The Research Business in Singapore

 

Singapore is not so much a country, but a corporation.  Like most corporations, their objective is growth and for a country with no natural resources like Singapore, growth means more people.  When Singapore was founded in 1819, the population stood at 150; today it is about 4.8 million.  Whereas many countries are concerned about population growth, Singapore appears to encourage it and the population is expected to reach 6.5 million within the next 30 years.  Hence within a relatively small island many observers will notice increasing land reclamation and high rises under construction.

With an aging population and falling fertility rates (1.3 Total Fertility Rate in 2008) the ‘corporation’ relies heavily on immigration to sustain itself.  Unlike other countries, Singapore’s approach to population growth is to open their doors to only those with the ‘right CV’.  However it is competing for talent and Foreign Direct Investment (FDI) with a multitude of emerging markets in Asia as well as its traditional rival of Hong Kong which still remains an important hub for the region.

But Singapore is somewhat of an oasis within South East Asia, with many markets in the region still affected by political instability, corruption, poor infrastructure, and natural disasters.  Singapore, ‘the corporation’, has marketed itself on squeaky clean corporate governance (and streets), good IT, and a well trained workforce.  It has as also marketed itself as a life style choice for safe living and low taxation, as a regional centre for arts & culture, and more recently for gaming with the new casinos at the Integrated Resorts development.

The market research industry rides on the back of Singapore Inc.  In the same way as Singapore attracts corporate regional HQs, it also attracts the region’s research and business consulting professionals, and also those from outside the region looking to enter Asia’s rapidly growing markets.

Asia Research ran its first article on the Singapore research business in its very first edition exactly four years ago.   Since 2005 the industry has undergone considerable change as it has passed through boom years of 2006, 7, and 8 and now into one of its worst recessions in its history brought on by the global economic crisis.

The Market Research Industry in Singapore Today:

According to the ESOMAR ‘Global Market Research Report 2009’, the Singapore market research industry is quite insignificant, ranked in 2008 at a lowly 41st in the world.  It is valued at USD 72 million, in the same league as countries such as Malaysia, Philippines, and Romania.  This however hides a larger market of regional business, e.g. research commissioned in Singapore but for research conducted in other markets mainly in SE and South Asia.  On this basis, the market could be valued at over USD 100 million, but even on this measure it is still smaller than markets such as the Czech Republic, Argentina, and Chile.  Although it its too early to say, figures for 2009 are expected to show a significant fall in spend probably back to 2007 levels or lower.

In tandem with this, Singapore is an over-supplied market as a result of the boom years between 2006 and 2008.

Almost all regional players are present in Singapore such as Nielsen, TNS, Synovate, Millward Brown, GfK, IPSOS, IMS, etc.   Based on Asia Research’s survey of market research buyers conducted earlier this year, Nielsen leads the market (in terms of overall market penetration).  However the combined entity of TNS and Research International through the recent merger suggests that they might just pip Nielsen as market leader (allowing for cross-over of some clients).  However, the resultant market leadership in Singapore will be confirmed with the next Buyer survey to be conducted by Asia Research in March 2010.

Singapore is also the regional headquarters for some of the regional independent firms such as Acorn, Kadence, and Insight Asia.  But it is the proliferation of the small independent firms that has been most noticeable in the last few years.  During the boom years, a multitude of start-ups and new companies entered the Singapore research industry.  The ease at which companies can be set up in Singapore as well as the relatively low start-up costs for research businesses resulted in a proliferation of the supply market.

Today there are around 100 companies operating in the research business, although maybe twice this number might operate in the research business with other companies positioning themselves under the broader heading of ‘consultants’ but undertaking market research when the opportunity presents itself.  As a result of this over-supply, a price war has ensued as suppliers try desperately to maintain their revenues and market share.  To illustrate this point, in Year 2000 the unit cost for a standard consumer focus group ranged from USD 3,250-4,000.  Today it can range from USD 2,000-2,750.

