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Synopsis
The number of local businesses going overseas dropped by 38% to 1,600 last year, which was expected due to global travel restrictions. Those that continued to pursue internationalisation, did so in different ways such as attending virtual trade fairs or online networking events, while tapping into e-commerce platforms to market and sell. In this episode, we discuss why internationalisation of businesses is important, and how companies can leverage resources, partnerships, and technology to manoeuvre past business challenges brought upon by COVID-19 and continue to grow and scale beyond Singapore.
Transcript
0:01
Yvonne Chan
Welcome to futurepulse, a podcast series brought to you by IPI, your innovation partner for impact. Together, we will explore how ideas, creativity and collaboration drive impactful innovation. Welcome to this episode of futurepulse, where we'll be discussing what innovation without borders means and how companies can achieve growth beyond boundaries. I'm Yvonne Chan and joining me for the discussion today, we have Jonathan Lim, Director, Global Innovation Network at Enterprise Singapore (ESG) and Kelvin Lim, the Group CEO of Durapower Holdings. Welcome, Jonathan and Kelvin. The number of local businesses going overseas dropped 38% last year as global travel restrictions were imposed. But we have firms that continued to pursue internationalisation by attending virtual trade fairs or online networking events, and much more. So why is the internationalisation of businesses so important? And how can companies manoeuvre the business challenges brought about by COVID-19 and scale beyond Singapore? I want to kick off our discussion with a quick self-introduction and your role at ESG and Durapower. Let's start with you first, Jonathan.
1:18
Jonathan Lim
Right. Hi, everyone. Thanks for inviting me to this session. So I'm Jonathan, Director of the Global Innovation Network division at Enterprise Singapore (ESG). My role is really to connect Singapore to the other start-up and innovation ecosystem around the world. We want to create a two-way flow between Singapore and the ecosystem, helping Singapore enterprises plug into the ecosystem, and attracting foreign tech enterprises to use Singapore as a base to access Southeast Asia, (through) the programme or this initiative, we call it the Global Innovation Alliance or GIA in short.
1:53
Yvonne Chan
Sounds like a great programme for a lot of SMEs to tap into. Kelvin, what about your role at Durapower Holdings?
2:00
Kelvin Lim
Good afternoon, Yvonne and Jonathan. Thanks for having me to be part of the conversation today. Pleasure to be here. My name is Kelvin, I'm Group CEO of Durapower Holdings. Let me give a quick introduction about the company as well. We are a local company, and our business is on energy storage systems, lithium batteries in particular. We design, we manufacture, we system integrate, and we are a tier one supplier to several customers worldwide. We focus on three major market verticals. First one is on e-mobility, that would be electric vehicles, vessels, and all that. The second vertical that we focus on is specialty platforms. This would be the autonomous vehicles, off-road vehicles that would use hybrid electric or fuel cell hydrogen solutions. So, the third market vertical that we are involved in right now is stationary systems, and that's where we put batteries and integrate them into renewable energy such as solar, wind, and other forms of energies, in a setting of a micro grid or smart grid, where we deploy energy efficiently and deemed to be important.
3:22
Yvonne Chan
That's very exciting and also very focused, you know, on the future. I think there's a lot of things happening at Durapower's side. Thanks for that introduction, Kelvin. Circling back to you now, Jonathan. This pandemic has significantly altered the context for cross-border businesses. I want to find out, you know, what sort of impact have you observed in the context of our local SMEs? Has there been a slowdown in the demand to expand overseas during this time of the pandemic because it is very challenging?
3:53
Jonathan Lim
Yeah, Yvonne, expectedly right? Global travel restrictions have slowed down internationalisation activities amongst Singapore enterprises. But nonetheless, I think many of the enterprises have continued to pursue internationalisation in different forms, reflecting very sustained interest and desire by our enterprises to adapt and capture overseas business opportunities. We are seeing that China and Southeast Asia remain the top markets of interest. We have also been very encouraged by the strong interests of our GI (Global Investors) programmes, be it our acceleration programmes or co-innovation programmes. Overall, the numbers have continued to grow despite COVID. This shows that our Singapore enterprises have not lowered their growth ambitions and the need to innovate, and they remain very interested to forge partnerships with like-minded companies overseas. Similarly, we have also seen strong interest from overseas enterprises seeking business opportunities with Singapore enterprises. Again, it shows that Singapore enterprises do bring along unique value propositions, including helping overseas enterprises plug into Singapore's innovation ecosystem and access the ASEAN market. To help our enterprises, we have expanded our GIA to more cities and countries. And early this year, we've also joined the Eureka network, which will provide more co-innovation opportunities for our local companies.
