Fuelling Growth:

Why German Companies Should Choose ASEAN Markets, Specifically Singapore, for International Expansion

By Andre Stolz, Co-Founder & Managing Director of Budding Innovation

TL;DR

German companies looking to expand internationally should consider the ASEAN markets, with Singapore as a strategic hub due to its dynamic economy, favourable business environment, skilled workforce, and strong legal frameworks for IP protection. Budding Innovation is your partner in leveraging these advantages for successful market entry and growth.

Introduction

Fourteen years ago, I made the pivotal decision to move to Singapore, embarking on a journey that would irrevocably intertwine my destiny with the vibrant pulse of Southeast Asia. As a German expatriate, a business builder, a seasoned mentor for German Entrepreneurship and the Asia Lead for GERMANX, I have been at the forefront of bridging European innovation with Asian dynamism. My role has not only allowed me to foster cross-continental collaborations but has also deeply ingrained in me the intricacies of this diverse market.

Throughout my years here, I have had the privilege of guiding German businesses through the complex tapestry of ASEAN markets. My personal engagement with the local business ecosystem, from mentoring burgeoning startups to advising established corporations, adjusting their product-market-fit to hands-on supporting their go-to-market implementation has provided me with invaluable insights into the unique opportunities that Singapore and the wider region present.

This rich tapestry of experiences has cemented my belief in the untapped potential of ASEAN for German companies. In this article, I draw upon my extensive mentorship and hands-on experiences to unveil why Singapore is not just a market, but a gateway for German businesses aspiring to scale new heights in Asia.

The Asian Advantage: A Confluence of Opportunities

ASEAN – A Dynamic Market In recent years, the ASEAN market has positioned itself as a high-potential destination for international businesses. With its diverse consumer base and growing economies, it offers a plethora of opportunities for German companies looking to expand their footprint. By 2030, ASEAN's economy is expected to double from US$3 trillion in 2018 to US$6.6 trillion. In 2022, the bilateral trade volume between Singapore and Germany reached 14.7 billion euros. This robust figure underscores the depth of economic relations, with approximately 2200 German companies registered in Singapore, showcasing the country as a gateway to both the EU and the ASEAN region.

·      Strategic Geographical Location Singapore's strategic positioning in the heart of Southeast Asia provides German companies with unparalleled access to key markets. Its robust transportation and logistics infrastructure serves as a gateway to China, India, and ASEAN countries, making it an ideal launchpad for international ventures. Over 130,000 multinational companies have chosen Singapore as their regional headquarters, underscoring its role as a critical node in global commerce.

·      Business-friendly Environment Renowned for its business-friendly atmosphere, Singapore consistently ranks high for ease of doing business by the World Bank for over a decade. German companies benefit from efficient bureaucracy, straightforward incorporation processes, and supportive government policies fostering innovation and growth.

·      Robust Legal Framework and IP Protection Singapore's stringent protection of intellectual property rights instills confidence, ranking 2nd in Asia for IP protection and providing a secure environment for businesses.

·      Attractive Tax System With a corporate tax rate of 17%, significantly lower than the global average, and no capital gains tax, Singapore's tax incentives are among the most attractive worldwide.

·      Skilled Workforce Singapore boasts a multilingual, tech-savvy workforce, approximately 40% of whom hold a university degree, ensuring a highly skilled talent pool ready to meet the needs of German businesses.

·      Innovation and Technology Hub Singapore invests over 1.5% of its GDP in research and development, solidifying its position as a global innovation leader. It's the perfect environment for companies that are at the forefront of technological advancements.

·      Quality of Life Singapore's high quality of life, safety, cleanliness, excellent healthcare, and education systems make it an appealing location for German expatriates and their families.

Success Stories: German Companies Like Yours

DHL: A Case Study in Strategic Expansion

One exemplary German enterprise that has maximized Singapore’s strategic benefits is DHL, a global leader in logistics. Since establishing its presence in 1972, DHL has evolved from a door-to-door express delivery service to a significant player in Singapore's economic scene. The establishment of the South Asia Hub in 2016 marked a pivotal expansion, reinforcing Singapore’s role as a central node in DHL's regional strategy. This move has been quantified by a doubling of DHL's air cargo volume at Changi Airport in recent years, a testament to the hub’s operational success.

Christopher Ong, Managing Director of DHL Express Singapore, reflects on this journey: 'Singapore’s exceptional connectivity, cosmopolitan culture, and robust governance have been instrumental in our growth. It's an exemplary launchpad for German Mittelstand seeking to broaden their horizons. The blend of cultural diversity, political stability, and talent availability here makes Singapore an ideal starting point for German companies aiming to penetrate the Asian market.'

Looking ahead, DHL continues to commit to innovation, local integration, and contributing to Singapore’s stature as a global logistics hub. Their story stands as a powerful model for German businesses contemplating a similar passage into SEA."

BMW Group Asia: Steering Success in Singapore

Since establishing its regional headquarters in Singapore in 1985, BMW Group Asia has been steering a course of success in the SEA region. The office oversees operations across 14 diverse markets, encompassing South-east Asia, South Asia, and the Pan Pacific Islands, driving the growth of both the BMW and Mini brands.

