SMESpotlight

Tapping growth and changes in Guangdong

IE Singapore's Ms April Oh said: "We want our firms to partner the Chinese, and co-create and sell solutions to manufacturers."
IE Singapore's Ms April Oh said: "We want our firms to partner the Chinese, and co-create and sell solutions to manufacturers."PHOTO: AZMI ATHNI FOR THE STRAITS TIMES

S'pore firms can gain by seizing opportunities, offering solutions

The explosive growth of the southern Chinese province of Guangdong offers opportunities for local firms in manufacturing services and technology, said government trade agency International Enterprise (IE) Singapore.
 

Guangdong is one of the largest manufacturing bases in China, with capital Guangzhou and economic hub Shenzhen particularly prosperous.

It has moved towards innovation over the years to drive economic restructuring, noted Guangzhou-based Ms April Oh, regional director for South China at IE Singapore.

Firms from Singapore can complement these changes by offering advanced manufacturing and intellectual property (IP) services while hardware start-ups can tap Shenzhen's capabilities to grow, she told The Straits Times in a recent interview.

Ms Oh noted that Guangdong is facing challenges in upgrading its manufacturing facilities and firms have said productivity "is probably only a quarter of what developed countries can achieve".

IE Singapore noted the Guangdong government plans to spend US$143 billion (S$195 billion) supporting the robotics, advanced manufacturing and modern services industries.

Here is where Singapore firms can jump in to provide solutions. The Singapore Manufacturing Innovation Centre - in what is called the Sino-Singapore Guangzhou Knowledge City - was set up in Guangzhou in August for that purpose.

SUPPORTING FIRMS

We've a two-pronged approach - first to help Singapore professional services firms gain market access to Guangdong, and to bring them to Asean by registering their patents through Singapore.

MS APRIL OH, regional director for South China at IE Singapore.

Local tech firms such as motion control specialist Akribis Systems and SESTO Robotics have already opened offices there.

Ms Oh said: "We want our firms to partner the Chinese, and co-create and sell solutions to manufacturers. The physical location is important so firms are plugged into the market and are able to provide after-sales services and such."

She noted that more money is being pumped into research and development (R&D) in Guangdong - R&D is now 2.58 per cent of its gross domestic product (GDP), compared with 1.9 per cent in 2013.

Also, low-end manufacturing is being relocated owing to increasing costs, especially in the Pearl River Delta region "where low-end textile, food manufactures are being shifted further out in Guangdong or even to nearby provinces", she said.

With such upheaval, China is also paying more attention when it comes to intellectual property. Guangdong is ranked first in terms of international patent application, for instance, noted Ms Oh.

IE Singapore is developing an ecosystem in the province through what is called the IP reform pilot zone in the Sino-Singapore Guangzhou Knowledge City. "We feel the ground is sweet right now, and want to do more with Guangdong in terms of IP," noted Ms Oh.

"We've a two-pronged approach - first to help Singapore professional services firms gain market access to Guangdong, and to bring them to Asean by registering their patents through Singapore."

Ms Oh said international IP filings from Chinese firms in Guangdong and Asean "don't match the high volume of trade and investment".

And local hardware start-ups will be inspired in Shenzhen, dubbed the Silicon Valley for hardware innovation, where 4.12 per cent of the city's GDP goes in R&D and the average population age is 32 years, said Ms Oh.

"Shenzhen for the past decade has been the factory of the world, and because of that, they've developed a complete ecosystem of product development, enablers, intermediaries and hardware start-ups," she added. "This complete supply chain has helped support demand for the electronics industry."

Chinese drone maker DJI was one of those which benefited and the city has also attracted Singapore start-ups like Igloohome, which specialises in smart digital locks.

The firm entered Shenzhen in May, and 80 per cent of its hardware R&D is in Shenzhen. Ms Oh said being there means "prototypes are out in three to six months for a fraction of the time and cost in Singapore".

Igloohome co-founder Wang Yue said: "This is called Shenzhen speed due to its full and mature supply chain. You can buy most sensors in Shenzhen within an hour, but if a sensor is not available in Singapore, we've to book online and wait three to five weeks, which increases cost and time."

Ms Oh noted: "We're happy to see Singapore companies are realising such opportunities in Shenzhen, and IE is creating more connection to accelerators and such so any firm can just plug into the systems there, and run with their products."

A version of this article appeared in the print edition of The Straits Times on October 04, 2017, with the headline 'Tapping growth and changes in Guangdong'. Print Edition | Subscribe