Public Perception and the Challenge of Foreign Retail Chains in Singapore
Singapore’s trade minister, Gan Kim Yong, recently revealed that locals own nearly 90 per cent of registered retail businesses in the city-state, with Chinese nationals coming in second at a distant 3 per cent. These figures sparked mixed reactions from the public and analysts, raising questions about the implications of foreign ownership in the retail sector.
The discourse online centered on what these statistics truly meant. Critics argued that while the proportion of foreign-owned entities might be small, many of them could be large brands with multiple outlets, potentially outcompeting smaller local businesses. Some observers warned that public perception could be skewed due to the visibility of popular foreign chains like Chagee, Luckin Coffee, or Scarlett supermarket, which often occupy high-footfall locations. This visibility might create an illusion that foreign brands are dominating the market, even if their numbers are relatively low.
According to data from the Accounting and Corporate Regulatory Authority (ACRA), as of January 8, Singapore residents owned 89.7 per cent, or 40,931 of registered retail businesses, while business owners who were Chinese nationals accounted for 3 per cent (1,390). Malaysians and Indians each owned about 0.9 per cent, with the remaining percentage comprising owners from the United States, Japan, Vietnam, and Indonesia.
Ownership is determined by shareholders who collectively hold more than 50 per cent of shares, or nationality for individual owners. For corporate shareholders, their country of origin is based on their place of incorporation. Earlier data on the breakdown of ownership of retail businesses is not publicly available.
The Struggles of Local Businesses
In Tampines Mart, a heartland shopping center in eastern Singapore, the beverage brand BubbleCute closed its sole outlet after two decades of operations, citing rising rent. A spokesman for the local brand told This Week in Asia that the environment in Singapore was tough, especially with rising operating costs and rental pressures.
The owners found a new space in the same neighborhood but had to invest in renovation and equipment. “Not everyone knows we have moved, so business has been tough since we restarted last July,” the representative added. Chinese coffee chain Luckin Coffee now occupies the unit where BubbleCute once stood.
Analysts suggest that foreign-owned retailers are likely to continue entering the Singapore market, presenting both opportunities and challenges for local businesses. Chen Liang, an associate business professor at the Singapore Management University (SMU), noted that the growth trend of mainland Chinese food and beverage outlets is expected to continue.
While the influx of foreign firms increases competition and encourages improvements in value proposition, efficiency, and service quality, it also puts pressure on small local businesses with lower margins. Linda Lim, professor emerita of corporate strategy and international business at the University of Michigan, highlighted that foreign retailers with a presence across various markets can often tolerate losses better than local firms.
A bleak picture for local retailers might discourage entrepreneurship, as retail is the most common entry point for those seeking to start a business. It could also cut off a channel of upward mobility, limiting the dream of being one’s own boss.
Some online users have questioned the full picture painted by the statistics released by Gan. They argue that listing the number of business entities does not provide insights into the scale and presence of these businesses. Chen from SMU emphasized that the statistics are informative only regarding entity ownership, not about sales, stores, rents, or jobs.
Monitoring price and inflation levels in sectors where foreign chains expand visibly would offer a clearer understanding of whether competition is tightening. If replacement is a concern, analyzing the entry and exit rates of retailers in areas with high foreign chain density compared to areas without could be helpful.
Government Initiatives and Policy Recommendations
For the government’s part, Gan mentioned that Singapore has implemented grants aimed at supporting businesses in transformation, increasing productivity, and overseas expansion. These include the Productivity Solutions Grant, allowing small and medium-sized enterprises to receive up to S$30,000 (US$23,320) to automate processes with IT solutions and equipment.
Gan also highlighted the example of Design Orchard, a mall that opened in 2019 along Singapore’s shopping district. The mall showcases over 80 local brands and allows tenants to save costs through shared facilities and services.
Chen suggested that while grants are useful for capability-building or digital adoption, they may not fully address issues such as rent, footfall volatility, or higher consumer expectations. Policies should aim to contain externalities including escalating rents in prime locations and the hollowing-out of retail ecosystems in neighborhood areas. Place-based interventions like pop-up pilots or flexible leasing experiments may be helpful and more targeted.
Providing rental subsidies to retail businesses integral to Singapore’s heritage, such as local cuisine, could also be an option, according to Lim. She suggested that preserving food heritage might be socially beneficial, even if not economically, for the city-state. However, she cautioned that any such policies need to be tightly controlled to prevent foreign retailers from using them as a back-door entry to the Singapore market.
BubbleCute called for greater stability and transparency in rental frameworks, advocating for longer-term leases to allow firms to plan, invest, and build a customer base without uncertainty. “We have always tried to stay local and familiar,” its spokesman said. “We hope there continues to be space for home-grown brands, because they add to the character of our neighborhoods.”
