One of the highlights of my working life in corporate
insolvency came from a meeting which involved one of Singapore’s foremost
insolvency and restructuring practitioners. I was part of a team bidding for a
case that was being held up in the American courts and my employer felt that it
was necessary to rope in a “brand” name practitioner and so got this particular
practitioner into the coalition that we were trying to assemble. Towards the
end of the meeting, the solicitor who was trying to build the team turned to this
practitioner and asked, “Are your fees competitive.”
At that very instant, the practitioner said, “I’m NOT competitive
at all,” and he said so with a certain amount of pride.
I think of this moment and the way this man took so much
pride in being “NOT competitive at all,” because it underlines one of the most fundamental
aspects of doing business – price. One of my favourite clients said it best
when he told me – tell me:
- 1. What can you do?
- 2. How quickly can you do it?
- 3. How much will be cost me?
As someone who was inevitably desperate for the job, the
answer to these questions were as close as one could get to the following:
- 1. Anything you want?
- 2. It was done before you even thought of it?
- 3. Nothing at all.
Quite often, the most important factor in deciding who got
the job, often boiled down to the third point. It is in the buyer’s interest to
get away with paying as little as possible and the seller will inevitably try
to show that he or she can give the buyer the price that he or she wants.
If I look back at my freelancing days, I realise that I had
one key advantage over my competitors, who were inevitably sizeable companies –
price. I could do the job at a certain standard at price that my competitors could
not do. When I took my last big job in the industry, I was presented with a
quote that the client had gotten from a multinational and was told – “It’s yours
if you can do it at half the costs.”
I was hungry enough to agree and we ended up settling at around
40 percent of what the competitor had quoted. However, while I had won the job
on the third point, the client had high expectations about the first point. I
was expected to deliver coverage on a multinational level without the multinational
team (which would have required a budget). I managed to deliver the expected
results at the expected budget (so much so that they told me to invoice and
paid on the spot) by working through a relationship that are not commonly used
by conventional practitioners.
Business is inevitably about balancing points one and two
with point three. The adage is that success inevitably boils down to being able
to be “good, fast and cheap.”
I’ve noticed that national economies, particularly the Asian
ones do something similar. Japan, the most advanced economy, built itself up by
being able to make things cheaper and better than the West. Gradually, as
prices rose in Japan, manufacturing moved to South Korea, Taiwan, Hong Kong and
Singapore.
Being able to work cheap has done wonders for Asia. Millions
have left poverty because we were able to give the multinationals a cheaper
alternative. This went into hyperdrive when China started becoming the world’s workshop
and India the back office.
However, while price is often an important factor, I have to
ask if this is sustainable, particularly for the mature economies like Hong
Kong and Singapore. Our politicians are particularly fond of reminding us that in
order to stay competitive in the global economy, Singapore needs to be competitively
priced.
I don’t think they’re wrong to suggests to say that
Singapore needs to be “competitive.” We are a pipsqueak island with no domestic
market or resources. Our larger neighbours have more to offer and so we got to
be on our toes and constantly find things to offer the world.
While I do understand that we need to be competitive in the
global economic arena, I do question if the “need to be competitive,” is
becoming an excuse to justify unacceptable practices, especially when it comes
to making life better for the poor and needy. Just think of the two most common
instances when the need to stay competitive is brought up to stop a discussion.
They are inevitably:
1.
Having a minimum wage – common argument is that
this will make us less competitive (read cheap) and therefore our economic
system and well being will collapse;
2.
When it comes to slave labour from South Asia.
Once again, the common point is that if we gave the slaves a dollar an hour
more (and actually gave it to them) and got them to spend an hour less in the
sun, our infrastructure costs would sky rocket and our economic system would
collapse (believe it or not, even when Covid-19 was showing us very clearly
that slave hovels were endangering the rest of us, there were people fretting
that improving the lot of slaves would endanger our economic survival).
Shouldn’t it be clear by now that a mature economy like
Singapore’s can no longer compete on being cheap and we need to reinvent our
focus on being good instead of being cheap. This is not to say that price will
not be an important factor – merely that we need to compete on something other
than price.
I go back to my freelancing experiences and the insolvency
practitioner who is proudly not competitive. I competed on price because I went
to look for my customers. The insolvency practitioner has reached the stage
where customers look for him. He does not need to be cheap. He does not need to
do every job to stay alive – merely the ones that pay very well.
There are examples of this. The most famous example of
Apple, which designs products and reinvents the way we do things. Apple is an
example of a company and business that creates our need to need their products.
This is an example of what type of business Singapore Inc needs to aspire to.
Unfortunately to be good, you need to pay and this where
Singapore needs to get away from its obsession with “cheap.” Let’s face it we
will never make things cheaper than China or 3D printing or do back office work
cheaper than India or AI and that’s even if we give away factory land away and
exempt foreign multinationals from paying CPF contributions to locals.
Our economic role models can no longer be other developing
countries. I think of the German model as an example. Germany has one of the
highest hourly wages in the world:
Yet, at the same time, Germany is also the third largest
exporter in the world. Germany with one third of the population of the USA and
not even 10 percent of China’s, competes in the global market.
What does Germany export? It exports good quality products.
The ones that come to mind are Mercedes and BMW, which are known as some of the
best cars in the world rather than the cheapest:
However, there are others. The German economy or Europe’s
largest and the world’s fourth largest, is driven by SME enterprises that specialize
in unique goods for very niche industries. I think of the Rational Combi-Oven
that every chef I’ve worked with used to drool over as an example.
Isn’t it time we moved away from trying to be the world’s
cheapest for the world’s big boys? Why can’t we be proud of being good and not
being embarrassed of getting the world to pay for Singapore Inc’s products what
it pays for that of the West.
We’re a small economy but in the interconnected world we
live in, there’s no reason why we can’t do big things on the world stage?
Surely this is something the government should drive us towards.
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