subject: Tesco Ready to Do Business in Singapore [print this page] The retail landscape in Singapore is about to undergo a change, and we don't just mean the record growth that is occurring in that sector. In a story that has since made international headlines, grocery giant Carrefour decided to place the 61 stores it controls throughout Southeast Asia up for auction. Their ideal asking price of somewhere between 800 million and 1 billion US dollars was at first called optimistic by analysts, but soon, with more than a dozen companies involved in an intense bidding war for the assets, it became apparent that Carrefour stood in a position to name their price. In the end, leading UK grocer Tesco was victorious, and now owns those 61 stores throughout Singapore, Hong Kong, and other countries in the region.
The interest in the auction has actually caused some to suspect that Carrefour has committed a major blunder. The Financial Times, for instance, recently stated as such, and cited the 17.9% year on year growth in gross domestic product in Singapore as the primary reason for their confusion. Why would Carrefour be so interested in selling their already considerable hold in one of the fastest growing economic regions in the world?
The development of Singapore and Pacific Asia is no secret. As economic recovery begins to spread throughout the east, a cultural shift has occurred. While Singapore was originally an economy seated firmly in exports, this is no more. They are now as much a country of consumers as they are producers. One need only look at how previous exports such as pharmaceuticals and electronics are now some of the biggest industries, in terms of domestic purchases, in Singapore. Consequently, it has been supposed that any business in the retail or manufacturing sector is poised for solid, sustainable growth over the next several decades. Carrefour's sale of assets in such a region is indeed confusing in this light.
However, there are other reasons besides economic growth to wonder about Carrefour's strategic wisdom. The United Nations recently published a report that gave an estimate that some 140,000 people a day will move to Asia during the next 40 years, primarily for economic reasons. As groceries are one of those foundational commodities that all people require, it seems even more likely that Carrefour could have thrived in this market.
At any rate, those times are over, and Carrefour's opportunity is gone. Tesco now holds the keys to 61 stores that are in prime position to provide solid growth and sales for the foreseeable future. They seem certain to have success in the region as a result of this latest buy. What's interesting to the motivated entrepreneur, however, is that Tesco is by no means in a unique situation. Every day, more and more businessmen and women are taking advantage of Singapore's open economy to migrate existing businesses there, or set up new ones. With the manufacturing and retail sectors set to explode, along with solid growth in other sectors such as real estate and communications as well, it's easy to understand why.
