SG #101: The basics of Singapore
Singapore is a fabled land. The world looks at Singapore as a futuristic utopian land. What is Singapore, really? Who are the people? What are their buying behaviours?
👋 Namaste! Welcome to Out of Singapore. I am Shan and I write about building business in Singapore. I came here in June 2021 and quickly fell in love with the place. I conjured up wild hopes from the place. Will they come true? Time will tell.
Yesterday, a LinkedIn post about Singapore irked me. This gentleman claimed - “There is nothing Singaporean about Singapore food” and goes on to share Kaya Toast and Hainanese chicken rice as cultural gifts from immigrants. It was annoying but then I realised that few people know about Singapore becoming Singapore.
Culture and consumer behaviour are the fundamental levers on which businesses are built. In 2022, when I started with my first business here, I knew nothing about people on the ground. I learnt bits and pieces during my travel to Jakarta, Kuala Lumpur and Singapore wet markets and central trading markets. It takes years of grinding to earn the trust to get into business relations. That was a B2B business.
For consumer business, knowing about consumer, their habits and practices is fundamental. I have come to know a bit about Singapore, so let’s spill the bean.
We will cover
Who are Singaporeans really?
Why is Singapore pre-dominantly Chinese?
What do Singaporeans care about? The Five Cs
How rich are Singapore residents?
How do Singapore residents buy?
Let’s get started.
#1 Who are Singaporeans really?
Singapore is a country of immigrants and it started taking shape in 1819. The British identified the island as their trading post for the India-China trade. At that time, the island population was 1000. By 1824, this increased to 10K. By 1871, there were 100K people living on the island. The British were ingenious - they made Singapore port “free”, pitching it against the Dutch controlled ports of Jakarta and Manila. Few things worked in favour of Singapore port
No taxes, free port
Coming of steam ships which needed frequent bunkering
Production of rubber and tin in Malaysia (1840 onwards, by Chinese)
Opening of Suez Canal in 1869
All of this brought Chinese, Malay, Indian, and Arab traders and merchants to the port city of Singapore. However, one ethnicity dominated - by 1845, more than half of the population were Chinese. The two opium wars further pushed more Chinese to seek refuge in Singapore, a burgeoning port city close to Southern China.
In the modern time of last 50 years, there has been a play of racial domination in South East Asia. Malays wanted to dominate Singapore and were worried about influencer of China and Chinese.
Singapore has now developed into a multi racial country that is highly aware of it’s racial identities. Race is part of everyday conversation in hawker centres, offices and Marina Bay Sands.
Here is how Singapore’s multi racial demography looks like - it is primarily Chinese (75%), followed by Malays (15%) and Indians (7%).
Citizens form 61% of the population, 8% permanent residents and 29% non-residents. You can have a look at the split of non-residents in the chart below. Each of these non-resident group is an interesting story (to be captured some other day or maybe on LinkedIn).
#2 Why is Singapore pre-dominantly Chinese?
Three reasons - Trade, geography and politics.
Trade - Singapore became the main trading port for India-China trade route and after Suez Canal started, a major port for China-Europe trade. Chinese merchants and traders took the opportunity and settled here. Singapore’s wealth has grown significantly in the last hundred years. News of business success travels fast, brining in more people.
Geography - Southern China isn’t far from Singapore. In modern context, a flight from Singapore to Shanghai takes 5.5 hours. Flight time to Hong Kong is 4 hours. Singapore was on the main trading route, which means travelling to Singapore was simpler (not easy).
Politics - Comparatively, China from 1800 to 1970s was a chaotic political place. There were two long Opium wars, and recently the cultural revolution. India, a potential source of large migration, was stable under British rule during most of this time and did not contribute to migration. India also lacked strong trade routes to South East Asia (you can disagree, I have my reasons to explain).
Safety - hahah, sorry, I said three but throwing in an extra reason. Singapore has been a majority Chinese dwelling for over two hundred years. This ethnic safety was not available in Malaysia, Indonesia or other SEA countries. Even today, Chinese Malaysian citizens do not have the same rights as ethnic Malays.
This majority Chinese population means Cantonese and Hokkien are widely spoken. People from China find it easy to assimilate into the Singapore society. This historical flywheel is the reason for the current population composition.
#3 Five Cs of Singaporean aspiration
Singaporeans “dream” are (utterly simplified)
Cash - means bank balance or savings. There isn’t a definite number cited anywhere, but you get the gist. (A friend says it’s 1 millIon to retire)
Car - Own a car. 33% of Singaporeans own a car. The COE (certificate of entitlement) that gives 10 year right to own a car has become indicator of wealth (similar to gold elsewhere).
