The Singapore Method
By Enrique Sánchez
A few years ago, when Singapore became independent from Malaysia, it had to decide what kind of future it wanted as a nation. It had the option of competing with its neighbours as a country which was more orientated to the services sector, but it had to cope with an underdeveloped society with a very low level of education. So, the "Singapore Method" was created under the slogan "schools that think, a nation that learns". A state educational model based on the ability to solve problems that had to provide solutions for a manufacturing country. In other words, they sought to move ahead by thinking. A system that Spain has adopted in some schools with great results. And that companies too should be orientated towards. They must also be aware of the export opportunities offered by Singapore. Spanish producers are working on it. They are analysing the situation, studying the possibilities of selling there and how to do so. Because Singapore is more than just a modern country that is constantly growing. It is also another gateway to the Asian market.With 5.5 million inhabitants, the equivalent to that of Barcelona and its metropolitan area, the population of Singapore now has a medium-high level of purchasing power. And it is keenly aware that it has to import 90% of its food. Most of these products arrive from Malaysia, Japan, Australia and New Zealand. The United States and Canada have already seen market opportunities in the smallest of the South-east Asian countries. They have also been detected by European countries such as France and Italy, whose marketing has consolidated their position. However, Spanish companies have now noticed the desirability of exporting to Singapore. According to the World Bank, Spain is the 29th country on its list of imports.
Proof of this is the fact that Spanish shipments have gone from €4 million in 2014 to €9.5 million in 2017, mainly based on fruit. In 2018, according to the latest official data from the Directorate General of Customs, Spain exported more than 8,000 metric tons of fruit and vegetables to Singapore. A figure that represents more than €14.5 million. The numbers are similar, but they have been growing little by little over the past four seasons. The fruits most exported to Singapore are persimmons, citrus fruit, stone and pip-fruit. The autonomous regions that export most to Singapore are Andalusia, Valencia and Catalonia .
The main fruit exports were persimmons, which amounted to €1.9 million; blueberries, €1 million; lemons, €945,917; peaches, €937,035; and plums, €811,292.
Exports from the European Union to Singapore follow a similar trend. Over the last four years, they have grown by more than 6% and their value exceeds €35 million. In this case, the main fruits exported were apples, kiwis, persimmons and, in the case of vegetables, onions.
What the ICEX says
The latest report from the Spanish Institute for Foreign Trade (ICEX) on food in Singapore highlights several facts about a market worth almost €100 million, of which 32.1% are fruits and vegetables. That is the figure that needs to be won over by Spanish products. The average Singaporean is increasingly concerned about food safety, although Singaporeans do not usually buy much organic food. Only 27% of them buy organic food once a week or more, while 17% say they never to do so. Spanish products have a good image although it lags that of French, Italian and even Australian brands. All of them are behind those of the front runners, which are from Japan or Malaysia. The arrival of Spanish restaurants has contributed to the positive image of Spanish products. Today, it is possible to go out to lunch or dinner in 27 establishments run by Spaniards in the country.
Another aspect to highlight is the creation of the HPB, the Health Promotion Board of Singapore. It is an institution which is dependent on the Ministry of Health and is dedicated to promoting Health and the prevention of diseases. Thus, it encourages healthy eating. A few years ago, it launched the Healthier Choice label, which has been widely accepted by consumers on supermarket shelves and which has been growing by more than 9% each year.
For now, we must accept the fact that it is very difficult to find Spanish products on the shelves of the country’s main retailers. The largest of them is Zenxin Agri Organic Food Pte. Ltd. A chain of supermarkets that sells high quality products, similar to those we know here as premium. Another difference concerns the high prices which are between 100 and 400% of what they could be sold for in Spain. For example, cherry tomatoes from the European Union, which is what they are labelled as, cost 28 Singaporean dollars per kilo in this supermarket chain, equal to €18.40.
In Singapore there are two wholesale import centres, Pasir Panjang and Pandan Loop, where imported products are stored. Although it is increasingly common for supermarket chains to buy directly from foreign exporters. A situation that opens a window of opportunity for Spanish companies, as explained by Ramón Pascual, sales director of Summer Fruit, based in Fraga, Huesca. He points out that they export 5% of what they produce to Singapore and that each year exports are growing.
The ICEX report contains several recommendations for entering the Singaporean market. Among them, he points out that it is necessary to offer reasonable prices because "expatriates and millennials" are willing to pay more for healthier options. It is also important, he says, to reduce the environmental footprint of production and to use e-commerce to contact local importers. All this information appears in "The organic products market in Singapore", a report by the Economic and Commercial Office of the Spanish Embassy in Singapore from 2018 by Lourdes Marín Sánchez.