Although ‘healthy competition’ is good for the industry, many are concerned that the price war is undermining quality in the least visible areas of the industry – the data collection.  Although research companies are under competitive pressure from clients to deliver insight and value, the data collection element of research is one the clients are least able to dontevaluate.  Serious questions have been raised over how some of the low cost vendors are able to gather primary data at their prices, particularly those bidding on open-tender for Government projects.

Buyers of research industry in Singapore fall into four main segments.  The characteristics of each can be summarized as follows:

a)    Government: numerous Government departments in Singapore buy market research for planning and policy development purposes.  Open tenders with on-line submission are the norm, and many observe that the Government sector is the most price sensitive of all buyers.  However, some departments look for more specialized vendors and will seek tenders on invitation basis, particularly those in business-to-business or international sectors.

b)    The Multi-National Corporations (MNCs): although some MNCs have chosen to locate to bigger markets such as China and Thailand, Singapore continues to be the preferred regional headquarters for MNCs in the region.  As a centre of research excellence for the region, organizations such as Unilever have chosen recently to centralize their research to Singapore.  Other major MNCs buyers of research in Singapore include financial services, IT, telecoms, express distribution, hospitality, and automotive.

c)    The Large Local Corporations: local Singapore corporations such as Singapore Telecommunications, Singapore Air, Singapore Post, Singapore Pools, to name a few have advanced marketing functions and with it maintain sizeable market research budgets.

d)    The Mid Market: an emerging sector is the hundreds of mid sized corporations who undertake periodic pieces of research, sometimes for specific new business initiatives such as new market entry.  Many of these companies operate in the Business-to-Business space, do not have in-house marketing functions, and research can be commissioned directly by the C-Level executives within these companies.  According to ESOMAR, business-to-business research in Singapore accounts for a much higher share of the overall market research industry compared to most other countries globally.

In addition to the above segments is the huge market of intermediaries, e.g. advertising agencies and management consultants who are asked to conduct research as part of an end-to-end solution for communications or business consultancy.

Careers in Market Research:

Along with many other Asian markets, Singapore has struggled to retain local researchers as many take decisions early on in the career to pursue other professions lured by higher salaries and more reasonable working hours.  However, as the industry matures many local Singaporeans are now reaching higher management levels and some head their own businesses.  The Asia Research staff survey in 2008 showed though that many medium and senior management level positions in Singapore are still occupied by expatriates.  Traditionally these have been filled by Western expats, but pressure to reduce overheads means that many research companies are hiring expats within Asia, e.g. from markets with a plentiful supply of qualified candidates such as India and the Philippines.

The recent economic crisis has hit the research jobs market very badly.  Singapore, as a trading city state, has experienced a decline in GDP of around 8%, although in many ways it is weathering the storm quite well through Government support and financial stimulus packages.  Despite this, the market research industry in Singapore might decline by as much as 15% in 2009, and already there have been significant numbers of redundancies across the industry with some of the larger firms facing the most difficulties.

The Outlook:

Most expect 2010 to be a year of recovery for the research industry in Singapore, with restored budgets and with a revitalized job market.  There is likely to be further fragmentation of the industry with the larger agencies losing share to smaller vendors, but at the same time some rationalization where a much reduced market can simply not sustain so many companies.  Another potential development for the industry will be a shake out of poor quality vendors as the industry acts to regulate against unqualified companies entering the industry, and in particular poor quality data collection.

Singapore at a Glance:

Metric 2008
PopulationAnnual growth rate (all)Annual growth rate (Singapore Citizens) 4,839,4005.5%1.0%
Per capita GDP c. USD 37,000
Unemployment rate 3.3%
Literacy rate 96%
Home ownership rate 90%
Median age 37 years
Private cars per 1,000 population 107
Crime rate per 100,000 population 670

 

Typical salaries in Market Research
Level (years of experience) Annual salary range
Director (10 years+) USD 80-150,000
Associate Director (8 years+) USD 50-80,000
Project Manager (3-6 years) USD 25-40,000
Researcher (<3 years) USD 18-25,000