South Korea’s Paris Baguette has a secret ingredient for growth in Southeast Asia

Paris Baguette, a popular multinational chain of bakery-cafes headquartered in Seoul, has set an ambitious goal — to increase the number of storefronts by over 10 times in eight years. The bakery has 36 stores across Singapore, Vietnam, Indonesia, Cambodia and Malaysia and plans to set up around 500 stores in Southeast Asia (SEA), the Middle East, and North Africa by 2030.

The secret ingredient to making this lofty goal possible is none other than the partnership between Singapore, Malaysia and Indonesia, that allows businesses to leverage the complementary advantages of the three countries to secure long-term growth in the region and globally.

Under the “SG+” twinning model, international companies and foreign manufacturers have set up their regional headquarters in Singapore, tapping on its world-class business ecosystem, financial and innovation ecosystem, and manufacturing operations in neighbouring countries.
 

Said EDB’s Vice-President of Regional Partnerships, Mr Herman Loh: “These companies are attracted to Singapore’s conducive business environment and innovation ecosystem. This includes our extensive network of FTAs, interconnected global logistics hub and strong intellectual property protection. At the same time, the consumer and labour markets in SEA are expanding by the day. Companies see an opportunity to access all these advantages and markets through Singapore.”

In the case of Paris Baguette, it set up its SEA headquarters in Singapore, housing its main administrative functions, regional innovation and training centres and central kitchen. The central kitchen supports local retail operations and a first-of-its-kind regional innovation centre set up by SPC Group – Paris Baguette’s parent company.

While the Singapore centre focuses on the research and development (R&D) of new products, Paris Baguette has set up a regional production base in Malaysia. Malaysia, which is linked to Singapore by a land bridge known as the Causeway, has an increasingly educated workforce, as well as competitive and abundant manpower, land, and resources.

Ms Hana Lee, CEO of Paris Baguette SEA, told Lianhe Zaobao in an interview that the company continued to make substantial investments to accelerate its global expansion.

“In addition to building our first Halal-certified factory in Johor, Malaysia, we will also build a global manufacturing and distribution centre in the region to support the company’s expansion in Southeast Asia (SEA), Middle East, and North Africa,” she said.
 

Paris Baguette’s Johor factory is in Nusajaya Tech Park in Iskandar Puteri. The company has invested approximately S$39.79 million (US$30 million) in the 16,500 sq m factory with fully automated warehouse facilities, and it is estimated to begin production in the second quarter of 2024. It will have seven fully automated frozen dough production lines that can produce up to a total of 11 metric tonnes of dough per day. The dough will be used to make bread, pastries, cakes and other bakery items.

Paris Baguette SEA’s Ms Lee said Singapore’s numerous free trade agreements (FTAs) and talent pool in areas such as technology, engineering, and business management were plus points.

For example, Singapore is a member of the Regional Comprehensive Economic Partnership (RCEP), the world’s largest FTA. This FTA supports trade by simplifying the customs clearance process and eliminating tariffs, among other measures.

Nusajaya Tech Park is close to the Malaysia-Singapore Second Link, and a five-minute drive from the Johor Bahru Customs, Immigration and Quarantine Complex. It is also a 30-minute drive from a Port of Singapore Authority (PSA) terminal, and less than a 45-minute drive from Singapore’s Changi Airport. This makes it extremely convenient to export goods.
 

The biggest advantage of adopting the “Singapore + Malaysia” twinning strategy lies in gaining the support of two governments concurrently, according to Ms Lee. Paris Baguette received funding from the Singapore government for innovation R&D in the city-state, and received assistance from relevant agencies in the process of gaining approval to establish the company in Malaysia.

With supply chain resilience now top of mind for manufacturers, companies with operations in Singapore and Malaysia will be able to respond quickly to any issues and minimise risks, due to the countries’ close proximity and ties with each other. Through its expansion to Malaysia, Paris Baguette has already developed closer links with strategic partners supporting its expansion plans. Last year, it opened more stores in Malaysia through a joint venture with Berjaya Food, which operates Starbucks in Malaysia.

This article was adapted from a content series produced by Singapore Chinese-language media organisation Lianhe Zaobao, that spotlights how businesses can tap on opportunities across Southeast Asia and serve global markets, from Singapore.