5:18
Yvonne Chan
Some very encouraging data there despite the challenges of COVID-19. But what about Durapower's internationalisation journey, Kelvin? How has that changed as a result of the pandemic? I know, in 2014, when you first joined the firm, you had already moved the focus away from China to Europe.
5:35
Kelvin Lim
So indeed, it's been quite a journey for us. Back in 2014, we were doing very well in China. We were covering more than 20 cities, but our business was largely in China. And I've always thought that diversification is important, not just geographically, but also in terms of product offering. So, we set a target then to have half of our revenue targets to be in the international market, whereas 50% would be in China at that time. Now, many people would ask why? Because China was a very hot market at that time. Many companies were looking to expand into China, yet we were going the other way, right?
6:20
Yvonne Chan
Yeah, tell us why.
6:22
Kelvin Lim
You see, China was a market, I mean, it still is, where the government drives and creates market growth with very strong policies or government subsidies. Now, this in turn would make companies very dependent on them. We wanted to make sure that we have a business model that's sustainable, and therefore, that created a big drive for us to do what we did. And today, we have proven our business to be more on a TCO model, a Total Cost of Ownership model, rather than a business or project that is dependent on government grants and subsidies, so that is important. How has the pandemic affected us today was your second question. So, in a way, it has allowed us to develop closer relationships with our existing customers. We do have more focus time to strengthen this strategic alignment, and we were also able to expand our market reach through our local presence in the different countries where we are at right now. However, because of the travel limitations, it is kind of hard for us to develop new markets, and that's a challenge.
7:54
Yvonne Chan
That is a big challenge and that actually brings me nicely to my next question, then. Because of the pandemic, Kelvin, you've said, it's really hard to try and reach out to other markets. So in the meantime, what are you guys trying to do to get around that problem?
8:09
Kelvin Lim
Yeah, I mean, the problem to us is magnified just by the fact that we are in many countries. So, when COVID-19 started, we were very much affected at China very much as our manufacturing base is there. We couldn't have our manufacturing activities started. And when China recovered, we were affected in Europe and we were affected in India, in Thailand, and it goes round and round. So, in a way, going international is good. We are in more than 20 countries today. However, when a pandemic comes, then we will be affected on a different scale, at different time. So, what we're doing now to cope with that…
8:56
Yvonne Chan
Yes.
8:57
Kelvin Lim
is to leverage very much on our local presence. We have local teams that we set up in Europe, in China, in Thailand, and they would be the ones to maintain and expand the business activities. And for the rest of us, we'll be supporting virtually.
9:16
Yvonne Chan
So, it's really important to have that very strong local presence, even in all those international markets that you're in, right, to secure Durapower's position there. Jonathan, do you think some of the other SMEs, that you provided advice for, are facing similar challenges?
9:34
Jonathan Lim
Yeah, definitely. I mean, if you look at COVID-19, it has affected companies very differently, right? It's quite uneven and with travel restrictions here to stay for a while longer, actually, many SMEs will have to be forced to think outside the box and come up with innovative ways to expand overseas, to meet prospective business partners without physically being there. So I think at some level, for me, I think our SMEs will need to embrace digital technologies. So, most of us are now very familiar with using Zoom and various forms of other technologies to at least continue to communicate and stay in touch. But I think at the same time, more importantly, I think most of our SMEs are looking for trusted platforms and trusted partners, right, to help them in this process. So for ESG, we have decided to convert all of our GIA programmes to virtual or a hybrid mode, so that we can continue to help our tech enterprises seek out those opportunities overseas. And hopefully, through our programmes, our tech companies, you know, can continue their internationalisation journeys.
