Singapore is home to thousands of Multinational Companies (MNCs) according to the EDB, many of whom have their headquarters in the country. The number of MNCs is Singapore is continually increasing especially when compared to its closest regional business center, Hong Kong. In a study compiled by KPMG, around 50% of MNCs choose to have their Asia headquarters in Singapore compared to around 37% who choose Hong Kong. With those operating in the technology industry, that figure jumps to 59% having the regional HQ in Singapore.
1. What is a multinational company example?
Multinational Corporations or Multinational Companies are corporate organizations that operate in more than one country other than their home country. Multinational Companies (MNCs) have their central head office in the home country and secondary offices, facilities, factories, industries, and other such assets in other countries.
These companies operate worldwide and hence also known as global enterprises. The activities are controlled and operated by the parent company worldwide. Products and services of MNCs are sold around various countries which require global management.
2. The main benefits of being multinational companies in Singapore
Specialization in production
The scale of many industries means firms split production into different countries. For example, Apple design electronics in the US, where they have access to skilled labor. However, the design is then manufactured in China, where labor costs make production much more efficient than producing in relatively high-cost US.
For industries like the motorcar, the production process is split up into more stages, with plants dedicated to engines, tires, and bodywork. The multinational can produce different components in regions that are best suited to manufacturing that process before assembling in plants close to their market for sale. For example, BMW produce engines in Germany, import tires from Asia and then have plants assembling cars in many different countries, such as the UK.
Outsourcing
Related to specialization is the concept of outsourcing. A manufacturing firm in a high-labor cost economy can outsource the labor-intensive production to cheaper labor cost countries and enable a reduction in costs.
Economies of scale
Multinationals can benefit from a range of different economies of scale, including
- Technical economies – economies of scale in producing goods, using expensive machines, and investment. For example, if a drug company invests in developing new drugs, it can then sell them around the world
- Marketing – A global brand can advertise on a global scale and gain global exposure. For example, at the Olympics, you see global brands such as Coca-Cola, Visa, Samsung, McDonald’s, and General Electric.
- Risk-bearing – A large multinational is more able to survive a local downturn due to its diverse consumer base. If the US economy slows, a multinational can counter this by increased sales in Asia. A firm that only operates in one country is more vulnerable to domestic problems.
3. How many multinational companies are there in Singapore?
Singapore’s Economic Development Board (EDB) reports that more than 37,000 international companies, including 7,000 MNCs, have their headquarters in Singapore.
The top Multinational Companies in Singapore
FMC Agro
For more than a century, FMC Corporation has served the global agricultural, industrial, and consumer markets with innovative solutions, applications, and quality products. On November 1, 2017, FMC acquired a significant portion of DuPont’s Crop Protection business. FMCs 2016 pro forma revenue was approximately $4 billion.1 FMC employs more than 7,000 people throughout the world and operates its businesses in two segments: FMC Agricultural Solutions and FMC Lithium. Ever since our beginning in California in 1883 when John Bean invented the first piston sprayer for agriculture, FMC has continued a proud heritage of pioneering solutions for our customers.
Revenue: 5M-10M
Founded Year: 2017
LaSalle Investment Management Asia
LaSalle Investment Management
LaSalle is one of the world’s leading investment managers. They only invest in real estate, bringing a unique focus and depth of expertise to the sector. LaSalle has decades of experience and has successfully operated in both bear and bull markets, and always protects the interests of their investors. For this reason, they have trusted the world over, and this will continue to be the case for years to come. Not surprisingly, they have chosen Singapore as one of their regional offices.
Revenue: 10M-100M
Founded Year: 1999
SAFERAY
SAFERAY is one of the best Multinational Companies in Singapore
Saferay was founded in 2010 by an experienced team that had previously built Q-Cells International from scratch into the largest system integrator of solar plants in the world within 2 years. The team’s mission is to create a new kind of independent power producer that solely focuses on solar PV. Saferay developed rapidly during the first two years of existence, building 45 MW during the first six months of its existence, and adding another 125 MW in the first full year of operation. The company keeps most of the powerplants on its own balance sheet. Saferay is fully privately owned and has no third-party investors, which allows for fast decision-making and clear focus. The company is currently active in Germany, Chile, Mexico, the US, Japan, Singapore, and Australia.
Revenue: >100M
Founded Year: 2012
NVIDIA is one of the largest multinational companies in Singapore
Nvidia Corporation is one of the best American multinational technology companies that designs graphics processing units for the gaming and professional markets, as well as system on chip units for the mobile computing and automotive market. Nvidia Corporation, incorporated on February 24, 1998, focuses on personal computer (PC) graphics, graphics processing unit (GPU), and also on artificial intelligence (AI).
NVIDIA is one of the biggest multinational companies in Singapore
Since 2014, Nvidia has diversified its business focusing on four markets: gaming, professional visualization, data centers, and auto. Nvidia is also now focused on artificial intelligence. The company holds more than 1,100 U.S. patents, including ones covering designs and insights fundamental to modern computing.
Founded Year: 2000
Micron Semiconductor Asia
Micron Semiconductor
Micron Technology is a world leader in innovating memory and storage solutions that accelerate the transformation of information into intelligence, inspiring the world to learn, communicate and advance faster than ever. We deliver the world’s broadest portfolio of technologies at the core of today’s most significant disruptive breakthroughs such as artificial intelligence and autonomous vehicles.
They manufacture the industry’s broadest portfolio of memory and storage technologies: DRAM, NAND, NOR, and 3D XPoint™ memory.
Founded Year: 1998
4. Conclusion
Advantage of Multinational Companies
- Creating job opportunities
- R&D in areas of interest
- Ensure standards kept
- Foreign investments
- Business for SMEs
Disadvantage of Multinational Companies
- Like most corporations, MNCs are often interested in profit at the expense of the consumer regardless who they are.
- MNCs avoid tax through funnelling profit through the countries with lowest corporation tax rates.
- Cash reserves – All if not most MNCs has cash reserves which is in overseas accounts. This just bring deadweights welfare loss as It is not being used for investment in the right area.
- Their market dominance makes it extremely difficult for any local small firms to succeed, or even close some of them.
- MNCs often contribute to pollution in the pursuit of profit.
- Outsourcing at cheaper labour-cost economies has caused loss of jobs in the a more developed economy. This can be either good or bad, but it depends on how you look at a cup half full or half empty.