However, Singapore's role in BMW's strategy extends beyond sales; it acts as a catalyst for business innovation and a strategic nexus for vital corporate operations, including financial services and treasury functions. A spokesperson for BMW Group Asia remarked on the strategic importance of Singapore: 'The conducive business environment and strategic locale of Singapore serve as an unparalleled incubator for our markets across the region. This has enabled us not just to manage but also to foster growth and innovation for the BMW and Mini brands.'

Under Singapore’s nurturing business climate, BMW has accelerated its regional financial services, benefiting from the city-state’s robust financial ecosystem and its position as a leading global financial hub. The brand has also leveraged Singapore's advanced digital infrastructure to drive transformation in automotive finance and customer service excellence.

Looking forward, BMW Group Asia is committed to further enhancing its regional operations, leveraging Singapore's dynamic economic landscape, and harnessing the potential of emerging markets in Asia. The company's journey from a regional office to a cornerstone of BMW's global strategy underscores the advantages Singapore offers to German enterprises looking to expand in SEA."

Schaeffler:

Schaeffler has been a part of Singapore's landscape since 1975 and serves as the regional headquarters for the Asia Pacific region since 2014. Schaeffler's Singaporean base is not just an operational hub; it is a significant part of the company's transformation and growth in the region. With over 6,000 employees, Schaeffler has a substantial presence across nine production plants and R&D facilities in eight locations throughout the Asia Pacific. The Singapore location also boasts a certified Schaeffler Technology Center, which is part of the Global Technology Network that connects engineering and development hubs worldwide. This presence enables rapid local implementation of their comprehensive engineering and service knowledge.

Additionally, Schaeffler Aerospace Singapore Pte. Ltd. was established in 2015 as the only fully certified aviation bearing reconditioning facility in Asia, providing diagnostics and bearing reconditioning services to help aviation customers maintain high system reliability and lower lifecycle costs. The company has also collaborated with Nanyang Technological University to establish the Schaeffler Hub for Advanced Research (SHARE at NTU), an innovation lab that underscores Schaeffler’s commitment to pioneering research and development within the university's ecosystem.

These details about Schaeffler highlight the company's integration into the local economy, its commitment to innovation, and its strategic use of Singapore's business-friendly environment to foster growth and expand its influence across the Asia Pacific region.

Other companies:

I see companies like SAP and Bosch continually expanding throughout the region. Whether it has been to sell high-quality products, benefit from low-cost manufacturing, or take advantage of the incredible potential the APAC market has to offer.

Budding Innovation: Your Strategic Ally for Expansion

About Budding Innovation Budding Innovation (BI) is a Singapore headquartered Venture & Business Builder, and supports corporations with its consulting & implementation services to develop and deliver innovative in-market solutions. BI works to understand, fore- & back-cast the impact of trends, and visualize forward thinking concepts & business opportunities. We use these insights to define bespoke interventions, and develop fitting solutions that enable corporations to deliver winning innovations and future-proofed & resilient roadmaps. BI was founded with the mission to be more than a consultancy: BI is your strategically, positioned partner to support companies in their expansion journey into the dynamic ASEAN market. Based on my own experiences in global business and the opportunities I witnessed first-hand in Singapore, with a unique vision at the intersection of multinationals and start-ups, BI offers unparalleled expertise realizing the international aspirations of our clients. From deep domain expertise to consumer & market-focused strategies, BI is dedicated to ensuring German businesses can maximize the ASEAN opportunity.

Budding Innovation's Offerings: BI is equipped to facilitate every aspect of your expansion needs:

·      Opportunity Assessment & Market Entry: BI facilitates market evaluation, product-market fit adaptation, entity setup, and go-to-market strategy, allowing you to focus on your core business.

·      Venture Building: BI supports startup development, scouting, MVP development, incubation, acceleration, and joint venture creation, all without the need for internal hiring or resources.

·      Strategic Foresight: BI looks after your future potential, and work to alter & evolve it to make it more attractive, valuable, competitive, profitable, etc. or whichever criteria you assign to it.

Impactful Moments: There's a particular story that encapsulates our impact: a European foodtech startup looking to navigate the complex SEA market. With BI's guidance, they not only established a foothold but became a leading innovator in their field. Our involvement transcended traditional consultancy—we became an integral part of their team, and together we crafted a strategy that turned potential into success.

Conclusion: A Gateway to Success

My passion for fostering growth and innovation is deeply rooted in the belief that with the right guidance, international companies can not only enter but excel in the ASEAN markets. It's a conviction born from the success stories I've helped shape, and a journey I'm eager to continue with future partners. Let’s embark on this path to success together.

Take the Next Step

Ready to explore the opportunities that Singapore offers? Contact Andre Stolz, Co-Founder & Managing Director at Budding Innovation, for a personalized consultation. Reach out to me via andre.stolz@budinno.com, and let's craft your success story in Asia. Together, we can build your success story in Asia.

Let's Discuss

Have you considered international expansion, or are you currently operating in multiple countries? Share your experiences and thoughts on the potential of the ASEAN market. Together, we can navigate this journey to growth.