Credit card - Don’t understand why this would be important. Somebody enlighten me, please! (Friend says self esteem, a black metal card)
Condominium - Singaporeans don’t think that buying an HDB is an investment. Almost everyone I have spoken to, believe that buying a condo makes more financial sense. Condominiums can be purchased by residents and non-residents alike while HDBs can only be bought by residents. Condominiums offer a more “lavish” lifestyle - tennis courts, swimming pool, barbeque pits, and security guards.
Country club - This is membership for the affluent common across the world. The rich (middle class in SG terms) want to hangout within themselves like the SOHO clubs of New York, London, Mumbai and Shanghai.
Singapore has come up new five Cs. However, I feel that’s pure state propaganda.
My version of new dreams are -
BTO HDB (this is the basic level)
Resale HDB (this is upsize level)
Condominiums (yes, plural)
Quarterly Japan trip (especially, during the cherry blossoms)
Quarterly Korea trip (and get the 10 step Korean skincare routine, see Korean Oppa)
Monthly concert tickets (it is an achievement to secure a ticket)
Let’s get to the next stage that will give you more context.
#4 Is every Singaporean rich?
Singapore’s GDP per capita was USD 133K 🫢. Do you know the GDP per capita of other rich nations, as of 2023? Look down
So Singapore is rich. How is the income distribution among its residents? Let’s look at the household statistics for that.
Avg. median household income is SGD 10.8K (inclusive of CPF)
Mean household income is SGD 13.9K (inclusive of CPF)
55% of households earn at least SGD 8K and above per month. This increased from 51% to 55% in last 2 years.
Top 10% household earn SGD 32.9K and above per month
Source: Smartwealth, Singapore department of statistics
It is fair to say that at least 55% of the households have high disposable income (8K and above), which would translate into higher discretionary spends.
#5 Buying behaviours in Singapore
Let’s get into some consumer behaviours that I have seen as business manager. I am keeping it limited to my observations (so please don’t expect lot of statistics)
Residents like to eat out. This is reflected in the presence of hawker centres around each HDB block. Cooking at home is not a norm since all adult household members are working the whole day.
Food takeaway is a big thing. Pre covid, 25%, 40% and 49% of orders in restaurants, cafe and fast food chains, respectively, were takeaway orders.
Eating and shopping are around MRT stations. Large and famous malls are built on top of MRT stations or around them. This is the design of modern Singapore.
Shopping at physical retail shops vs online stores - This news article says that 10% of Singapore sales were online purchases. I would agree. The country is highly online - reading and watching reviews - but almost everyone will like to purchase offline. It is difficult to be an online only brand in Singapore.
Consumers ask the same question - “can we collect from your office?”, “where is your store?”Buy online, collect offline is big. Decathlon is a prime example - It has 3 experience stores (large stores, with warehouse) and 12 click and collect small stores. All these click and collect stores are in proximity to MRT stations. Uniqlo has 30 stores (6 million people with 30 Uniqlo stores 🫨 ). Delivery fees are high - 10 to 15 sgd.
Consumers spend on food, travel and health. Food translates to restaurants and fast food. Travel would be flight tickets and shopping for destinations. Health would be preventive care like TCM and supplements. I wouldn’t consider entertainment to be a big monthly spend component (big chance that I am wrong about this).
Consumers love packs and bundles. Saving by upsizing and getting more products is more common that one would expect. The whole Singapore is like a giant COSTCO.
Close knit society makes word of mouth valuable - Word of mouth spreads fast in Singapore. One person likes a product. They meet friends over dinner or go to a family dinner, tell their relatives about it. The relatives share with their friends. People like to share. They don’t keep good things to just themselves (unless it is billions of laundered money, joking lah 😅).
Facebook is big in Singapore. 53% of residents are 40 and above age. The affluent class (40+ residents who have sold off one or two properties) spends thousands of dollars each week on Facebook live streams.
The Singapore Mall - Uniqlo, Cotton On, Toast Box, MacDonalds, Subway, Kopitiam/Food Junction, maybe GV movie hall, massage parlours, aesthetic clinics, and more restaurants. That’s my version of a typical Singapore mall. Mothership thinks differently (as shown in the image below).
I stop here today.
Thanks for reading. Please like and share 😍
My health has been patchy this week - bad throat, fever, weakness and strange one-side headaches. I almost decided to skip today’s writing. But here I am. A quick Jisoo GIF and then I am off.
Good bye, have a great week ahead!