10:52
Yvonne Chan
Absolutely. You've talked about trusted platforms. I think the word(s) trusted networks and trusted relationships are also very important. And with that, I want to bring in the Eureka network, which you have touched on very briefly just now, Jonathan. I understand that this inter-governmental network brings greater access to other markets for local firms. So I want to know, what has the take up rate and the response been like? I mean are there any targets that ESG hopes to achieve with Singapore being a part of this network?
11:22
Jonathan Lim
Yeah, definitely. In 2020 last year, we launched our second call, so we're not new to Eureka. We started our engagement with Eureka in 2019. So, in 2020, we continued to grow our partnership and relationship with Eureka, through what they call a GlobalStars call, and essentially, we are able to then work with 14 countries to look for partnership and collaboration opportunities. So last year, we have received 84 joint applications, and over 20 of them will be approved, involving partners from 14 countries. Now, this is actually the highest number of applications received by Eureka GlobalStars throughout the history,
12:09
Yvonne Chan
Wow.
12:09
Jonathan Lim
and we are doing that, you know, in the midst of COVID.
12:13
Yvonne Chan
Yeah.
12:13
Jonathan Lim
So again, you know, our participation in the Eureka network really comes at the juncture where, like I have mentioned earlier, we want to continue to help our companies to grow overseas but also to innovate. And at this point, I think co-innovation is going to be more crucial than ever, and Eureka programmes allow our companies to work with other like-minded enterprises, through market-oriented innovation. Hopefully with that, we can connect our Singapore enterprises to other businesses, to talent and ideas from around the world.
12:53
Yvonne Chan
Yes, 84 joint applications. Highest number ever. That's a very healthy demand there. Kelvin, isn't Durapower part of this network as well?
13:02
Kelvin Lim
Yes, indeed. Thanks to ESG and the relevant government agencies over at Europe, Durapower is one of the proud winners of the second Eureka GlobalStars grant call, and we won this in partnership with our consortium partners, Ecomar Propulsion and University of Exeter from the UK. We are looking forward to jointly develop advanced marine electrification solutions, and we would like to see this platform as an opportunity to propel us to reach out to the massive marine electrification market in Europe, so we are very much looking forward to that.
13:41
Yvonne Chan
I want to move on now to talk about some of the lessons that the both of you have learnt or have witnessed along the way. And Kelvin, you know, 80% of Durapower's revenue comes from overseas, and I believe your company really is a stellar example of a homegrown company who operates like an MNC. So what lessons were learnt for Durapower? I mean, can you tell us a bit more about why it's so important for you to build that local ecosystem in each of your international markets?
14:11
Kelvin Lim
Sure, I always thought that it is important for companies to develop their business to allow them to compete on value and not just depending on scale. So, what does value means? Value means differentiation, technologies that would make you different from your competitors. So, for us, it's very important that we have a balanced strategy on product offering and geography, as I mentioned earlier, and it's also very important to leverage on network effect. So, building ecosystems would allow that. Having an ecosystem and you being a part of that, would very much see it as partners versus suppliers. So, we like to see ourselves as a partner to a local network than being another supplier that is selling at a cheaper price. So, that is something that we thought is important for the new markets that we develop, it is always based on the first principle of developing local partnerships. With partnerships, then we develop local ecosystems. With that, then we expand with a local network effect to the region and to the other larger part of the market.
15:36
Yvonne Chan
So, really leveraging that partnership status rather than just being a mere supplier. That's a great point there, Kelvin. Jonathan, how else can IPI's rich innovation marketplace and network access, provide companies with the tech experts? I mean, you said it's very important that SMEs must digitalise, right? So how can that provide the tech experts and the tailored resources that are needed for our local companies to scale beyond borders?
16:02
Jonathan Lim
Yeah, IPI is actually one of our very close partners in GIA. So IPI's network access services, in fact, comes in very handy to help our co-innovation programmes, right? And how do they do that? Now, Singapore companies that are interested to partner in co-innovation programme usually need to look for an overseas collaborator, and this is where you know, IPI can come in to help us. If they are missing a collaborator, they can leverage on the platform to find potential partners and like-minded companies or enterprises that can work with them. IPI also partners with the Enterprise Europe Network (EEN), so enterprises can actually benefit from the access to member organisations in over 60 countries worldwide under this network umbrella. So together with IPI, we hope to foster greater collaboration and help businesses, find partners, find matching technologies, and hopefully that can help them to develop new products and new solutions for the global market.
