Mittelstand in Singapore
- Posted by admin
- 04 September 2014
As a company that works for small and middle sized enterprises, specializing in company registration and company incorporation, we have studied the way these enterprises workin other developed countries. We did some research on how middle market companies in Singapore could be improved, following successful models from other countries. We have studied various economic models that Singapore could replicate.
The German mittelstand model seems the most favorable option. The word Mittelstand means small and medium sized manufacturing businesses in Switzerland, Austria, and, most of all, Germany. Mittelstand enterprises are very productive and profitable. According to economists, they are the most important part of the German economy, which is one of the leading economies of the world.
How Mittelstand Works
German mittelstand enterprises focus on one narrow field and they excel in that particular area, they, for instance, sell specific machines and accessories for one particular industry. Imagine a family owned business that focuses on one specific auto part; this enterprise has been producingspeedometers for several decades. After a while, the enterprise will be the best in that area, it will create the best speedometers. Most mittelstand companies deal with car accessories, machines, chemicals, or electrical devices. Mid-market companies create jobs; in Germany, the jobs that mittelstand companies offer make up 60 percent of all the jobs. These companies offer a good working environment and good career opportunities for their workers, and they actively invest in creating more jobs and in training and developing their employees.
In general, middlestand businesses focus on export. They have long term goals instead of quarterly or annual goals, so they go for medium-term or long-term investments. They are funded by equity and bank loans. Mittelstand owners make decisions alone, they ensure job security for their employees.They take responsibility for the finances of the company and for the team of workers. Even iftimes get hard and the market demands less of their products, these employers will keep their employees’ payment steady. They show their employees that they care about them. This improves loyalty to the company. Mittelstand policy can help other issues: instead of a couple of giants taking over a country’s economy, there are lots of smaller businesses that focus on specific areas. Mittelstand approach also means more workplace for the unemployed young people. Mittelstand is a proof that a country can benefit from producing for the global market, provided they use their human capital and they focus on excelling in one particular area.
How Singapore Could Replicate the Mittelstand Model
Other countries have already recognized the benefits of mittelstand policy. South Korean, Iranian, Egyptian as well as American officials and entrepreneurs have studied the German model in order to copy it, translating it into their specific economic conditions. However, in order to succeed, they have to consider their own specific situation. In Germany, there is a balance between schools and companies (for example, mid-size companies support their future workers, they offer internship programs and language courses for them, they support their studies) as well as capital and labor (they invest to provide more opportunities for workers), this is how middlestand business model can be so successful. Could we do the same in Singapore?
The other factor we should consider is that mittelstand is changing fast. Its products go to the global market, so they have to reinvent themselves, tailoring their services and products to the demands of their specific new markets.