Reflecting on Singapore

I’ve noticed in the weeks since our return from Asia that Singapore gets a lot of exposure in the U.S. press, particularly The Wall Street Journal.  Why is that, I’ve been wondering?  Singapore certainly has grown in economic clout but the country is the size of St. Louis for Pete’s sake. It’s too small to ever become a world power, politically or millitarily speaking.

But there’s so much that’s right about Singapore.  They plan for the long term. They’re investing in infrastructure, they’re working to diversify their economy, and they’ve accomplished a 100% literacy rate. You can see the intersection of economic, social and political systems everywhere you look.  It’s clear they’ve got a master plan in which each leg of the stool is critical in and of itself, and also critical as part of the bigger picture.

Not only do they tolerate their multi-cultural identity, they protect and celebrate it. The quality of life in Singapore is remarkable: it’s free from crime and drugs, it’s clean and beautiful, unemployment is low, and there are plenty of sporting and cultural events to enrich peoples’ lives. Everything they’ve done makes Singapore an attractive place to live and do business.

Sure, there are trade-offs. The price of this life includes fewer individual freedoms, more rules and restrictions, and a press corp controlled by the government. But the Singaporeans we talked to (both native and ex pat) seem happy enough with that bargain.

Perhaps the stories about illegal gum chewing and caning live so large in our imaginations because they’re the only chinks in the armor we can find?

More on BASF

Some additional highlights from BASF:

  • They are moving into the West, primarily because the Chinese government has determined that the East has enough economic development.
  • Talent acquisition (and retention) is a big issue for them.  Multinationals used to have an attractive value proposition for employees (ability to move up, travel the world, etc.), but now so many Chinese companies are multinational that the competition for talent is much more intense.  The trappings of hierarchy–like the size of your office, whether there’s a window, the number of people you manage, and your title–are really important to young workers. Our host told a funny story of being asked to change the title of a position from Junior Chemist to Assistant Chemist because no one wants to a be a junior anything in China.
  • There’s so much opportunity in China that it’s easy for them to lose focus by chasing every good idea.  Keeping a strategic focus is harder here!
  • They see the following segments as key for their growth:  construction, packaging, paint and coatings, pharmaceuticals, food and agriculture, mining, and automotive.
  • They use the German concept of “Verbund” to bring production, technology, sales and customer service, and people management together in “smart integration.”
  • They’re building a beautiful new Asian Innovation Campus on the site of their current production facility near the shipyards in Shanghai.  This will bring all the scientists from various divisions together into one facility.  They hope this will lead to more cross-pollination of ideas.

Goodrich and Technetics: two different job shops

On our last day in Singapore, (which was, admittedly, a few days ago) we visited two different types of job shops.

Goodrich, which is headquartered in Charlotte, has a unit near the Singapore airport that specializes in the repair and maintenance of different parts of commercial airplanes.  They fix the casings that line the airplane’s engines, they upfit small items like the cabin lighting, and they maintain all the inflatables–like the life rafts and the ramps that passengers use if the airplane crashes in the ocean.

It’s a high margin business–especially for things like the inflatables that must be serviced every three years whether they need it or not.  We saw a team of workers folding a ramp to go back into its casing.  It was like a giant origami operation.  James said, “I want them to pack my bags tonight!”

According to the guys in our class who are in manufacturing, the Goodrich operation was extremely clean.

Later in the day at Technetics, a unit of Charlotte-based EnPro Industries, we saw a manufacturing plant on a smaller scale.  Our classmate Joe is an executive at EnPro and the Technetics team really treated us to a VIP tour and reception.

Technetics makes a particular type of pipe fitting that helps seal two pieces.  It looks something like a Slinky.  Like Goodrich, there was no assembly line because each job is different and based upon the customer’s specs.

Recently EnPro had moved one of its US employees to Singapore to become director of business development for Asia.  When asked about how they handle pricing, Brad said you need to set your pricing for the globe and then figure out where to build your product so that your margins make sense.