17:12
Kelvin Lim
If I can just add a point to what Jonathan has shared
17:14
Yvonne Chan
Of course, Kelvin.
17:16
Kelvin Lim
Yeah, one big lesson that we learnt was that small companies can achieve big things too, right? So, one example I’d like to cite is back in 2014, when we first entered Europe, there was a very large tender, at the time, at the city of Eindhoven. We were up against the world's largest battery companies from China, from Korea, from Japan. And there we were, Durapower, a small company from Singapore. No one knew who we were, but we were lucky to win the tender and not just win, we won 100% of that. Yeah, so that is a big, big lesson. No fear, always go for it. You know, it is an open market for anyone.
17:57
Yvonne Chan
That really is a very inspiring story, and thank you for sharing that anecdote with us, Kelvin. And as what Jonathan pointed out, I think there's so many avenues out there right now, that SMEs can tap on, you know, to scale beyond borders, and I do hope that those owners of SMEs who are listening to this podcast will know where to go, you know, after we conclude our conversation today. But Kelvin, why do you also think having a global perspective and that overseas venture experience is so important for businesses?
18:28
Kelvin Lim
It is very important as it provides a very effective matchmaking platform to build the bridge between technology companies and markets, right? And it goes both ways, really, for us, who want to enter into new markets to seek new technologies, this platform is very good for that.
18:56
Yvonne Chan
So, what key advice would you give to local firms who are still looking to venture overseas? And for those who are already overseas, how can they continue to thrive in those markets and innovate without borders, Jonathan?
19:10
Jonathan Lim
Yeah, the post COVID world basically will be very different. I think we cannot assume that, you know, we're going to go back to the pre-COVID world, right? So, what it means is that things may become more volatile. But having said that, I think our enterprises, most of them have started to prepare themselves for this. By you know, looking at, like just now I mentioned about digitalisation, embracing digital solutions, continuing with looking at productivity improvement, innovation and business transformation. I think those are all good, but it's also critical for enterprises to continue to look for new demand and new market(s), right? And I think by doing that, then enterprises will be able to seize opportunities in new growth sectors post-COVID, and obviously new markets that have not emerged pre-COVID. So, innovation and internationalisation to us, are mutually reinforcing pillars. We think that SMEs will definitely have to innovate and internationalise at the same time. Given our small size, right, given Singapore's small size, we definitely have to do that. So, at the same time, we also believe that the enterprises need to look at innovative products because they can't look at selling, you know, another me-too product.
20:45
Yvonne Chan
Yeah.
20:45
Jonathan Lim
So, we see that it’s very important for them to create the intellectual property and build new brands. So hopefully, through our GI programmes, you know, we can help our companies to tap on those opportunities.
20:58
Yvonne Chan
Create new intellectual property, and innovation and internationalisation go hand-in-hand. Kelvin?
21:05
Kelvin Lim
I think for companies who are looking to venture overseas, it is important to define a clear strategy based on differentiation and value-add. Then, the next thing is to pick the right place to fight your battle, right?
21:21
Yvonne Chan
That's hard though, huh? Pick the right place?
21:24
Kelvin Lim
Yeah, but it's a process that sometimes you’ll get it right, sometimes you’ll get it wrong. But it's important to learn when you are wrong and then you know, pick yourself up and go again. And it's also crucially important to embrace local partnerships. I can't say that enough. It is really important because that is often the fastest way to penetrate new markets.
21:47
Yvonne Chan
Yeah, the importance of local partnerships. Thank you so much, Jonathan and Kelvin, for sharing all your valuable insights with us today. Internationalisation, it can seem very daunting, but there are avenues where companies can seek funding and advice, as pointed out by Jonathan. And challenging as it may be, there are certainly exponential benefits to be reaped from scaling beyond our shores and innovating without borders, and not forgetting how integral local partnerships are to this process. In the parting words of Kelvin, small companies can achieve big things too. Thank you so much, gentlemen.
22:22
Kelvin Lim
Thank you.
22:22
Jonathan Lim
Thanks, everyone. Thanks, Kelvin and Yvonne. Bye.
22:27
Yvonne Chan
I'm Yvonne Chan, thank you so much for joining us. We will see you next time for another exciting and insightful episode.