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The importance to SMEs of being focused; Spring S’pore urges SMEs to specialise, and boost tie-ups with German SMEs

The importance to SMEs of being focused

Spring S’pore urges SMEs to specialise, and boost tie-ups with German SMEs

The Business Times – June 20, 2014
By: MINDY TAN

Mr Tan: ‘Find your own unique selling proposition and focus on that.’ – PHOTO: ARTHUR LEE

AT a factory that specialises in the manufacture of glass lenses in Germany, Spring Singapore deputy chief executive Ted Tan’s simple question – why don’t you outsource this to Singapore? – was met with a surprising answer.

The head of the family- run business or mittelstand – the German equivalent of a small and medium enterprise (SME) – had approached various companies in Singapore but found that the costs were too high.

“It’s quite surprising, right?” asked Mr Tan. “Then I realised that they have one operator looking after three very sophisticated machines. And because it’s highly automated, they are highly productive because the machines run almost 24 hours. In Singapore, we probably have three persons operating one machine.”

One of the key takeaways from years of collaborating with German companies for the German-Singaporean Business Forum (GSBF) is that the differentiating factor between mittelstand and Singapore SMEs is focus, said Mr Tan.

“When you compare German and Singaporean companies, there are some differences in the way we operate. They are very focused on niche capabilities . . . and develop very deep capabilities within the company,” he said.

While local SMEs try to do everything, German companies are focused on deepening their competitive advantage in order to allow them to harness their full potential. This specialisation not only increases their productivity, it also means that they are the best at what they do.

Spring Singapore has since been trotting out this message to Singapore SMEs.

“So we challenge companies: are you really good at doing all these things? What are your main revenue contributors? Our job is to help them focus; out of these 10 things, it may actually be two or three things which contribute 80 per cent of the company’s revenue,” said Mr Tan.

“SMEs are very small, so they don’t have the depth of pocket or manpower to do a lot of things. So find your own unique selling proposition and focus on that,” he said.

It is also imperative that companies upgrade their capabilities and technology. This includes hiring people who are operationally suited for the job.

“As we continue to build master craftsmen (polytechnic and ITE students) and deepen their expertise, I think companies must realise that (they should) pay for skills instead of paying for just paper qualifications,” said Mr Tan.

This same focus has been implemented in the way the GSBF is run. Since 2008, the forum has shifted away from its general focus to target three main sectors – medical technology, precision engineering, and clean technology – which were identified as sectors with strong growth potential for both Germany and Singapore.

“It has resulted in a much more focused collaboration between Singaporean and German companies because then we have people from the same three sectors coming together over the last few years establishing potential collaboration platforms,” said Mr Tan.

A number of successful partnerships have since been forged. For instance, Environmental Dynamics International (EDI) Asia, which specialises in wastewater treatment, inked a partnership agreement with German company Biolak Technology to represent their biogas technology in South-east Asia. This strengthens EDI’s product offering and at the same time enlarges Biolak’s technology footprint in Asia.

Similarly, Singaporean company T.Ware, which specialises in wearable technology, will start product trials for its T.Jacket, with two German autism centres. The T.Jacket is an app-controlled smart jacket that helps to calm a wearer and keeps the person focused by “hugging” them.

Over 50 business leaders from 27 Singaporean SMEs attended the bi-annual GSBF in Germany this year. It is the largest delegation of SMEs ever sent, and they benefited from a series of company visits, business matching and networking seminars to enhance collaborations with German counterparts.

 

 

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About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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