The reasons so many pick Singapore over Hong Kong or other cosmopolitan Asian cities speaks volumes about its competitive advantages.

For Borders, it was significant that the city of 3.4 million is an English-speaking place, affluent and also extraordinarily open to foreign influences. What's more, the Chinese majority heavily emphasises reading and education. And lastly, as Murray Coleman, Borders' director of human relations for overseas stores explains: Singapore has an ``incredible thirst for retail.'' In other words, Singaporeans love to shop.

That's why lots of Western chains make Singapore their first or second stop in Asia: The Starbucks coffee house chain came here after Japan, for instance. It has yet to go to in much bigger Hong Kong, a cityof sky-high rents and tight spaces.

``Western restaurant chains reckon that if it can't be made to work in Singapore, it doesn't have a chance anywhere else,'' says Tim Isaac, regional client services director for the big US advertising agency Ogilvy & Mather.

With its Burger Kings and Denny's restaurants, squeaky-clean, middle-class Singapore can almost seem more like a Midwestern US city than a typical Asian boomtown, with their flashy skyscrapers and sometimes sprawling slums.

Borders Group started as a first-rate local bookstore in the college town of Ann Arbor, Michigan. It is now the US' second-largest bookstore chain, after Barnes & Noble Inc., with sales of $2.6 billion last yearBorders pioneered the book superstore in the early 1990s, with its wide selection of books, comfortable chairs and fancy coffee. However, it has fallen behind in the latest hot book-selling arena: the Internet. There the titans are Barnes & Noble and Amazon.com Inc., the Internet bookseller that has come out of nowhereto dominate this growing business.

Borders' move abroad is a sideshow compared with the epic battle for Internet business. But it does give the chain a chance to experiment with things like serving alcohol in the bookstore's cafe. Singapore is the only place Borders does this.

The chain says the Singapore store, open since November 1997, is profitable and is one of its three busiest in the world, along with a store in downtown Chicago's Michigan Avenue and another new one on London's busy Oxford Street. On a recent Monday afternoon in the cavernous shop on Singapore's Orchard Road, there isn't a seat or a bench to be had. Customers sit, legs crossed in the aisles flipping pages -- something new for Singapore, where most books come shrink-wrapped.

Borders started opening stores in the UK last fall-it has four and two more on the way-then moved into Australia with a branch in Melbourne, and is opening a store in New Zealand in October. Borders says it is looking at the market in Hong Kong, another wealthyAsian city with a sizable English-speaking community. But it is hard to find big chunks of retail space there.

Meanwhile, Borders and the other Western chains are changing tastes and even the way business gets done in Singapore. Borders encourages its 180 employees to dress casually and comfortably in jeans and T-shirts, while other Singapore bookstores make workers wear uniforms. It gives employee 100 shares of stock each when they join, and eschews the formal, hierarchical style of management common in Asia.

But if borders has helped change Singapore, Singapore is changing the book-store, too. The store stocks more books on Asia in the travel and cookbook sections; more books on tropical plants in the gardening section; and more books on soccer in the sports section. Contrary to rumour in wonkish Singapore, though, there is about the same proportion of books on busines and computers as in the US.

Borders has run up against some Singaporean prohibitions on what it can sell. Mildly racy Cosmopolitanmagazine, with its advice on sex and cleavage-revealing cover models, is banned. So is a Janet Jackson CD with songs about domestic violence and homosexuality.

If Borders isn't sure whether a book passes the censorship guidelines, it submits it to the government for review. ``If it's a sex manual with drawings, not photos, that'll pass,'' says Community Relations Manager Christopher Tong, who wears jeans and an earring. ``If it's a photography book that shows nudity, we might have to shrink-wrap it.''

Borders was able to find 32,000 square feet of space right on Orchard Road, Singapore's ground zero for shopping, because Lane Crawford, the Hong Kong department store chain, closed its store there. The reason. Retailing has been in a slump since the mid-1990s, thanks to a strong Singaporean dollar, which made shopping here expensive for the tourists who are a traditional mainstay of Orchard Road trade. High rents also hurt, as did the ailing Japanese economy, which kept high-rolling Japanese tourists athome.

Finally, increasing competition hurt as more Western stores opened in places like Indonesia and Malaysia, keeping tourists from those countries at home instead of coming to Singapore to shop.

``The second half of last year was awful,'' says Lau Chuen Wei, executive director of the Singapore Retailers Association. ``This year is supposed to be getting better, but there are still stores in trouble.''

More worrying for Borders may be an even bigger new bookstore that the Japanese chain Kinokuniya Co. opened down the street a month ago. For the first time, Borders has some serious competition in Singapore, until now a town of smallish book-shops.

So far, Borders says, the Japanese store hasn't put a dent in sales. But that can't last. Borders proved Singapore was hungry for a big, friendly bookstore; now it will find out if there is enough business for two.

(The Asian Wall Street Journal)