On 9th December 2020, Germany Singapore Business Forum organized an event, held in conjunction with the Singapore Week of Innovation and Technology (SWITCH), to debate the relationship between German corporations and Singapore’s startups, as well as investigating the possibility of joint projects to promote business innovation amid the COVID-19 health and economic crisis.

Since the 1960s, Germany and Singapore have gradually developed a strong strategic relationship from a trade perspective.

The substance of this relationship in terms of trade is well described by data from the German Federal Foreign Office, according to which the value of exports from Singapore to Germany reached €5.7 billion in 2019. In contrast, German exports to the Asian country totaled 87.3 billion euros.

Germany has also actively supported the negotiations of the EU-Singapore Free Trade Agreement (EUSFTA), the free trade treaty aimed at facilitating the export of goods and services between the European bloc and the Asian country.

For some time now, German corporations and SMEs have been exploring the potential of the Singaporean market, appreciating, in particular, the predisposition of the authorities to support the attraction of investments, as well as the geographically strategic position of the city-state within Southeast Asia.

On the other hand, for Singapore enterprises, the relationship with Germany is in practice the main gateway to the European single market.

Given the mutual importance that the two countries hold within their respective strategic networks, the COVID-19 pandemic has not led to a stalemate in bilateral dialogue.

On the contrary, as the December 9 event revealed, the German and Singaporean manufacturing communities are looking to expand business partnership opportunities and establish additional digital connections even in the midst of the pandemic.

COVID-19 and Manufacturing in SouthEast Asia: navigating the challenges

 

The breakout of the pandemic has brought unprecedented changes to the manufacturing industry in SouthEast Asia.

In this situation, it is possible to observe the presence of three central trends in the Southeast Asian region:

• the rise of intra-Asia trade and supply chains, driven by rising of internal consumption, growth of domestic value chains.
• the reorientation of industrial policies by Beijing. China is progressively shifting from labor-intensive manufacturing to R&D-based manufacturing.
• the diversification of supply chain from China to other parts of Asia, as a result of the tendency of international companies to diversify supply chains from China to other parts of the SouthEast Asian region. According to a survey of 150 business executives, about 67% of European executives and 80% of American executives intend to shift sourcing to other Asian countries.

As far as post-pandemic supply chain arrangements are concerned, the phenomenon of regionalization seems to be in store for Southeast Asia as well, as the effects of the pandemic are promoting the formation of unique clusters to form regional or local supply chains.

The definition of the regional context was the basis on which to develop a dialogue in which to compare different experiences in responding to the pandemic, as well as to explore the possibilities for an enhanced partnership between Germany and Singapore in the area of open innovation.

Overall, key points identified by the panelists as major solutions to reduce the economic impact of the pandemic included:

1. Building partnerships between different sectors
2. Prioritizing development in key areas such as digital solutions and sustainability
3. Developing capacities to react to external shocks

Germany – Singapore: the opportunities to strengthen open innovation partnerships during and beyond the pandemic

 

Keynote addresses by Prof. Dr.-Ing. Axel Stepken, Chairman of the Board of Management, TÜV SÜD AG, and Mr. Peter Ong Chairman, Enterprise Singapore, kicked off the proceedings.

Both speeches outlined the current state of cooperation between Germany and Singapore in terms of open innovation partnerships, emphasizing that the pandemic has not diminished the interest of the two countries in forms of collaboration aimed at addressing global innovation challenges in a creative way.

At the institutional level, initiatives have been taken to facilitate the maintenance of communication channels between the two countries during the health crisis, including the creation of a green lane corridor for business travelers. But, above all, Germany and Singapore took full advantage of the potential offered by digital platforms to engage with the business and startup communities of the other country.

What will remain is the digital connection, even after the pandemic.

– Prof. Axel Stepken

The two countries are characterized by a lack of natural resources and dependence on knowledge-based innovation. Therefore, what Germany and Singapore need “is the continuous flow of fresh ideas that results in the creation of new, attractive products”.

The pandemic, while disrupting existing social and economic structures, has created an environment conducive to experimentation across industry segments.

Thus, COVID-19 ended up reinforcing the shift towards crowdsourced innovation. In both Germany and Singapore, the need to counter the spread of COVID-19 has given new impetus to collaboration between corporations and startups, which have been able to develop joint programs with a strong impact on pandemic response measures.

Innovation happens best at the intersection of different industries and cultures.

– Mr. Peter Ong

The cooperation between the startup BioNtech and Pfizer in developing a vaccine against COVID-19 (Germany) or the rapid scaling up of the machine learning-based diagnosis system of BioMind (Singapore) across hospitals in China, Germany, and Luxembourg are two of the most concrete examples mentioned by both speakers.

Open innovation as a driver for growth

 

The discussion then focused on creating growth opportunities by connecting Singapore startups to Germany’s innovation scene.

The panelists who took part in this session were: Mr. Claus Karthe, Co-founder & CEO, German Entrepreneurship Asia; Dr. Stefan Nothelfer, Director Partnerships at Lufthansa Innovation Hub; Dr. Peter Nagler, Chief Innovation Officer, A*STAR and Executive Director, Institute of Chemical & Engineering Sciences; Dr. Maren Schweizer, CEO, Schweizer World, Singapore; Mr. Raymond Moh.
Founder of BioMind.

