INNOVATION is crucial for small firms if they are to thrive in a global economy where product is king.
The 'get inventive' message to small and medium-sized enterprises (SMEs) was delivered in a seminar that also underlined to bosses that the old way of relying on foreign investment to drive prosperity had lost its potency.
Mr Victor Tay, Spring Singapore's director of services and biomedical, said the new economy operated in direct contrast to the old 'FDI (foreign direct investment) driven economy'.
He cited the example of giant tech firm Seagate, which 'designed its hard disks elsewhere, and left the low-value manufacturing to us'. Local workers and firms dependent on it fell upon hard times when the firm relocated to lower-cost regions.
But Mr Tay envisions that those days are numbered and that SMEs will reduce their reliance on multinationals outsourcing with revenue generated from their own intellectual property.
Local firm Aeromobile, which makes equipment for aircraft ground support, told the seminar about the way it developed its proprietary hi-lift, a ground-handling vehicle for the new Airbus A-380 aircraft.
This innovation also presented opportunities for other SMEs to 'come in as collaborators...in joint research, IT, and as component manufacturers', said Mr Tay.
Last week's seminar was jointly organised by Spring Singapore, the Singapore Business Federation and the Singapore Manufacturers' Federation.
The more than 120 participants from various sectors in manufacturing and services heard that innovation did not have to be ground-breaking or revolutionary.
Take Pamarine, a marine safety firm that launched a Singapore-made voyage data recorder.
The device, which is required on every cargo vessel under international maritime rules, captures audio, video and navigation data. It functions like the black boxes carried on aircraft, allowing investigators to uncover the cause of any accident.
The concept of this product, which is made in Singapore, is not new, but Pamarine 'saw the opportunity in the international maritime organisation's ruling to come up with the product', Mr Tay said.
While there is a risk that such SMEs might shift manufacturing of home-grown innovations to lower-cost regions, he pointed to several 'anchoring points' that might persuade them to stay put.
Music player firm Creative Technology manufactured its proprietary sound card overseas, but the company is 'based here...and hires locals, enjoys tax benefits and family support...This is much better than depending on foreign (multinationals)', Mr Tay said.
Spring Singapore is fostering the creative drive at the SME level with the Technology Innovation Programme.
The scheme brings together SMEs and researchers and 'invites customers to test-bed the products', said Mr Tay.
dicksonl@sph.com.sg