Singapore and Hong Kong have the world’s highest number of online businesses that have expanded overseas, according to a survey of founders and senior execs in these companies.
Over half of the Singapore businesses surveyed said they expanded overseas within their first year of operations.
However, the majority of respondents said it was getting harder to expand overseas due to tariffs and regulations.
Almost 75 per cent of the companies said they spend between S$68,800 and S$691,550 on compliance and regulatory issues, and that this cost has been rising.
Singapore, alongside Hong Kong, has the world’s most online businesses that have gone international.
This was one of the key findings of a research report by payments infrastructure company Stripe published on Tuesday (Jan 15), which looked at how online businesses expand internationally.
The report surveyed over 9,000 founders and senior executives of online businesses across 15 countries – including 601 online businesses from Singapore – whose companies rely primarily on e-commerce for revenue.
Online businesses in Singapore and Hong Kong had the most “international focus” with 88 per cent of businesses saying they had expanded overseas. Conversely, countries with large domestic markets like the US lagged behind in overseas expansion.
Over half of the Singapore businesses surveyed said they expanded overseas within the first year, Stripe said in a statement.
In addition, almost three quarters of these businesses planned to expand further internationally in the coming few years. About half of these businesses also said the planned expansion would be “dramatic”.
Stripe said that quick international expansion was tied to a business’ long-term economic success, with the revenue of companies that had expanded overseas in their first year growing 141 per cent faster than those that had not.
In terms of region, Southeast Asia was still the first choice of area for overseas expansion for Singapore companies, but some companies also chose to expand into India, South America and Europe first.
Despite the number and speed of local businesses’ online expansion, only 40 per cent of Singapore respondents said it was easy to start a business locally – ranking behind countries like France and the UK.
Over 60 per cent of respondents also said they felt it was more difficult to run an international business now than it was five years ago, with about half indicating that regulations and tariffs were the main barriers to starting a business.
Most said technology helped make expanding easier, as well as government support and proper physical infrastructure.
The barriers identified were consistent with global findings, with respondents citing the biggest hurdles to international expansion as taxes, regulations and tariffs.
The costs of spending on compliance and regulatory issues to operate overseas cost almost three quarters of these businesses between S$68,800 and S$691,550, Stripe said.
Over 70 per cent of the respondents added that this cost has been rising.
Interestingly, despite identifying it as a barrier to overseas expansion, objection to increased tariffs on international trade was the lowest among respondents from Singapore’s online businesses, with just under half of the respondents opposing more tariffs.