market
and other markets in the rest of Southeast Asia. Finding prospective
partners is easy. Singapore firms are aggressive when it comes to
representing new products and usually respond enthusiastically to
new opportunities.
Franchising is growing in popularity. Many cash-rich Singaporean firms
looking for new growth opportunities are interested in the franchise
concept. Franchisees usually buy franchise licenses for the Southeast
Asia region and not just for Singapore alone. Most franchisees finance
their purchases of franchises through bank loans, personal savings
or pooling resources from family members.
The direct marketing industry in Singapore began about 12 years ago
and includes direct mail, telemarketing and television sales. Direct
marketing through television began four years ago and is growing very
fast. There are many creative consultants in Singapore, each employing
10-20 employees, who provide advice, market research, mailing lists,
printing and mailing services. Several companies provide telemarketing
services and are involved in direct marketing through television.
Typical products sold through direct marketing in Singapore include
consumer goods such as gifts, cosmetics, health supplements, stationery,
fitness equipment, household appliances, bags and accessories. Items
that cost less than US$ 50 are popular and prices rarely exceed US$
200 per item.
Most Singapore companies are open to joint venture proposals, and
many are interested in manufacturing under license.
The Singapore Registry of Companies and Businesses publish an excellent
guide that takes the first time registrant through the process of
establishing an office. The process takes about one day for a sole
proprietorship, while more complex business entities can take up to
six weeks and will require the assistance of lawyers and accountants
to help with incorporation documents.
A point to bear in mind is that registration of a company does not
automatically mean that expatriate staff can be assigned to Singapore.
Foreign staff will need to obtain an employment pass from the Immigration
Department. A local attorney must handle legal matters involving Singapore
law.
Singapore's Parliament passed a new Patent Law at the end of 1994,
which entered into force in February 1995. The new law replaced the
previous system whereby patent protection was accorded through registration
in Great Britain. The new law establishes patent registration in Singapore
and provides product protection for a 20-year term. The Singapore
Government recognized certain shortcomings in the law and amended
it in 1996 in order to make it more consistent with International
laws.
Singapore's Copyright Act Coverage is limited to reproduction, protection
and rights, with no coverage of rental protection and rights.
Enforcement of relevant copyright laws is left largely to the private
industry. Small firms are advised to join trade associations to protect
their interests, if they cannot afford to hire specialized Singaporean
IPE firms. Large corporations and business associations such as the
Business Software Alliance and the Software Publishers Association,
spend large sums of money investigating and prosecuting software pirates
in Singapore. Industry organizations estimate that 59 percent of all
software in Singapore is pirated.
The Registry of Trademarks and Patents administer Singapore's Trademark
Act. The Registry maintains a list of trademarks registered as distinctive
marks under the United Kingdom Trade Marks Act of 1938. The Act was
strengthened in March 1991 and now includes provisions for service
marks in keeping with worldwide trends.
The Official Secrets Act and the Internal Security Act protect all
Government trade secrets. The Law of Confidence protects investors'
commercially valuable proprietary information under common law. |
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