He also mentioned that the U.S. Embassy team has been instrumental is in helping American businesses figure out how to do business in Southeast Asia.  A recent trade mission to Vietnam was really informative, for instance.  It was great to hear about our government being helpful!

This business was located in a sort of multi-story “apartment complex” for small manufacturers.  We drove up a circular ramp to the fifth floor.  Each floor of the building is leased to smaller businesses that don’t need huge amounts of space.

China as “yesterday’s news”?

According to our host at DuPont in Singapore, (Peter, an expat from Australia who’s in charge of their Asia-Pacific marketing and business development), everyone doing business in China grapples with intellectual property protection.  Sometimes DuPont will find counterfeits of its products that are still in their development pipeline!

Think of it:  the counterfeiters are so sophisticated they can duplicate products that haven’t even launched yet.  Sometimes the packaging mimics the real thing but the product itself is way off.  And sometimes the packaging is wrong but chemically speaking, the product is a very close match.  That seems to offer some clues about who leaked what.

He also said China still has a unique value proposition for western businesses, but it’s “yesterday’s news” in terms of emerging market upside.

Places like Cambodia, Myanmar and Indonesia are where it’s at now.  He’d just returned from Myanmar, where DuPont is looking at building a new plant.  Dr. Berry pointed out that the West is going to need to figure out how to do business in Muslim countries.

 

A “wow” visit to ZPMC

Yesterday’s visit to ZPMC was a standout.  Talk about thinking big… they make the cranes that unload container ships at ports around the world (as well as other heavy-duty steel structures like bridges and oil drilling platforms).

Cranes in production

It’s a government-owned company that’s risen to 70% market share in just 20 years of existence.  I suspect this is due in part to their state subsidies, but they’ve also been hugely innovative.  With more that 2,000 design engineers, their intellectual capital (and thus capacity for innovation) evidently dwarfs their competition. They are very proud of this.

Their gargantuan manufacturing facility is on an island outside of Shanghai with more than 3 miles of river coastline. They build and erect the cranes right here, then they use their own fleet of 26 ships to deliver them. They roll the fully-functional cranes off the ships at their destinations–no extra time needed to assemble them at the customer site.  This is a major process innovation that gives them an edge in terms of pricing and delivery time.

One of their special ships carrying five cranes--it looks like it would sink in a storm (to me, at least) but it's specially engineered for the purpose and they haven't lost one yet.

Helen, Rasheen, Rafat and me

Impressions of Shanghai

Some early impressions of Shanghai:

  • It’s enormous–overwhelmingly so.  It’s the size of five Manhattans, with more than 19 million people.
  • Everywhere you look there are skyscrapers as far as the eye can see.  It gives new meaning to the “concrete jungle.”
  • In the 1980s there were three buildings over 40 stories tall.  Today there are more than 4,000.
  • And they’re still building!  We noticed that when they build residential towers they don’t just build one, they build five or ten at a time.

A partial view from the 100th floor observatory at the Shanghai World Financial Center. Imagine this view extending in every direction and that will give you a sense of scale.

 

A view from another angle; you can see more of the smog

  • Our tour guide said the omnipresent haze was a mixture of fog from the ocean and smog.  It reminds me of Los Angelinos calling their smog “the marine layer.” Ha ha! I’m not convinced fog has much to do with it.
  • We’ve seen far more mopeds and bikes here in Shanghai than in Singapore. People load up their bikes with side cars or trailers and it’s amazing how much they can carry on those things.
  • They have elevated freeways here with flower boxes along the edges.  They also have great digital signs that use a combination of green, yellow and red to show drivers what they can expect in terms of traffic.
  • Speaking of driving, it’s insane.  Yesterday we were on a three-lane road with two-way traffic.  Use of the middle lane was completely random–sometimes our bus would occupy it, sometimes the oncoming traffic would.  The lane markings were purely decorative.  Drivers swerved in and out of lanes, played chicken with oncoming cars, etc.  Our guide said Shanghai drivers need, “Good horn, good brakes, and good luck.”
  • It’s an ambitious city and an economic powerhouse.  The growth in the last 20 years is phenomenal but it’s different from Singapore.  Singapore was all about the master plan.  Everything they’ve accomplished has been conceptualized, strategized and executed with intent and purpose.  In Shanghai it somehow feels more organic.  It’s just this explosion of growth and it sort of feels like the city is just holding on for dear life while it all unfolds around them.

