Retail & Lifestyle
Food and Beverage
In a small country like Singapore, shopping and eating are our national pastimes. Food is Singapore's social sustenance and our strength and creativity in this industry has made us a Food Hub.
The outlook for our soft drinks industry looks promising with value sales set to grow by 19% to 2010 in this dynamic sector thanks to the sustained innovation and marketing efforts of major industry players, such as Fraser & Neave, while a sustained economic performance and tourism levels will further aid growth.
Business conglomerate Fraser & Neave (F&N) has revealed that it is expecting record annual profits, after its six-month financials revealed that it had got the year off to a strong start. F&N, which announced this quarter that it was to set up a new real estate trust, confirmed that its flagship food and drink divisions continued to perform strongly. (Source: BMI).
Singapore has provided a reliable location for companies such as Asia Pacific Brewery, Cadbury Schweppes and Fuji Oil to set up innovation centres for new product development. Our commitment to science and innovation has brought about successful partnerships between food and specialties companies.
Our competitive advantage in our connectivity to the world and our extensive Free Trade Agreements (FTAs) has also become our bargaining chips in ensuring on-going investments.
The Singapore Manufacturers' Federation (SMa), formerly known as the Singapore Manufacturers' Association, was first established in 1932. Its main aim is to champion manufacturing and the Singapore manufacturing sector.
With a membership of over 2,800 corporate members ranging from MNCs to SMEs, SMa carries out a myriad of activities to enhance the competitive edge of its members. Its mission is to be a world-recognised manufacturing federation making a difference to its members.
Furnishing the world
Singapore-based furniture companies are taking aim at overseas markets
Like many traditional manufacturing industries, the Singapore furniture industry was facing structural challenges barely a decade ago. 'Few people were willing to work in the furniture industry then as compared to the electronics sector,' says Tan Li Lin of International Enterprise (IE) Singapore. 'This problem was exacerbated by the lack of available raw materials,' adds Tan, who is IE Singapore's Director, Lifestyle and Business Services.
The furniture industry is one of the oldest, and most established businesses in the country.
Most of them are small and medium-sized enterprises (SMEs), and family-run. The lack
of skilled and unskilled workers and rising costs have prompted companies to move their
manufacturing operations to neighbouring countries where fixed costs are lower and raw
materials more readily available.
The factories overseas are responsible for production, while the HQs in Singapore take charge of marketing, design, branding and product development. 'Local entrepreneurs are able to leverage the lower production costs and abundant raw materials there while
developing their Singapore headquarters into a centre of competence in knowledge-driven activities,' says Tan.
Neighbouring Malaysia, Vietnam and Indonesia may be the obvious choices for setting up manufacturing operations but some companies have opted for China. For example, a 350,000 sq m Singapore Furniture Industry Park has been set up in Kunshan, China, by the Singapore Furniture Industries Council.
Tan says regionalisation has not only enabled the local industry to survive, but has also allowed the players to carve a niche for themselves in the international arena.
Carving a niche
The industry has responded well to the call to regionalise, notes Tan.
Almost two thirds of the 172 local furniture manufacturers have set up subsidiary manufacturing plants outside Singapore.
According to Tan, such regionalization efforts are already paying off. 'It not only enabled the local industry to survive,
but it also allowed our Singapore furniture industry players to carve a niche for themselves in the international arena.'
The Singapore-run production facilities are able to provide prompt delivery and service, and at competitive prices. These factors are all 'crucial to the success of Singapore furniture products in the highly competitive global furniture market', Tan notes.
The furniture industry may not have as high a profile as the new, fast-growing sectors such as pharmaceuticals and electronics
but it is playing a key role in adding robustness and diversity to Singapore's economy.
Today, this industry has some 1,600 companies and employs around 12,000 workers, numbers that are not to be sniffed at.
The companies include manufacturers, wholesalers and retailers in furniture, furnishings and supporting industries, notes IE
Singapore. Together, the industry generated sales of US$2 billion ($1 approx US$0.63) in 2001 and manufacturing output of
close to $1 billion in the same period.
