E-commerce is another avenue to grow businesses, and both Malaysian and Chinese SMEs are taking advantage of it.
THE 12th China-Asean Expo (Caexpo) in Nanning, Guangxi province concluded on Monday (Sept 21), after four days of trading and business matching.
A billboard near the venue advertised: “You are just one handshake away from the market of 1.9 billion people,” referring to the combined population of 1.3 billion from China and 620 million from 10 Asean countries.
The Malaysian pavilion was the busiest at the Caexpo.
Visitors thronged the hall for the food and beverages, health and wellness products, lifestyle products and other services offered by the exhibitors.
While goods changed hands and meetings between potential partners took place under the Jalur Gemilang hanging from the hall ceiling, small and medium enterprises (SMEs) were encouraged to give e-commerce a try.
International Trade and Industry Minister II Datuk Seri Ong Ka Chuan, who opened the Malaysian pavilion, said the booming of e-commerce is another round of industrial revolution.
“The first stage of industrial revolution created factories in Europe while the second created companies in the United States,” he said.
“Now, commodities are marketed through e-commerce, expanding trade volume tremendously.”
Malaysia External Trade Development Corporation (Matrade), the coordinator of Malaysia’s participation at Caexpo, emphasised e-commerce as another avenue to grow businesses.
With 649 million Internet users, China is the largest e-commerce market in the world, recording US$420bil (RM1.8 trillion) of online retail sales last year.
Noting that the level of e-commerce adoption among SMEs still needed to be further boosted, Matrade deputy chief executive officer Susila Devi said Matrade has rolled out an e-Trade programme to assist them to establish an online presence.
“You don’t have to travel across the border. If you are engaged in e-commerce, your business is open 24 hours a day and 365 days a year,” she said.
China’s largest e-commerce company Alibaba is the first to collaborate with Matrade for B2B (Business to Business) transactions.
SMEs can also explore B2C (Business to Consumers) e-marketplaces like Zhongdamen (www.zhongdamen.com), a cross-border e-commerce platform under a “comprehensive bonded zone” in Zhengzhou, Henan province.
The services of customs, inspections, warehouse and logistics are combined under one roof.
The foreign sellers supply the products and the rest – promoting the products in an offline venue, managing the online platform and delivering the products to retail customers – are all handled by Zhongdamen.
A virtual Malaysian pavilion dedicated to products from Malaysia has been set up by Reliance Seas Sdn Bhd on Zhongdamen, alongside Korean, French and Belgian pavilions.
Xu Jingyi from Reliance Seas said Zhongdamen provides a chance for SMEs, who are otherwise deterred by the complicated process to export their products to China, to venture into the China market.
Among the 1,200 SKUs (stock-keeping units) available in the Malaysian pavilion are Claypot sauces and pastes and Cowa coconut water manufactured by Linaco Group.
Its business development strategist Kobe Tee said the platform has relaxed restrictions for food products for the benefit of foreign exporters.
“For example, our bak kut teh mix is normally considered medicine for its herbal content, which requires approval from the Chinese authorities.
“But this requirement is exempted when we offer the product through Zhongdamen.”
Meanwhile, Susila said that despite the popularity of e-commerce, fairs like Caexpo remain an important channel for Malaysian businesses to understand the market needs, from the taste to the packaging of products.
SGK Food Industry Sdn Bhd business development director Steven K. Pillai, who was at Caexpo to identify potential distributors, can attest to this.
“We were told there is no need to change the packaging design of our confectionery to include Chinese characters.
“The existing one reflects the status of a foreign brand, which the consumers like,” he said.
“Chinese words on the packaging will give the impression that the products are locally manufactured. Consumers here prefer imported goods because of the food safety issue in China,” he explained.
Tee shared his company’s multi-pronged approach in order to gain a foothold in the China market.
“We participate in fairs to get a feel of the market and visit distributors to discuss collaboration.
“We have to identify a reliable distributor in each channel, such as one to list our products at supermarkets and another to offer our products online, to tap into the opportunities offered by this huge market,” he said.
Matrade assures the SMEs that it is there to guide them to break into the China market.
Matrade trade commissioner in Guangzhou Suresh Kumar said the focus is now expanding to second and third-tier Chinese cities, such as Foshan, Zhongshan and Zhuhai in the southern province of Guangdong, where purchasing power is on the rise.
While food and beverage products from Malaysia are popular among Chinese consumers, the fact is that their value is small.
Suresh said Matrade is working hard to push for the sectors of auto parts, healthcare and electronics and electrical (E&E) items as well.
In 2014, E&E products ranked the first by value among all product sectors that Malaysia exported to China, contributing to 46.7% or RM13.16bil of the total exports.
At 10.3% or RM2.92bil, chemicals and chemical products were the second highest while palm oil (8.3% or USD2.34bil) was the third.
Susila added that Malaysian businesses have to be more aggressive in competing for business segment during this economy slowdown.
“When the market is in a lull, it is the best time to spend money on advertising as people are looking for alternatives,” she said.
“Nobody stops promotion when times are bad.
Matrade is still aggressively promoting so people will remember the ‘Malaysia’ brand when the market picks up.”
The views expressed are entirely the writer’s own.