KUALA LUMPUR: For some, entering China’s market may be the ultimate goal but there are a number of important things to consider carefully before taking the leap.
Vepro Group Sdn Bhd director Chu Chee Seng said having the right business partner in China and understanding what the market needs can either make or break a company.
According to him, having the right partner will not only allow a company to submerge themselves into the local culture, but also bring about the right connections and networks that will be vital.
“Finding a partner that doesn’t cut through a deal halfway is also important, as well as someone with the right attitude and integrity to build something together with you,” he said during the Global Navigator Series, a part of Star Media Group’s 2024 Export Excellence Awards (EEA).
Chu: Finding a partner that doesn’t cut through a deal halfway is also important.
Chu also noted discussions with customers, suppliers and large-scale buyers are important because it has become increasingly clear that China does not need new products.
“The level of localisation or customisation that a particular product needs can only be answered by speaking to the customers there to understand their needs.
“We can also leverage on our own expertise which in turn, can provide value to the market,” he said.
Additionally, the Malaysia External Trade Development Corporation (Matrade) Hong Kong trade commissioner, Yazrin Syakhairi Mahlan said trading with China has never been an easy option but the ministry has strived to make it an easier and a more seamless process for those ready to cross borders.
Yazrin said in the context of both the China and Hong Kong markets, the ministry arranges business meetings for companies to meet with potential importers and distributors.
He said this widens the network circle, and allows those within the ecosystem to collaborate and forge relationships that can prove fruitful.
“We also look at elements like your company profile and product brochure, you may need to amend some of it to better suit the regulations and demand of the market before you go in. Knowing the regulations is very important because not everything you read online is true,” he noted.
Yazrin said even for those in the advanced stage of doing business with China through partnerships, Matrade can still assist in verifying companies and doing background checks.
“On top of all this, we also sit with companies and help them set up short, medium and long-term plans so they can strategise and plan their journey into China well enough,” he said.
As for some of the challenges that companies may face when going into China, Standard Chartered China, SME Banking, head of transaction and treasury management Jackson Qiu said some people perceive China as a capital control cross-border nation, making trading there not easy.
“One challenge would be the money factor – cross-border into China or out of China, is actually subject to the regulators’ capital control which is very strict. So that adds a slightly different layer of complexity to either trade or invest with China,” he said.
Qiu added the bank provides a lot of advise and education for its clients on how to deal with China.
“The other thing is we’ve seen the currency fluctuate the most in the past two decades over the last year. In the past, the renminbi versus the US dollar would be between 7% to 9%. Last year, it hit more than 11%. This is another challenge,” he said.
Qiu said to mitigate these, companies should find bankers to speak to and whilst at that, decide on how to invest.
“Companies should also consider if they want to use their capital to fund daily operations, or use cross-border trade. And what about transfer pricing? All these things can be very complex,” he said.
The good news is, Malaysia has been in the good books with China for a number of years now.
Yazrin said the simplicity of dealing with Malaysian companies has certainly elevated the ease factor.
“Firstly, I’d say language is a bonus point, we are a multicultural society and sometimes people in China may speak other dialects like Cantonese, Hokkien and so forth, which many people here can speak too.
“Secondly, in terms of historical transactions, Malaysian products have been around in China for a while, so the trust factor is there,” he said.
Teo: You need to ensure you can deliver on time, and your speed matches theirs.If you want to capture the market, you have to work at it.
Meanwhile, Hernan Corp Sdn Bhd founder and chief executive officer Datuk Anna Teo said being quick and efficient in capturing the market was one of the top strategies that helped her successfully penetrate China.
“You need to ensure you can deliver on time, and your speed matches theirs. There isn’t such a thing as public holidays, if you want to capture the market, you have to work at it,” she said.
Teo added going into China is by no means a cheap feat, and companies should be prepared to either make the money or lose it.
“My advise is to choose the market you want to go into very carefully, and only do so if you think you are capable of taking it.”
The EEA 2024 is organised by Star Media Group in partnership with Standard Chartered Malaysia, and PKT Logistics Group as a co-sponsor, and Matrade as patron. It is audited by BDO.
Submissions for the Awards programme are also open from now until Jan 17, 2025.
For more information on EEA 2024, go to exportawards.com.my or email eea@thestar.com.my
