PA GPI Reports: Singapore

Peter Schoppert • 22 October 2012

Singapore is a wealthy city-state, well-placed to benefit from the growth of emerging markets in Asia. It is a largely English-language market, with long-standing historical and cultural links with the UK. With post-financial crisis deleveraging likely to continue to constrain economic growth in Europe and the US, can Singapore offer the prospect of an increase in profitable business to UK publishers? The short answer is probably yes, keeping in mind the following points:

• Singapore is already highly penetrated by UK and global English-language book businesses. Imported bestsellers drive the book trade, and imports take a large share of the trade and professional markets. It seems that around 25% of trade activity is already going directly overseas, having been captured by Amazon and The Book Depository. Local publishers have command of the primary education market, Pearson Education (long-established in Singapore) contests the secondary textbook market with local heavyweight Marshall Cavendish and others. Other international publishers like McGraw-Hill, Cengage, Lexis, CCH and others are very well entrenched in the tertiary and professional education markets. Singapore imported £50m of books from the UK in 2011, making it the UK’s 9th biggest export market. Singapore is an open market, and US publishers exported around US$51.5m of books themselves in 2010. This suggests that increasing UK market share will not be a simple matter, and may require extra investment, including deeper localisation.
• Singapore is a useful place to conduct business in the region. Singaporean and international publishers who are members of the Singapore Book Publishers Association say that 68% of their business is for export; importers and distributors do a similar percentage of their activity in re-exports. The Malaysian market is very closely linked to Singapore, but Singapore trades books with the wider Australasian region, as well as Africa and West Asia. The major STM publishers base important elements of their Asian or even global operations in Singapore, and the Singapore government is continuing to support the development of knowledge economy hub activities in Singapore, in financial services, education, R&D and in communications, training, conferences and the like. Singapore is already one of the easiest places in the world to establish a business, and publishers with global activities are targeted for incentives to set up headquarters operations and co-ordinating functions in Singapore.
• Singapore’s interest in English-language books is of a practical and utilitarian nature. This is a market that values books for their use in education, in professional development and self-help. The education market is nearly the same size as the trade or general market, and the prospect of continued increases in per household spending by families and per student by the Ministry of Education outweighs the slow decline in the number of children entering the system each year. The tertiary and professional education markets are strong, though continuing to fragment.
• Singapore’s retail book trade is contracting. The amount of retail shelf space dedicated to books has taken a dramatic hit over the last 18 months, with the closing of three of five of Singapore’s biggest bookshops, and the further retrenchment of the local chains. This shrinkage, roughly as much as 35% of total floor space, is likely to be permanent, with few prospects for fresh investment into book retail.
• While ebook disruption is just coming to Singapore, it has the potential to take off very quickly (and drive an even higher percentage of sales to overseas accounts). The factors arguing for a quick take up of ebooks are many. Nearly nine out of 10 Singaporeans have a smartphone. The market values convenience and generally considers books overpriced. Local bricks-and-mortar retail is in retreat. The main investments in the local ebook market however are state-owned quasi-monopolies, including the telecoms operator Singtel and local broadcaster Mediacorp. Neither has introduced an e-reader device, relying on smartphones and tablets. The comparative lack of investment is the chief limitation on growth in the market.
• Having gained significantly compared to sterling after 2008; the Singapore dollar is currently on a path of gradual appreciation against the currencies of its main trading partners, including the UK. Singapore is in a fiscally strong position, ready to weather the storms of global economic volatility. Despite its small size it is one of the world’s great creditor nations. While one hesitates to predict currency movements, it is hard to imagine the Singapore dollar slipping significantly against the GBP in the next few years.

Singapore does not measure or capture actual book sales data. So any estimate of the size of the local market must be an approximate one. Singapore’s total domestic book market was roughly S$387m in 2011. The estimate for the trade book market was S$184m, and S$157m for books in the education market (there are 2.1 Singapore dollars to the pound sterling). The professional market is much harder to measure, although estimated at S$46m, as much of its activity shows up in overseas accounts.

Demographics
Singapore is a highly-diverse society, and much complication and nuance underlies the fact of its being a mostly English-language book market. The country’s economic growth has been tied to dramatic population growth via immigration (Singapore now boasts a population of 5.2m).

Education
Singapore has one of the world’s highest-performing education systems, as measured in international benchmarks and tests. It is a bilingual national education system with a centrally planned curriculum and a national examinations framework at primary, secondary and post-secondary levels (the last two based on the UK system of GCSEs and A levels and set jointly by the University of Cambridge International Examinations and Singapore’s Ministry of Education). The government universities educate only around 25% of local cohorts; many of the private education providers who have filled the gap have strong UK ties and links.

Per-student spending by parents and government on books does seem to be increasing, even as the number of students entering the school system is declining slightly. In Singapore, parents purchase textbooks upon school recommendations. Textbooks must be approved by the Ministry of Education, via a tender process that looks at book proposal quality, as well as proposed price. The assessment book market is an important one in Singapore, that is books that train, measure or assess student readiness for exams, sold to parents. Supplementary books sold to schools have been an important growth area in recent years, though it is unclear if specific funding programmes will be extended further. Central library budgets are relatively small, but many schools use discretionary funds to supplement central budgets.

STM, professional, and tertiary education markets
Singapore’s higher education, R&D and training and professional development markets are all moving positively. UK standards and institutions are disproportionately influential in many of these areas, for example in law and accountancy. Professional development activities are compulsory in many Singapore professions, including teaching, and the rigour and depth of these programmes are on the increase.

General books
Singapore has a certain reputation for censorship or control of media. As a practical matter this is rarely a major issue for publishers operating here, and regulations do not extend to the export or re-export business. Still, publishers do take on a co-regulation responsibility, and need to be aware of these peculiarities of the local market.

The big news over the last 18 months has been the closing of bookshops, a trend which looks likely to be irreversible. That being said, the market has not collapsed, despite the decline in floor space. The full impact will only be felt later in the year and in years to come. And Singapore is just on the cusp of the ebook shift: The big news of the next 18 months could potentially be the increasing adoption of ebooks. Some specialists are doing better: the trends in favour of growth in religious books look positive, for example.

This is a mature market. Some of the benefit of Singapore’s growth will accrue to domestic accounts, but there may also be some compelling Singapore investment stories for UK publishers, in particular trade niches, and certain areas of education, and in professional markets. Investments into Singapore can also be leveraged to a wider region. Singapore’s publishing industry does includes potential targets for acquisition that can play into wider Asian growth stories, for those UK publishers able to consider inorganic growth options.

This is the introduction to Peter Schoppert's report. The full report is available to PA members and GPI subscribers at the PA website.

Peter Schoppert has over 25 years experience in publishing and related industries, based in Singapore. After completing this report, he accepted a position as Director, NUS Publishing, the successor to Singapore University Press.

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