malysia-gedsman
Market Analysis

Malaysia: A Teeming Throng of Small Businesses

The western external drive towards South East Asia has tended to focus on Singapore as a central hub. Whilst from the opposite perspective, countries like Malaysia have often lacked the push to launch themselves into the wider marketplace. Kathryn Cave catches up with Keng Teck Yap Founder and MD of Bizsphere to talk about the glut of SMEs and Malaysian division on the ground.

In the 1920s arch author and dramatist Somerset Maugham travelled round Malaysia meeting British civil servants and casting a largely scathing eye on their society. His formula was simple: as a fellow Englishman he would sidle in on their hospitality, seduce them with a few drinks, then fish out their life problems and twist the end result into a nice neat short story.  There was clearly something nefarious and underhand about this practice, but the outcome offers a fascinating insight into Little-England-South-Seas poking British pretention in the eye, sly patronising the local culture… whilst describing a beautiful exotic landscape that feels close enough to touch.

"If you haven't seen this place, you haven't seen the world" Maugham is often appropriated by the Malaysian tourist board for saying.  Yet aside from the belting scenery (and loud presence of Maugham himself) the main sense you get is of a landscape divided at every single level…. geographically, socially and culturally. Now Maugham may be long dead, the colonial presence may be long gone, but this division is something which still holds sway.  In fact, today this lack if unity also seems to be impacting the wider Malaysian ‘brand’ (for want of a better word). From the lack of marketing awareness exhibited by the vast SME business population, right through to a lack of recognition for Malaysia in the global market place.

“We are lacking one true Malaysia,” says Keng Teck Yap Founder and MD of Bizsphere Malaysia over the phone.  Yap runs a successful marketing agency which focuses specifically on the multitude of SMEs which form 97.3% of business population.  “When we introduce ourselves externally we will say ‘I am a Malaysian businessman’. But when we go out we introduce ourselves personally we will say ‘I am a Malaysian Chinese’ or ‘I am a Malaysian Indian’ or ‘I am a Malaysian Malay’”- we are proud to be Malaysian in the wider sense, but this gets a little lost.”

“Malaysia is a multi-racial, multi-cultural, multi-religion, multi-language country. English is our business language. Malay is our national language. I am Malaysian Chinese, so I [also] speak several Chinese dialects…” but an Indian Malaysian may speak Tamil, Malayalam, Telugu or Punjabi. “Malaysia is very popular in tourism, but in terms of business we have been up-shone by counterparts from the South and our counterparts from the North.  Singapore is very much regional offices, whilst Thailand [is] growing very fast. We are in the middle. Most international investment would go to Singapore or Thailand before it came to us,” Yaps explains.

Perhaps surprisingly to an outsider, the recent World Bank “Doing Business Report 2014” ranked Malaysia sixth globally. This saw it jump six places from last year, catapulted it into a similar league to Singapore and put it ahead of countries like Norway, the UK, Australia and Finland. More surprisingly still, an October report commissioned by the United Nations’ International Telecommunication Union (ITU) showed that Malaysia has the fourth-highest proportion of “digital natives” in the world. The prevalence of this group, defined as youths aged 15 to 24 with at least five years of active internet has seen Malaysia moved ahead of Singapore (which came in 22nd ) and suggests an extremely technical savvy young population.

Of course this is only half the story, Malaysia has also dropped two rungs on the ICT Development Index (IDI) in 2013 to 59th position. Yet overall Malaysia is very well connected, a fact which may or may not have been instrumental in the decision of engineering firm Weir Group, last month to make the biggest investment in Malaysia by a British company in the past five years.

The real back-bone of Malaysia though is its small businesses. And this rank is soon set to swell, because from 1st January 2014, the Malaysian government has announced that a new definition of SMEs will come into effect.  The official figures show that this will mean that the total number of businesses classified in this group will jump to 98.5% next year.  In the long run this means the total SME contribution to the country’s GDP should hit 40% by 2020.

The government has already put in place numerous initiatives to help the SME community. These include a dedicated government agency to promote growth (SME Corp Malaysia) along with a lot of measures to make the market more business friendly and help these organisations expand abroad.  There have been a slew of recent events such as SME Congress, SME Innovation Showcase and Asean-India SME Conference, which highlight the importance of this group within the Malaysian space.

Maxis Bhd (Maxis), which provides mobile, fixed line, and international gateway telecommunications services, as well as internet and broadband services in Malaysia launched a new SME solution on October 2nd, called ‘Maxis Business Kit’. The aim, explained Shanti Jusnita Johari, head of Enterprise Solutions at Maxis  BizHive Weekly is “to provide combination of mobile, internet and business voice propositions” for improved online communication.

Yap and many others are convinced however, that whilst there are some great products and services in Malaysia, a lot of SMEs hold themselves back through a lack of understanding of branding and marketing.  “Marketing in Malaysia is growing,” he says. “There are a lot of agencies, [but] most are servicing the big multi-nationals.  I would like more Malaysian brands to be known in the global market place.”

“Most [SMEs in Malaysia] have a perception that marketing comes down to advertising. They're talking about exposure, how will they be seen instead of how can they project their brand values to the target market,” he explains. On top of this “a lot [of marketing efforts] will be planned and executed by the brand owner, i.e., the founder.”

“Few have a [dedicated] marketing department,” he continues “and [instead] will depend on the brand owner to strategise, research, implement and monitor [marketing]. They [have so many other things to do] they cannot focus. That is why a lot of marketing efforts are ad hoc as opposed to campaign basis. Half of these organisations don't even have a marketing plan.”

Marketing tends to be fairly traditional in Malaysia. In the B2C space TV and billboards usually work best. In the B2B arena it is all about email content marketing via blogs and high-end, physical events to engage the relevant target. To match the extensive online presence social media has also become crucial.  Malaysia Today quotes that 87.9% of Malaysians on the internet access Facebook. And Yap says “Facebook is a key platform” for local marketing and “most campaigns” include this medium.

Divisions within Malaysia offer both opportunities and difficulties for businesses in the region. For example “[a high proportion of the] Malaysian community is Muslim and they only take halal products,” Yap explains. “This has made Malaysia into a regional halal hub. Other nationals like to come into Malaysia because it is famous for halal products and they like to use Malaysia as a platform to sell to the Malay community.”

“The products consumers choose will largely depend on race and religion. It takes a lot of effort to look into these individual areas. If we want to promote or advertise to the Malaysian community we need to go through different channels to engage different groups. This makes our marketing budget heavier.” 

Possibly in the larger sense this divided Malaysia may also lack the unity to propel itself out into the wider global community? Maybe more cohesion is needed to send this nation out into the bigger business market? Perhaps Malaysia is missing a trick to fulfil its true potential…

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