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Country Commercial Guides for FY 2000: Singapore Report prepared by U.S. Embassy Singapore, released July 1999 Note*

Chapter IV. MARKETING U.S. PRODUCTS AND SERVICES

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.

Information On Typical Product Pricing Structures
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 about 7-10 percent. These mark-ups are approximate, and will vary widely, depending on the product and the contractual relationship in question.

Use of Agents and Distributors: Finding a Partner
Many American exporters use agents or distributors to serve the Singapore market and other markets in the rest of Southeast Asia. Finding prospective partners presents no problem. Singapore firms are aggressive when it comes to representing new products and usually respond enthusiastically to new opportunities. Most American companies that use U.S. & Foreign Commercial Service (USFCS Singapore) business programs in Singapore find several interested agents or distributors. USFCS Singapore offers a wide range of business programs and has an excellent record of success in introducing U.S. firms to the market.

Franchising
Franchising is growing in popularity. Many cash-rich Singaporean firms are looking for new growth opportunities and are interested in American franchise concepts. Franchisees usually buy franchise licenses for the Southeast Asian region and not for Singapore alone. Most franchisees finance their purchases of franchises through bank loans, personal savings or pooling resources from family members. See the "Best Prospects" section in Chapter V for details on the franchising sector in Singapore.

Direct Marketing
The direct marketing industry in Singapore began about 13 years ago and now includes direct mail, telemarketing and television sales. Direct marketing through television began five 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.

Joint Ventures/Licensing
Most Singapore companies are open to joint venture proposals, and many are interested in manufacturing under license. USFCS Singapore is active in matching American and Singapore firms for joint ventures not only in Singapore but also in the rest of Southeast Asia.

Steps to Establishing an Office
The Singapore Registry of Companies and Businesses publishes an excellent guide that walks 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. One 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 must obtain an employment pass from the Immigration Department.

Selling Factors and Techniques
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 product involved, but are comparable to the techniques used in any other sophisticated market.

Advertising and Trade Promotion
There are many specialized trade magazines in Singapore and scores of trade fairs that can be used to promote U.S. goods and services. The major English-language daily newspapers are the Straits Times and the Business Times. The leading business magazine is Singapore Business. The major Chinese daily is Lian He Zao Bao. Contact USFCS Singapore for a list of specialised trade magazines and trade fairs.

Pricing Product
Pricing is very competitive. Major department stores and retail chains offer fixed-price merchandise, while the smaller shops expect 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.

Sales Service/Customer Support
Good sales and customer support are vital in Singapore. The market is so price competitive that good sales support or customer service can make a big difference. Singapore distributors respond well to training on new products and if properly supported by the U.S. manufacturer will do a good job cultivating old customers and developing new ones.

Selling to the Government
U.S. firms generally find Singapore to be a receptive, open and lucrative market. The Singaporean government procurement system is considered by most American firms to be fair and transparent. Bidders must meet the specifications set out in the tender and offer a competitive price in order to be successful. Government procurement regulations are contained in Instruction Manual 3, available from the Ministry of Finance or through CS Singapore. The Singapore Government also advertises its tenders on their web-site page, http://app.internet.gov.sg/gitis/.

Protecting your Product from IPR Infringement
Enforcement of relevant copyright laws is left largely to private industry, so small U.S. firms are advised to join trade associations to protect their interests if they cannot afford to hire specialized Singaporean IPR firms. Large corporations and business associations such as the Business Software Alliance (BSA) and the Software and Information Industry Association (SIIA) spend large sums of money investigating and prosecuting software pirates in Singapore. The software piracy rate in Singapore was 52% in 1998 resulting in an estimated loss of $58.3 million in retail revenue.

Need for a Local Attorney
U.S. and other foreign law firms are not allowed to practice law in Singapore. Legal matters involving Singapore law must be handled by a local attorney. A list of local law firms is available through USFCS Singapore.

Performing Due Diligence
Anyone who wants to carry out a business in Singapore must register with the Registry of Companies and Businesses (RCB). U.S. firms can run a check on Singapore companies by accessing the RCB database. Dunn and Bradstreet Corporation (D&B) recently formed an alliance with the RCB to offer D&B's customers worldwide access to 250,000 active Singapore registered businesses via the internet at www.dnb.com.sg.