For some years now, Spanish persimmons have had a strong foothold in the Singaporean market. And the same is true, with similar figures, of exports to other nearby countries such as Hong Kong. Last year, the Spanish persimmon association sold more than two million kilos in Singapore and three million kilos in Hong Kong. The association asserts that this product "goes up every year, because they like them." At the moment, only 2% or 3% of total Spanish production goes there. Production that this year could be close to 500 million kilos in the field.
It takes 24 or 25 days to get to Singapore from their port of departure. Travelling in large refrigerated containers at a temperature of only one degree. "It's the perfect transit time and also the most economical trade outlet. Their price is 25 cents per kilo." Spanish persimmons have scarcely any competition in that area of South-east Asia. The association goes on, "Any competition we might meet as regards persimmons is likely to come from South Korea, but our variety is bigger, redder and brighter, which means it is a different product. There are also some from Italy but the big world producer, which is China, consumes its entire production domestically." Their entry into Singapore was not easy but now they have good contacts with Singaporean wholesalers who, on occasion, "ask us for persimmons right now and we have to send them by airfreight. In this case, they arrive in two days and the price is more than €1.70 per kilo."
Saturn peaches and cherries go by plane
Selling products 15 thousand kilometres away is not easy. Especially as regards fruit and vegetables that must reach their destination in the best possible condition. Fruits de Ponent in Catalonia has been exporting Saturn peaches to Singapore. However, in the last two seasons, we weren’t able to do it due to the transit time, a formula in which the products travel by plane which makes them more expensive. "We are prepared to go to Singapore, we have done so, and we do not rule out doing so in the future", says Santi Bonet, head of communications. Their Saturn peaches are objects of desire "for certain customers who want to place this fruit on their premium shelves". Summer Fruit's Saturn peaches and cherries also travel by plane from Madrid to Singapore. They are aware that if they want to reach these countries, the only export route is by air, because "the maritime option is out of the question due to the delivery of the product taking a minimum of 30 days and our fruits won’t stand that", concludes Bonet.
Citrus fruit does travel by boat, although Singapore is a very small market and we do not exceed 50 containers a year", says the Citrus Management Committee, a professional association from the Spanish Levant (east coast) set up for export, which carries out 70% of Spain's private trade in citrus fruits. "Singapore is a market that has a long tradition of citrus fruit trans-shipment. This means that products that are imported are then exported to other countries such as Malaysia, Vietnam or China". Last year they re-exported just over a thousand metric tons of citrus fruit. Half, 574 metric tons, were oranges, 330 were clementines, 83 lemons and 22 grapefruit. A significantly lower figure than in the 2017 season when they were about to exceed two thousand metric tons sent to Singapore. The destination is ranked 22 out of all countries exported to by the Committee, still behind Canada, Brazil and China. "Increasing our market share is difficult because it is tightly controlled by the prices set by Turkey and Egypt. Egypt is one of the countries with the lowest labour costs in the world. Also, in 2016, the Egyptian pound was devalued by more than 110% and that makes them very competitive when it comes to exporting."
As with flat Saturn from Catalonia, blueberries from Huelva or lemons from Murcia, they say they cannot compete in that market with other players that are nearer "such as those of Egypt or Turkey" as pointed out by the Tana group, which has headquarters in Málaga and Murcia.
With all this, it can be seen that exporting to other parts of the world is not easy, but there are companies which have done so and are achieving objectives. Most have done it alone without the help of other institutions or regional governments which, in other places do decide to accompany and bet on fruit and vegetables as do receiving countries. Even so, a meeting point does exist which might be worth thinking about, if looking for new markets in Singapore figures in your business plans. It is the Food and Hotel Asia Fair (www.foodnhotelasia.com). An event that takes place every two years and that will be held again between 3 and 6 March 2020. It might be a good opportunity to show the strength of a highly recognised sector in Europe, which now seeks to make a place for itself in the country of lions, as the literal translation of Singapore would be.
BIBLIOGRAPHY AND SOURCES CONSULTED
FEDACOVA, Business Federation of Agri-Food of the Community of Valencia.
ICEX, Institute of Foreign Trade. AREX, Aragón Exterior. FEPEX.
FRESHUELVA, www.infoagro.com. Citrus Management Committee. World Bank. Directorate General of Customs. European Statistical Office. Spanish Persimmon Association