Japanese startups see S'pore as door to SEA

Entrepreneurs from the Land of the Rising Sun are expanding to Singapore because of its proximity to Southeast Asia and business-friendly environment.

Similar to multinationals in Japan, Japanese entrepreneurs are expanding overseas by using Singapore as a stepping stone to the wider Southeast Asia and Asian market. ZDNet Asia spoke to three Japanese startups that have decided to set up shop in the citystate.

Companies such as Panasonic and Mitsui Chemicals have moved key functions to Singapore while Hoya Surgical Optics established its headquarters in Singapore and moved its CEO. Among the reasons, according to a Japan Times report in August.

They chose Singapore is to be closer to the emerging Southeast Asian markets, the report said. In the article, Japan External Trade Organization President Hidehiro Yokoo noted Japanese foreign direct investment in Southeast Asia has exceeded that of in China in recent years.

Startups from Japan are moving into Singapore for similar reasons.

Choy Wai Cheong, director and COO of Android developer platform Metaps, said the company was choosing between Hong Kong and Singapore as its Asian hub. In the end, Metaps chose Singapore as it had a more strategic location to Southeast Asia where many Android developers were expected to arise , Choy said. Metaps started its operation in Singapore in March 2012.

Yukiko Otori from cloud video-conferencing service provider V-CUBE agreed, adding that Singapore was the hub of Southeast Asia and had easy access to surrounding countries. Singapore's "excellent" Internet network infrastructure  was another factor, she said.

Emi Takemura, co-founder and CMO of social ticketing event platform Peatix, said for the company which has bilingual services in Japanese and English, choosing an English-speaking market was its first priority when it was planning its Asia expansion.

"Singapore has very welcoming environment for startups so it made sense for us to set up our hub here and expand to other markets in the future," she said.

While Takemura noted while she had not been in Singapore for too long, she felt the startup scene in Singapore was more focused on young people than in Japan. Many tertiary institutions in Singapore  have entrepreneurship support network on campus which is different from Japan, the Peatix executive pointed out.

"In Japan, there is an increasing number of startups from college but it's more disjointed. If you want to start a business, there are incubation programs but the schools usually do not support that. You kind of independently pick the path," she said

"In Singapore, there is more built-in entrepreneurship programs that encourage local IT startups from Singapore university," she added.

Singapore govt supportive of startups
Other factors which attracted the Japanese startups to Singapore include the country's business-friendly taxation system and the government's encouragement in building the country's startup scene. Singapore's corporate tax rate is at 17 percent--one of the lowest in Asia, while Japan's corporate tax rate is as high as over 38 percent.

"The Singapore government is supportive of startups and is giving out grants and subsidies to various kinds of startups whether they are local or foreign-invested ," Choy said.

Takemura observed that the Singapore government was good at leveraging both public and private resources to drive the country's startup scene. For example, the Singapore government matches funds provided by a private investor to encourage more seed funding for startups.

Choy said Singapore has the advantage of a diversified talent pool from both the local population and foreign talent from the region.

Asked what the Singapore startups can learn from their Japanese counterparts, Choy said that the Japanese companies were good at innovation and have been always ahead of the game in areas such as games, Internet and apps. Their innovation has led to Japan overtaking the United States as the top revenue generator for Google Play appstore  in the month of November, he said.

Otori noted that Japanese startups have a high standard of customer support. "The reason is that Japanese customers demand products with higher quality, even for startups ," she said.