Mr Lee Yi Shyan at the Opening Ceremony of Franchising and Licensing Asia 2012

​OPENING ADDRESS BY SENIOR MINISTER OF STATE FOR TRADE & INDUSTRY AND NATIONAL DEVELOPMENT, LEE YI SHYAN AT THE OPENING CEREMONY OF FRANCHISING & LICENSING ASIA 2012 AT THE MARINA BAY SANDS EXPO AND CONVENTION CENTER ON 1 NOVEMBER, 2012, AT 10.20 AM

Chairman, Franchising and Licensing Association (Singapore), Ms Karen Eidsvik,

Executive Director, BizLink Exhibition Services Pte Ltd, Mr Chua Wee Phong,

Ladies and Gentlemen.

Introduction

Good morning, I am pleased to join all of you at the opening ceremony of Franchising and Licensing Asia 2012 (FLAsia).

FLAsia was conceptualized as a one-stop shop for deal making.  Over the years, FLAsia has become an exchange platform for franchisors seeking new markets, entrepreneurs seeking growth, startups seeking to enter a new business, and private equities seek opportunities to invest. It has added another level of sophistication and buzz to the business-friendly environment here in Singapore.

Asia as the New Growth Frontier

As Asia continues to grow, two things will happen. Firstly, the momentum of foreign brands establishing themselves in Asian cities will continue. Secondly, within Asia, original brands created locally are multiplying quickly. Some of them have attained the critical scale to seek growth opportunities in new and overseas markets.  The two-way flow, and the accompanying fusion of new ideas will render local markets in Asia more competitive and exciting.  While many brands prefer to grow their businesses organically, a significant portion of others choose to grow rapidly by adopting the franchising and licensing strategy.

Singapore as a Key Hub for Growth and Development

In Singapore, the franchising and licensing industry has grown steadily over the years.  In 2011, our local franchising industry accounted for 18 per cent of the total domestic retail sales volume. The diverse sector has now in excess of 500 franchise systems, with more than 37,000 franchisees operating with an annual turnover of more than S$6 billion. We expect this sector to continue its growth momentum.

Franchising and Licensing strategy and Productivity-driven growth 

In Singapore, we have been talking about productivity. Many of the discussions have been focused on firm-level house-keeping, process re-engineering, automation, waste reduction etc. In short, they focus on better resource utilisation and cost reduction.

The other part of the productivity equation, which is not sufficiently covered in the media as far as productivity discussions go, is about value creation and revenue generation. In fact, there is so much we could and should talk about in terms of increasing sales transcending the limits of local shop fronts and workers. This is where internationalisation and a franchising and licensing strategy become relevant.

In a way, when a company decides to franchise and license its products and services, it probably has to go through a process of self-discovery. Such a self evaluation process will help many SMEs seeking growth to ask themselves very fundamental but strategic questions about their business: the brand positioning, attractiveness of their products or services, assessments of competition, market communications strategy, staff training and human resource developmentn and core competitiveness etc.

As SMEs examine these questions, they could well begin to define a sustainable growth strategy.

There are many examples of Singapore companies successfully and rapidly expanding their overseas footprints via the franchising route. One such company would be ladies footwear and accessories label Charles & Keith. Started off as a heart-land shop in Ang Mo Kio in 1980s, the company has transformed. It has successfully ventured overseas with presence in Asia Pacific, Eastern Europe and Middle East regions with 290 stores worldwide, out of which 231 are franchised stores. L Capital Asia, the private equity arm of French luxury giant LVMH has also invested in 20% of the Group’s share in 2011.

There are other well-known Singapore names that have internationalised, adopting a combination of organic growth and franchise strategy. They include BreadTalk, OSIM, Fish & Co, SkinC, Kenko Foot Reflexology and Spas, Mr Bean, Muthu’s Curry and Udders.

Franchising as a strategy has clearly helped many SMEs internationalised in a speedy manner. The expanded sales and scale of operation would in turn provide resources for product development, automation and mass production. Franchising could help SMEs enter into a virtuous cycle of profitable growth and rising organisational capability.

Beyond lifestyle and consumer companies, technology companies can also take advantage of franchising and licensing strategy. Consider the example of Expressprint. The printing company licenses its online printing software technology to its franchisees. It allows distributors to use its brand and products to provide customers with a diversified range of printing services through an integrated software platform.

Importance of Intellectual Property in Licensing

To create successful franchises, companies sometimes need to create new intellectual properties which must be protected. Singapore provides such a nurturing environment for IP creation and registration. In fact, the World Economic Forum's Global Competitiveness Report 2012/2013 ranked Singapore second in the world and top in Asia in terms of IP protection. The Political & Economic Risk Consultancy Report 2011, as well as the International Property Rights Index 2012 has similarly ranked Singapore top in Asia for our IP protection efforts. 

The Singapore Government is committed to an IP regime that remains robust and conducive for business activities here. Singapore is a signatory to major IP treaties and conventions. It works closely with the World Intellectual Property Organisation (WIPO), our partners in ASEAN and APEC to increase Singapore’s IP network capabilities. To help companies embark on their franchising journey, Singapore has put in place attractive tax incentives for the acquisition and registration of IP.

Jointly managed by SPRING and IPOS, the Intellectual Property Management (IPM) for SMEs Program has helped companies develop in-depth capabilities in IP management. Since its inception in 2007 till end of 2011, 392 companies have benefitted from the programme. It has generated close to $160 million economic value-add last year.

Consider the example of Kee Song Brothers, a poultry processing firm that has secured proprietary rights to a farming technology of rearing “Sakura”¹ chickens. The company is now able to sub-license this technology to partners around the region, to cater to health conscious consumers. Another company, Euroflo Pumps International formulated a strategy to protect its goodwill and management of its IP. Prior to expanding into the international market, the company worked with consultants from the IPM program to strengthen its commissioning agreements to safeguard its intangible assets and boost the company’s confidence when negotiating new deals with its global business partners.

Conclusion

In conclusion, I would like to commend the Franchising & Licensing Association of Singapore and BizLink for their relentless efforts in promoting the use of franchising and licensing systems amongst Singapore companies. I would like to encourage more SMEs to consider growing their top lines using Franchising & Licensing systems. 

I wish you all of a productive conference and exhibition ahead. Thank you.

¹ “Sakura” chickens are chickens that grow with no growth hormones nor antibiotics.