Recently visited Singapore? If yes, you probably are aware of their new “entertainment centers” such as: the “Sand’s Marina Bay Resort & Casino” as wells as the “Resorts World” (including six hotels, Universal Studio and a casino) on Sentosa island.

No doubt that tourism is and will be extremely important to the future of the economy (which is famous for its financial sector). The new casino’s and entertainment centers represent the largest private-investments Singapore has ever had. The Sand’s, cost USD5.5 billion and Resorts World about USD4.7 billion to build. Marina Bay Sands is expected to generate as much as USD1 billion in annual profits and Resorts World to draw 13 million visitors in the first year. While there is no doubt on the potential of the casinos (recent earnings have surpassed projections), some uncertainty remains on the outside attractions.

According to several officials, those new developments will help Singapore to achieve a target of 17 million visitors a year to Singapore and generate over USD21 billion by 2015; thus increasing the “service” sectors and reducing the impact of “manufacturing” in the economy (note that Singapore does not have any natural resources).

After going through both, indeed “spectacular” attractions, it is clear that the Marina Bay Sands would rather target “corporate events and conventions” (for it stylish look, i.e: white/modern, and meeting facilities), whereas Resorts World is more family oriented (warmer colors, feeling, attractions).

While Singapore’s casinos would essentially compete against China’s “Macau” (which by the way has recently surpassed Las Vegas in gaming revenue), it is quiet unlikely that it will surpass it. Nevertheless, it might in some regard: Marina bay sands is the second most expensive casino in the world (after MGM City Center in Vegas). Additionally, knowing that the “premium-business” operator’s tax rate is 27 % less in Singapore and that the overall gaming area will, for now, be “less” crowded than in Macau; Singapore could become a destination of choice for the “high-rollers”.

In regard to Resorts World, the attractions seem to be well in place towards a bright future. Once Universal Studio will have resolved all its technical problems and open all its attractions, one challenge will persist: all attractions are outside, and it is very HOT ! Queuing for the attractions in a humid and hot (above 30 degrees Celsius) environment is not necessarily convenient and might put the park in jeopardy of losing many visitors (the humidity also damages the attractions over the years; constant maintenance is needed).

With the extension of the Disneyland in Hong Kong and the construction of the one in Shanghai, family oriented attractions are starting to emerge in Asia and is a strong sign of the current boom in the hospitality industry and overall services.

Finally, Singapore now must remain vigilant as there is a high risk that casino’s boost social problems in regards to gaming.

Fact 6:

The “ChIndia” myth.

In recent years the media have been putting India and China in the “same basket” and creating sort of a “ChIndia myth”. This myth is frequently based on the following facts: both countries are among the fastest growing economies in the world thus having the biggest potential for growth; together they have about 1/3 of the global population (making it the biggest markets). Additionally, often is highlighted that China and India are rather complimentary in their economic strengths; India being an IT and service powerhouse whereas China is seen as the “global” manufacturing hub.

The focus on those observations makes us commonly believe that China and India are very similar when it comes to “sell your products” in those countries. In fact, they are totally different markets, making this definition “ChIndia” an intellectual imposture.

To begin with, China and India have two different cultures with diverse histories. For instance, India has never had any hard worked “national reforms” like in China (initiated in 1978 by Deng Xiaoping). China’s single party authoritarian state (compared to India’s democracy with hundreds of political parties) has helped China to achieve a faster growth and a higher reduction of poverty.

Second, Chinese citizens (male or female) have now in general more opportunities to access education, find a job and live a “comfortable” life than in India. Approximately 90 % of Indian’s still live in poverty, only 10 % (about 100 million) have benefited from the recent economic growth (in 2004 China had 10 % of its population living under the poverty line).

Third, while India depends highly on foreign direct investments (mostly due to its significant trade and account deficits), China has trade surpluses which supports the domestic demand and the growth of imports.

Now that China is catching up on IT and services, India running after manufacturing; it will be interesting to see how long will it take India to catch up on China. India is just starting its industrialization process and will soon become a strong competitor but how, will it be faster, slower ? more efficient ? cheaper ?

In any case, the future development of those two countries will do much to determine the world’s outlook in this century.

Finally, from our experiences and for now, it is just much more difficult to simply “get things done” in India than it is in China.

Fact 5:

China is not a homogeneous nation-state like Japan or Korea

China can be seen as the Europe of Asia with many different cultures and languages within one country. In other words, China is a highly diverse and heterogeneous continent whose complexity calls for nuanced analyses, diplomatic approaches, or focused business strategies.

There are several ways of approaching China’s vast geographical areas; two of them are the following:

1. Making it straightforward, you can split China into 4 markets: The East, West, North and South which are all different.

2. You can regroup the China’s cities by “Tier”; with “Tier 1” would be: Beijing, Shanghai, Shenzhen, Qingdao… (totally about 16-20 cities), “Tier 2” would be: Wuxi, Dalian, Wenzhou… (totally about 25 cities) and “Tier 3”: Guilin, Weihai, Sanya, Xuzhou… (totally about 24 cities).

What you need to do first is to define your basic business plan strategies as well as your investment plan. Afterward, you can work on your “new product strategies”. Now you have to remember that in order to get something done in China you will need “TIME”. You will need a lot of time and money. Most small SME’s in Europe lack the money and staff to put the extra effort and succeed in China’s market place.

Now, this is where I would like to introduce our innovative services at “DragonGate”. We can help smaller companies with not a lot of resources to enter most Asian markets.

How do we do it ? Well we simply work in “your shoes”, embed your company’s culture and aspirations, add our local knowledge and experiences and sell your products (current or new). How much does it cost ? Would have to be discussed case by case, but what we can tell you is that all the “smaller” companies we have worked with are 100 % satisfied of our “unique and original” methods.

So, don’t wait and contact us; next week will be talking about the “ChIndia myth”

Fact 4:

Rapid urbanization

New technologically driven industries coupled to the globalization of trade have in the recent years pushed the focus and priorities from traditional agricultural based economies to nationalized systems more anchored on “knowledge and information”. This shift has made more people move to the cities and Asian governments are now spending huge amounts of money on public infrastructure projects as they modernize. People are moving into the cities in search of a better life, generating higher incomes and increasing spending to get closer to“western type of life/comfort”.

According to Euromonitor, “by 2020, the urban population in the “newly industrialized economies” will reach 53.1% of the total population compared to 48.7% in 2010. The most significant growth in urban populations will be in Indonesia, China and India rising to 62.5%, 52.7% and 34.1% of the total population in 2020 from 53.5%, 47.2% and 30.1% respectively in 2010.”

While urbanization should be seen as a positive social and economic phenomenon, challenges can appear when the amount of people coming in exceeds the ability of the governments to manage this influx. The “6th Hitachi Young Leaders Initiative” has summarized these challenges:

- “Rapid increases in urban populations strain the existing social, economic, and physical city infrastructure and affect the community in general”

- “Congestion has led to chronic traffic problems”

- “Illegal tapping of water and electricity lines”

- “Dilution of health care resources”

- “Has caused social tension between economic classes that often translates into a general atmosphere of mistrust and uncooperativeness at times culminating in violent public demonstrations or riots”

Next week will be going into more details and talk about China with Fact 5 : “ China is not an homogeneous nation-state like Japan or Korea”