Gateway to Asia

We’ve heard Singapore called “Asia 101 for Americans” and the “Gateway to Asia” because it is often the jumping off point for American and European companies that want to take advantage of the growth in Asian markets.  From Singapore you can get anywhere in Asia in less than seven hours, and the government here makes it attractive to foreign investors because the whole process of doing business so easy.

One of the young Americans from Enpro said they considered both Shanghai and Singapore once they decided to get serious about growing their Asian customer base.  In the end Singapore won due to:

  • Intellectual property protection
  • Free trade with the U.S.
  • Stable labor force
  • Stable government
  • No language barrier
  • Easier adjustment for expat families
  • And just an overall terrific quality of life
P.S. In Shanghai yesterday we met with the German chemical company BASF.  The head of its innovation lab said “Singapore is marvelous but it’s not really Asia, you know. It’s a blend of many other things.”  Just another echo of what we heard and saw firsthand in Singapore.

Visiting the Embassy in Singapore

We were briefed by several foreign service officers at the US Embassy, including a public affairs guy, the deputy chief and an economics/trade expert.  (Earlier today in the airport Helen showed me a picture of our group on their Facebook page but we’re in Shanghai now and I can’t get onto Facebook to find it!).

According to the deputy chief, Singapore tops nearly every ranking scheme you can think of:  government transparency, lack of government corruption, literacy, education, investment in infrastructure, low crime, home ownership, low infant mortality, millionaires per capita, etc.  He told us he had spent the bulk of his career in Africa, most recently in Uganda, and “Singapore is about as far from Uganda as one can get, in every regard.”

The one exception is freedom of the press, where it ranks 135th in the world.  But there are examples of improvement, including the fact that The Straights Times (the government run newspaper) actually had profiles of opposition candidates during last year’s elections—a first.

Our group posed a lot of questions about law and order, and specifically the infamous caning of an American back in the early 1990s.  It’s fascinating that a 20-year-old episode still looms so large in our imaginations.  That’s what they call bad PR.  Or maybe it’s very good PR.  I guess it depends on your point of view.

The subject of prostitution came up.  It’s legal in Singapore and highly regulated.  It’s existence poses a significant point of disagreement between the US and Singaporean governments, primarily due to the implications of human trafficking.  I’d be willing to bet most of the prostitutes are imported from poorer nations around Southeast Asia.

At the end of our visit a relatively new foreign service officer gave a pitch on life as a diplomat.  That sure piqued a lot of imaginations! The problem is this:  Singapore is about the best post you can get and even if you’re lucky enough to get it, you’re only there for two years.

“Our gift to the world”

Our first “official” visit of the trip was to the central branch of the Singapore National Library, 15 stories of gleaming floor-to-ceiling glass windows overlooking the city’s tree canopy and surrounding neighborhoods.

As Dr. Berry said, “This is a testament to Singapore’s investment in it’s intellectual infrastructure.”  With branches all over the country (“A branch within walking distance of every citizen” was their plan), the flagship is big, bright, airy and modern.  It makes a visit to the library quite appealing.

The expansion of the library system over the past decade or so was part of Singapore’s plan to “move up the value chain” to become more of a knowledge-based economy.  We learned that literacy in Singapore is almost 100%.  Imagine that.

The book checkout system uses a great technology that allows you to simply place the books you want to check out (even several books in a stack) on a special reader that picks up the data from a radio chip implanted in each book.  You simply swipe your library card, place the books on the mat, and voila!

They’ve been so successful with the advancement of their library system that now the Singaporeans consult with libraries around the globe.  Said one of the librarians, “It’s our gift to the world.”

A view from the 10th floor of the library

One of the reading rooms

 

A special reading room with pre-WWII materials