Open innovation and its potential for development was the main topic of the panel.

In fact, open innovation has been defined as a crucial element for companies to stay competitive. This idea was based on the belief that “in a world of distributed knowledge companies can’t rely only on internal resources and then will benefit immensely from innovating with partners”, as Mr. Karth put it.

At present, the idea that promoting open innovation projects is a key asset to increase the cognitive and economic potential of companies is gaining increasing consensus.

One of the priorities is therefore to have an environment that is designed to facilitate open innovation projects. In this sense, the intervention of Dr. Peter Nagler examined the aspects that make Singapore one of the best contexts in which to experiment with collaborations between startups, SMEs, and scaleups.

In fact, according to Dr. Nagler, Singapore enjoys several competitive advantages including:

• a government willing to invest in research and development
• a quality education system, composed of leading universities and research centers
• a well-established startups ecosystem
• a strong manufacturing hub. This aspect is sometimes overlooked when analyzing Singapore’s potential, but the city-state has a very competitive electronics, agriculture, and chemical sector, which is knowledge and technology-driven.

Singapore also hosts several regional offices and research centers of many international companies. It is therefore a context in which relevant stakeholders can easily communicate. As Dr. Nagler points out, “it is easy to form consortia and unusual partnerships across industry boundaries”.

Schweizer World, a German Mittelstand (or SME) is a long-standing example of the kind of collaboration that can take place between a German family business and the Singapore business community. In fact, Schweizer World has been exploring opportunities in Singapore’s research and business ecosystem since the 1980s.

Maren Schweizer shared her company’s experience during the 2008 financial crisis. In such crisis contexts, pursuing open innovation and progressive partnerships is a useful strategy to cope with such violent shocks. The advantage of open innovation initiatives is that they allow putting the strength together between partners.

Open innovation could be a means to build resilience and capabilities by dividing the risks between partners.

The theme of the potential of open innovation was then related to the challenge of sustainability. Co-creation and knowledge-sharing are key elements of the idea of open innovation. At the same time, they can play a vital role in informing strategies and policies to tackle challenges related to climate issues.

As pointed out by Dr. Nagler, to solve environmental challenges “you have to create new value chains, you have to create new partnerships”.

Open innovation has also emerged as a possible game-changer regarding technologies and services within a key sector such as mobility.

In the area of mobility, a collaboration between Germany and Singapore can be derived, as Dr. Schweizer pointed out, from the combination of their respective strengths, namely the expertise of the German industry in hardware development and the experience of Singaporean companies in software development.

The combination of these two strengths certainly creates more value in the mobility sector. Singapore is a great pilot market in that.

– Dr. Maren Schweizer

Strengthening relations with the economies of Southeast Asia concerning the development of innovative projects in the mobility sector has been identified as a priority for German companies in the sector by Dr. Stefan Nothelfer of Lufthansa Innovation Hub.

As Dr. Nothelfer points out, Germany has a well-established tradition in the mobility sectors, but innovation dynamics are actually happening in Asia.

53% of the mobility industry’s global venture capital is currently spent in Asia. Half of the world’s unicorns in travel and mobility tech are based in Asia, and for us Singapore is basically an ideal base to participate in these dynamics.

– Dr. Stefan Nothelfer

The panel was enriched by a different perspective, that of a representative of the startup world, Mr. Raymond Moh, founder of BioMind.

Mr. Moh spoke about the current state of development in the healthcare sector, highlighting the opportunities for development and innovation dictated by the urgency of healthcare. In BioMind’s experience, the relationship with the German healthcare model has been very important to study advanced patterns in research and healthcare infrastructure.

The collaboration with German hospitals was also a necessary step for BioMind to scale up across the EU.

Differences in mentality and culture can actually be an obstacle to open innovation projects. Strengthening the collaboration with an established partner like Germany and through it laying the foundation for establishing research centers in Europe is one of the hypotheses considered by Mr. Moh to strengthen the presence of the Singapore business community in the European market.

 

Germany and Singapore represent gateways to wider markets for each other.

 

Developing open innovation projects, however, is not a linear process. Several challenges need to be addressed for partnerships to be successful.

For example, one of the possible obstacles is the differences in mindset, which result in different management and decision-making processes, between corporations and startups.

As Dr. Nothelfer points out, corporations are slower, and their decision-making processes tend to be protracted, while startups tend to operate more quickly, driven by a greater appetite for risk.

Trying to understand the respective cultures and creating a link between the mindsets of such different entrepreneurial realities is, therefore, an important element for the balance of open innovation processes.

Equally decisive is transparency among the partners. From the perspective of the Lufthansa Innovation Hub, for example, Dr. Nothelfer stated that it is crucial to know “what unique assets startups can bring to the table”.

Overall, the picture that emerged from the meeting is one of two business communities intent on exploiting the urgency dictated by the COVID-19 pandemic to strengthen enterprise development in areas of common interest, including medical technology, manufacturing, and mobility.

In this perspective, open innovation programs seem to maximize the benefits for both German corporations and Mittelstand as well as Singaporean startups.