Expansion into any foreign territory requires a clear understanding of the business climate found in each candidate nation. Companies in the tourism and travel industry are as susceptible as any other to the negative impact of restrictions on international growth. Countries may appear to be valid locations for fruitful development based on physical infrastructure and the supporting population only to be revealed as potential money-pits if the government is not particularly friendly to the concept of international competitors entering domestic markets (Daniels, Radebaugh, & Sullivan, 2013). Accordingly, it is necessary to objectively explore several aspects of the venture prior to risking losses that could occur with an overzealous reaction to surface appearances. Variables like exclusive territorial taxes, labor force characteristics, mandated limitations, import restrictions affecting supply needs, and cultural influences are some of the less obvious barriers that can derail a project that would otherwise appear viable based on an analysis of core infrastructure and industry operations. However, these more basic evaluations are certainly necessary to develop an informed understanding of the situation in combination with the other more specific variables. Here we will examine this information in relation to the potential for successful expansion into Hong Kong and/or Singapore.
Infrastructure
Hong Kong
The territory of Hong Kong has an excellent social infrastructure and is consistently ranked as the freest economy in the world. The area is structurally contemporary with widespread service availability and has played host to a constant flow of international visitors due to its status as a global center of finance. One of the few concerns regarding basic infrastructure in Hong Kong is that the increasingly dense population has placed office and living space at a premium.
Singapore
Hong Kong has an attractive infrastructure for expansion but Singapore may be even more impressive. Jumpstarted by colonial developments, the area has become an international leader in many economic areas including finances, oil refining, and gambling while maintaining an up-to-date physical structural. Tourism already represents a large part of the economy that is expected to continue growth (Ooj, 2012), demonstrating the potential for success in the area and placing Singapore at a slight advantage over Hong Kong for prospective expansion.
Government Influence
Hong Kong
The Hong Kong government is very laid back with little involvement in most business affairs. They maintain a capitalist environment that is progressing toward a full democracy. Taxes are among the best in the world for international corporations and most mandates pose little threat to the success of incoming international ventures. There remains a land-related concern due to government ownership of all land and restrictions on leases (Lai et al., 2013).
Singapore
The government of Singapore is known for resistance to corruption and high activity in economic affairs. However, the involvement of policy does not place many restrictions on business operations and does not target international corporations. Taxes are reasonable though higher than those that would be assessed in Hong Kong. However, since both areas rely highly on imports, the presence of several free-trade agreements puts Singapore in a favorable position for industries that rely on materials. This may not be a concern in the service-orientated sectors of the tourism and travel industry.
Workforce and Culture
The quality and quality of available workers is a primary issue when expanding into a new international region. Even industries with a small number of employees will almost certainly require at least a single domestic representative, and integrating a single worker into an intimate employment setting can be as difficult as hiring a full force for a larger company. Quality and quantity are the two most basic factors affecting workforce potential, and neither would appear to be a concern in either Hong Kong or Singapore. Both territories are densely populated and are already home to a great number of skilled people due to the nature of existing industries.
It can be tempting to end the workforce assessment at the identification of worker numbers and skill levels, but the impact of culture can supersede all other characteristics. In an extreme example, if an otherwise thriving area is home to a traditional belief that tourism is a spiritually damaging exploitation of their land then a foreign tourism company would be unlikely to succeed despite having access to a workforce that appears to be of adequate quality and quantity. Fortunately, there do not appear to be any cultural barriers for tourism and travel industry expansion to either country. Singapore may present a better cultural situation due to the importance of merit in traditional assessments of value (Chen & Huang, 2011).
Conclusion
Both Hong Kong and Singapore are good candidates for international expansion in the tourism and travel industry, but Singapore is the best choice for several reasons. The country does not have land restrictions like Hong Kong, has a large tourism market, and maintains many international trade agreements should materials become a concern. Additionally, a cultural focus on advancement through merit rather than lineage provides a welcoming atmosphere for international competitors.
- Chen, H. J., & Huang, S. Y. (2011). Culture and risk assessment: A comparison of Singapore and Taiwan. International Business & Economics Research Journal (IBER), 6(8).
- Daniels, J. D., Radebaugh, L. H., & Sullivan, D. P. (2013). International business: environments and operations (14th ed.). Upper Saddle River, NJ: Prentice Hall.
- Lai, L. W., Chau, K. W., Ching, K. S., Kwong, J. W., Cheung, P. A., & Lorne, F. T. (2013). Acquisition and redevelopment of bus depots: A Hong Kong land policy and planning case study. Habitat International, 39, 75-84.
- Ooi, C. S. (2012). Brand Singapore: The hub of ‘New Asia’. Destination Branding, 242.
