SINGAPORE (Oct 21): Small and medium-sized enterprises (SMEs) are bracing themselves for a hit to profit margins and revenue amid a bleak economic outlook , according to a survey by the Singapore Chinese Chamber of Commerce and Industry.
Most of the enterprises polled cited rising costs driven by wages and rentals, a shortage of manpower and stiff market competition as key factors inhibiting their profits and growth.
In addition, some 63% say the ongoing US-China trade war has been the single biggest development that has impacted their businesses this year.
Some 71% of the respondents in the annual business survey released Oct 16 are from the services sector, while 21% are from manufacturing and 8% are in construction.
More than seven in 10 of the 972 business polled expect business costs to increase, while 54.1% anticipate profit margins to drop.
And to boost their earnings, businesses indicate that they are going to focus on growing revenue, innovating products and services, attracting and retaining staff, and going digital.
But while businesses are keen on digitalistation as a way to improve business processes, it has proven to be a challenge.
A separate survey on digitalisation administered by the SCCCI showed that 77% of respondents reported limited success from their digitalisation initiatives, and obtained less than 10% of their revenue from online sources.
The high costs of digitalisation is cited of one of the main challenges.
Meanwhile, some 60% of respondents are seeking opportunities overseas – particularly in Asean markets such as Indonesia, Thailand, Vietnam and Cambodia – in order to grow their profits.
Businesses say this is so they can tap on existing free trade agreements and digital channels to advance their ventures.
Another avenue for growth cited by 46% of the participants was to have more collaboration between bigger and smaller companies to enable greater ease in meeting each other’s needs in terms of access to equipment and technologies.
Speaking on the results, SCCCI president Roland Ng says the chamber is looking to “harness the benefits of a sharing economy to help individual trade associations and [its] member companies to transform the way businesses are conducted”.
Acknowledging the need for enterprises to internationalise given Singapore’s small domestic economy, Ng says the SCCCI will assist this by putting together an initiative that allows them to “tap on shared resources that can keep the costs lower” when they venture into China.
The chamber is now proposing for more free trade agreements to allow for more overseas expansions. It is also emphasising the need for government support to help ease business costs and assist companies with their transformation and digitalisation.
