Foreign-owned retailers likely to continue entering the Singapore market, analysts say

SINGAPORE: Foreign-owned retailers are likely to continue entering the Singapore market, analysts said, after official figures on the origin of retail businesses in the city-state sparked concerns from netizens that the smaller number of foreign-owned entities, especially from China, could be big brands with multiple outlets, jostling local businesses. 

Although other commenters online warned that high footfall from popular foreign chains like Chagee, Luckin Coffee, or Scarlett supermarket could give the impression that they’re edging out local operators.

Singapore Management University (SMU) associate business professor Chen Liang told South China Morning Post’s (SCMP’s) This Week in Asia that he expects the growth of mainland Chinese food and beverage outlets in Singapore to continue.

Analysts said that more foreign competition can encourage local businesses to improve their services, efficiency and value for consumers, however, the downside is it may also raise rents and put pressure on small local businesses with lower margins.

This pressure is already being felt by hawkers and coffeeshop owners in the city-state struggling with “paper thin” margins due to rental hikes and rising cost of living. Some even urged their fellow Singaporeans to “do more” to support local businesses amid a wave of closures in the food and beverage industry.

Another business professor from the University of Michigan added that the presence of big brands who are able to tolerate losses better may discourage entrepreneurship altogether, as retail is the most common entry to starting a business.

The discussion came after Singapore Trade and Industry Minister Gan Kim Yong, in a parliamentary response to People’s Action Party MP Valerie Lee on the statistics of the origin of retail shops operating in Singapore, shared that as of Jan 8, Singapore residents, comprising both Singapore citizens and permanent residents, owned 89.7 per cent, or 40,931, of registered retail businesses, while Chinese nationals owned 3 per cent, or 1,390 businesses.

This was followed by Malaysians and Indians at about 0.9 per cent each. The remaining proportion were owned by other foreign business entities including those from Vietnam, the United Kingdom, Japan, Australia, Indonesia, United States, and the Republic of Korea.

Business ownership was based on shareholders who collectively hold more than 50 per cent of shares, or nationality for individual owners. For corporate shareholders, ownership was determined by place of incorporation.

Mr Chen said the number of business entities alone cannot explain the scale and presence of these businesses. He noted that monitoring prices and inflation in sectors where foreign chains have expanded would provide a clearer picture of whether competition is tightening. /TISG

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