Drone business in Singapore - services

[liesbeth]

good day,

I am happy to have the opportunity to post my questions and 'worries' about doing business in Singapore. I hope some people can advise me based on their own experience.
by the way, first thanks to all who send me a message.

I am owner of a company based in Belgium. We developed hardware and software for mobile mapping systems. Our first product is a high tech drone which is really for a niche market. ( and quite expensive). We already sold 1 unit in singapore and 1 to the government in Singapore.
We collaborate with a partner who is active as our reseller and closed the deal for the sold units.
We have good communication with our reseller but it is clearly a different way of mentality in doing business (good and bad)

A few times the owner of the 'reseller company' asked me to set up a business together in Singapore do deliver services with our technology. You see and feel cleary that the Singaporian are very positive about their country and sounds more like the 'heaven of business'. The country where you can earn good money and have a good live. Sounds like a fairy tale.
I can make use of his office address and secretary to reduce costs. He also should have the connections to do business. It is not the goal that I move to SG in short time but he can point a person who can take care of the business.

Does anyone have experience with setting up a company where a Singaporian is shareholder?
what are the pro and contras?

thanks a lot!

[sundaymorningstaple]

I'll let Strong Eagle handle this one. He's our business guru here. He should be up or getting up about now (he's in Houston, TX).

[Strong Eagle]

Let me see if I understand the circumstances.

You have engaged a Singapore business to be a reseller of your drone in Singapore, correct? In this case, you don't require any kind of business presence for your company in Singapore because your reseller is effectively importing your product, and thus becomes the legal entity for marketing products and services in Singapore.

This is an arm's length business to business transaction. For an agreed upon amount of money, you supply the firm in Singapore with imported drone products, plus whatever else you may agree to support the drones and close the sale... parts, warranty returns, training, etc. If the Singapore company wishes to put your drones in the trash after purchase, or screw his customers, or provide shitty service, your only recourse for brand protection is to refuse to sell him more drones. Point: One independent company providing goods and services to another for money. Life is simple this way.

Now you say that your Singapore business connection wishes to enter into a business partnership with you in Singapore via some sort of registered entity? Is this correct? Your company and the Singapore company would own shares each in some proportion?

And the purpose for doing this is? You say "to deliver services". Does this mean that your Singapore business partner does not have the expertise to provide certain types of consulting services, and that you could come to Singapore as part of a jointly owned business and provide those services and both of you would make money?

Please share with me what your end goal is. Please also let me know who is to be in control of this company, and if you expect that at some point in the future you would be coming to Singapore to provide those consulting services. I will then be better able to answer your questions.

[liesbeth]

hi Strong Eagle,

we have a reseller (100% sales agency) who sell the products, accessoires, training, maintenance..., so he sells our products.

Our products are quite expensive to purchase and there is an open market to deliver services with our systems. so clients pay per day work and don't need to spend big money.
we do the jobs and deliver the final result to the clients.
He also note that services is a first step to convince clients on long term to purchase the systems.

It is clear that he wants to give an answer on the questions and he is looking for a solution. he is aware that you can not sell products and deliver services.
that means he is interested to set up an entity with me. He never delivered services before, but has experience with the technology. We will point another person who will perform the flights.

About equity, I will be main share holder.

The main worry if course is that Singapore sounds like 'paradise' but can be easily business generated? Can we trust Singaporian as share holder? Are people open to accept new technology (not only governent)
He is selling our products now but it takes time before you can really see the sales figures growing. We started sales in SG mid 2018.

I hope this additional info helps.

[Max Headroom]

I'm sorry to appear to be throwing a spanner in the works, but I foresee that your concept will have a hard time taking "flight" here.

The reason being that in all likelihood it's preemptively going to be reverse engineered into a cheaper derivative by a number of local clever-dickies with PRC connections, who will then run with it.

The local copies probably won't be quite as good as the original, i.e. your version, but - given their considerably lower price point - they'll do an adequately decent job and that will be good enough for the market here.

The good news is that after above scenario has played out, and provided of course that you don't throw in the towel during the melee, you may end up with the niche slice of the cake.

[Strong Eagle]

hi Strong Eagle,

we have a reseller (100% sales agency) who sell the products, accessoires, training, maintenance..., so he sells our products.

Our products are quite expensive to purchase and there is an open market to deliver services with our systems. so clients pay per day work and don't need to spend big money.
we do the jobs and deliver the final result to the clients.
He also note that services is a first step to convince clients on long term to purchase the systems.

It is clear that he wants to give an answer on the questions and he is looking for a solution. he is aware that you can not sell products and deliver services.
that means he is interested to set up an entity with me. He never delivered services before, but has experience with the technology. We will point another person who will perform the flights.

About equity, I will be main share holder.

The main worry if course is that Singapore sounds like 'paradise' but can be easily business generated? Can we trust Singaporian as share holder? Are people open to accept new technology (not only governent)
He is selling our products now but it takes time before you can really see the sales figures growing. We started sales in SG mid 2018.

I hope this additional info helps.

Max Headroom covered one of the points I was going to make. Here are two more.

Singapore is tightly regulated. Unlike the wide open spaces in Texas, for example, where I can fly a drone to examine pipelines or count cattle, there may be severe restrictions as to where the drones can fly. I have a hard time imagining the gahmen allowing you to fly drones around an HDB development or in private neighborhoods. Perhaps there is opportunity in flying over shipping in the straits, or perhaps over the unpopulated catchment areas.

Second, and you know the uses of a drone better than I, Singapore is highly urbanized. There are oil refining facilities in Jurong, and of course, the port. I'm not sure where the market for your product will be.

Perhaps there is opportunity in Malaysia or in Indonesia, for flyovers of palm oil plantations but I have no idea what regulations govern drones in those countries.

I'll respond later to your business questions/comments regarding stock ownership and business arrangements.

[sundaymorningstaple]

Might already have a niche market, at least in Singapore (do you think they would trust PRC?)

We developed hardware and software for mobile mapping systems. Our first product is a high tech drone which is really for a niche market. ( and quite expensive). We already sold 1 unit in singapore and 1 to the government in Singapore.

I'd say they already have their foot in the door. But repeat sales or branching out will be the key. The government is really restricting the use of drones here after they've shut down Changi Airport 2x already (private hands flying drones over changi airspace no fly zones).

I could see the government letting ST Technologies play with it and they would come up with a virtual identical unit but you'd be hard pressed to get any relief. They already did a number on a mobile medical unit that was designed by somebody else (who eventually lost in court here). No comment!, but you can use google 'Mobile Medical unit for Singapore military court case' and it should be the first item.

[Strong Eagle]

Just to add... Singapore's asset mapping, ie, infrastructure mapping... is excellent. It would be worth a trip to the URA... Urban Redevelopment Authority... just to see how much stuff they have... a complete scale model of the entire island.

The model is in the background of this image. The point I'm making is that unlike many other jurisdictions where maps are outdated or non-existent, Singapore's records are fabulous.