US$250 billion market
But obviously, the bigger market lies beyond tiny Singapore;
the global market is estimated at some US$250 billion, according to research institute CSIL Milano.
The industry is also the fastest growing among those that are not in the high-technology sector. Certainly,
Singapore companies have their sights set on the export market, the main ones being the US, Japan and Europe.
From Tan's perspective, the Singapore players have some strong assets.
For example, they have earned a strong reputation based on their ability to produce innovative, well designed and high-quality
furniture, which are widely accepted worldwide, she says.
Also, many Singapore manufacturers are experienced in the international markets. They have developed a wide range of products and styles to cater to both overseas and local markets, says Tan. The companies are also demonstrating versatility in their use of a wide variety of leather, metal and fabric materials, be it teak, rubberwood, oak, pine, birch or ash. To cater to the most discerning, they are also offering furniture that uses a blend of materials besides wood, such as leather and rattan.
In addition, 'the probability of default is a rarity in the Singapore furniture industry
and it is this high level of trust and reliability that has increased our local furniture's standing in the eyes of the world',
But Singapore furniture companies face a different set of challenges when entering
the international arena. 'On the one hand, in the high-end market, Singapore is competing with long-established European and
American manufacturers who are churning out high quality furniture with attractive original designs, using sophisticated
manufacturing and business models,' says Tan. 'On the other hand, in the mid- to lower-end markets, Singapore is facing
aggressive competition from emerging markets like China and Vietnam, who are leveraging their low-cost production to compete
based on low-pricing strategies.'
Not only is the competition stiff, the field is also crowded.
International buyers are spoilt for choice. This is an industry where price is often not the main determinant of whether a
piece of furniture gets sold. Aesthetics and other 'soft' elements influence buyers’ choices to a certain extent.
'Singapore companies have to constantly innovate and improve to be one up on the competition,' says Tan.
Nevertheless, there are many positive signs. After several years of stagnation,
there is a renewed interest in lifestyle and consumer spending, notes Tan. There is a continued growing demand by major countries
like the US and Europe, and new demand created by
developing giants like China, India and Russia. Today, Singapore companies have set up
commercial presence in more than 16 countries, including the US, Europe and Japan,
among others, to better service the players.
Afta and China
Singapore furniture makers are benefiting from developments on the geopolitical front
too. The Asean Free Trade Agreement, or Afta, has brought together a market of more than half a billion people.
Trade barriers are coming down, and tariffs — including those levied on furniture — are at zero, or close to zero, says Tan.
Afta has stimulated member countries to invest in one another. 'Many Singapore furniture companies have manufacturing facilities
in our neighbouring countries due to the proximity, lower costs and attractive investment policies,' says Tan.
China, which is 'instinctively' viewed as a threat not just by Singapore,
but also by the other Asean countries, should be seen as an opportunity for greater sales, rather than a competitor that
only undercuts, says Tan. 'As the Chinese domestic market opens up to
the world, there are tremendous opportunities for our local industries to sell to China,'
Again, at the international level, the path for furniture
makers is being smoothened. Under the China-Asean free trade agreement now in negotiations, by 2010, both sides
should have completed the abolishment of tariffs on merchandise goods, which include
furniture. Indeed, just like many other industries, for Singapore-based furniture companies, the world is their oyster.
Source: Beyond Singapore
The Singapore Furniture Industries Council (SFIC) was incorporated in 1981 as the official representative body for Singapore's furniture industry. It represents 95 percent of furniture manufacturers in Singapore, 65 per cent of whom have subsidiary manufacturing plants in the region, including China, Indonesia, Malaysia, Myanmar and Vietnam.
SFIC's core objective is to promote the interests of its members and to sustain and spearhead the growth of the Singapore furniture industry. SFIC also represents Singapore in the ASEAN Furniture Industries Council.