If you’re interested in starting electronic manufacturing, this article is for you. We have a look at what it takes to start and grow your business, the economy, the labor crunching problem, and the government initiatives to tackle these issues as well as labor laws for hiring foreign talent.
Given Singapore’s low wages, tax incentives, and direct foreign ownership rules, it offers the best economic conditions for startups and growing electronics companies. More than 80% of all electronic components are produced by small and medium-sized enterprises (SMEs), which do not require many workers. These SMEs tend to be smaller, more flexible, and closer to the customer. They start in Singapore because they can drive more profitable growth than in China or Taiwan.
While most electronics companies start in Singapore, a significant number of large electronics manufacturers set up shop here. These are global players with a cost structure that can be sustained in Singapore. Investing in an electronics manufacturing site is like investing in a single product and it is not as risky as it may sound. If you are keen to have your business start up and grow, we hope this article will help you achieve your goals.
WHY ELECTRONICS MANUFACTURING IS A GOOD BUSINESS
Electronic manufacturing in Singapore is a good business and has been very profitable for Singapore. The country’s electronics industry has grown by 45% in the past decade, making it the second-largest producer of electronics components in Asia after Taiwan, according to International Data Corporation (IDC). This rapid growth can be attributed to market trends and government initiatives.
Successful companies in this industry rely on the following trends:
1) Electronic devices are getting smaller and more powerful, i.e. cell phones and other portable devices. This trend will continue toward miniaturization till we get microchips and circuits that can be worn as a wristwatch or implanted in our bodies.
2) The disposable income of the middle class is increasing rapidly. As their income rises, they are buying more consumer electronics.
3) Asia’s middle class is the fastest growing in the world.
4) Mobile phones have unleashed a powerful horizontal market that has not been tapped effectively to date.
5) The popularity of mobile phones has reduced the average ownership period from five to three years, creating a lot of waste. More electronic devices will end up as e-waste (electronic waste) because of an increase in consumption and rapid technological change.
6) Governments are becoming increasingly aware of environmental problems and are making laws to control e-waste.
The growth of the electronics industries in Singapore can also be attributed to government initiatives, as follows:
1) The government actively promotes exports coupled with a low-cost manufacturing base. Over the past decade, support has included a Foreign Technology Transfer (FTC) scheme, new Technology Incubators, and free land to create industrial parks.
2) The government has also created an industrial climate where a start-up can easily find suppliers and raw materials.
3) An exemplary national infrastructure, including efficient ports, logistics facilities, and air transport is available at competitive rates.
4) There is access to a vibrant and profitable European market, which accounts for 50% of Singapore’s electronic exports.
Electronics companies can be profitable in Singapore because of the economic environment, rapid growth, and other factors explained above. If you are keen to start an electronics company, we hope this article will help your business in Singapore start up and grow. We will discuss labor laws for hiring foreign talent later in the chapter.