Chinese presence seen to toughen up Malaysian firms [BTTV]

KUALA LUMPUR: The influx of Chinese firms into key sectors is forcing local players to reassess their position in a rapidly changing landscape.

Industry leaders say Malaysia’s response should not be to push back against these foreign entrants, but to adapt, collaborate and strengthen consumer awareness.

In the past two years, Chinese companies had deepened their presence in Malaysia across sectors ranging from electric vehicles (EVs) to food and consumer tech.

On the automotive front, EV manufacturers such as BYD, Chery, Leapmotor and Xpeng have made major moves.

Tuhu, a Shanghai-listed online-to-offline car-care platform, is the latest player from China to set up operations. It has begun rolling out physical service centres in Malaysia.

In the F&B and lifestyle, Chinese brands are also making big inroads.

Mixue, known for its low-cost ice cream and beverages, has been expanding aggressively across the Klang Valley.

Tea chain Chagee is also expanding, positioning itself as a more premium Chinese teahouse with organic sourcing.

Other Chinese brands including Luckin Coffee and Lucky Cup – the latter backed by Mixue – have also entered the market, offering prices that undercut many home-grown food and beverage (F&B) players.

Price comparisons highlight the gap: Tealive’s large Original Pearl Milk Tea retails at RM7.55, while Mixue’s large classic milk tea goes for RM6.50.

McDonald’s Malaysia sells its strawberry sundae for RM6.46, compared with Mixue’s RM5 strawberry crispy sundae.

Local coffee chain Zus Coffee prices its iced latte at RM10.20 and its Americano at RM6.90, while Lucky Cup offers a large Americano for RM6 and a café latte for RM6.50.

Chinese Entry A Wake-Up Call For Malaysian SMEs

Dr. Nur Surayya Mohd Saudi, senior lecturer at Universiti Pertahanan Nasional Malaysia and senior fellow at the Malaysian Institute of Economic Research, told Business Times that the entry of Chinese retailers serves as a wake-up call and adds pressure on Malaysia’s small and medium enterprises (SMEs).

She noted, however, that under Asean’s integration agenda, this competition could encourage local SMEs to upgrade their operations, embrace digitalisation and target higher-value market segments.

“The real risk is not Chinese entry, it is local businesses staying stagnant,” she said when contacted.

Surayya said collaboration has become a strategic necessity, pointing out that around 65 per cent of Malaysian SMEs view partnerships with foreign companies as vital for growth, particularly for gaining access to technology and new markets.

“By collaborating with established Chinese platforms and supply chains, our SMEs can scale faster into the Asean market of over 680 million consumers, rather than competing on price alone.

“If Malaysia positions itself as the Asean hub for halal, logistics and digital trade, both Malaysian and Chinese businesses benefit, creating shared prosperity and long-term resilience instead of a zero-sum battle,” she said.

Surayya added that Malaysian SMEs win when they differentiate halal integrity, cultural insight, local sourcing, and trust.

“These are strengths Chinese firms cannot easily replicate. With Asean integration and stronger SME support under the 2026 Budget, local firms can scale beyond.

“The budget showed Malaysia’s intent to empower SMEs: RM10 billion in financing and guarantees, RM150 million in digitalisation grants, and RM60 million in export-market-development grants via Malaysia External Trade Development Corporation.

“Rather than tariffs, the game is capability-building: digital, regional, value-added,” Surayya said.

Collaboration, Consumer Awareness Key For Local Firms

Malaysian International Chamber of Commerce and Industry president Christina Tee said Chinese firms entering the Malaysian market and e-commerce will inevitably reshape the competitive landscape.

“Chinese businesses will definitely affect local players. Even the less competitive companies coming from China are still more competitive than us.

“We cannot avoid this, but we can choose to collaborate. Don’t be afraid of what’s coming. If you already know they are cheaper and better, then work with them,” she told reporters at the Asean E-Commerce 2025 press conference on Monday.

Tee said the solution is not protectionism or fear. Instead, she said local SMEs need to rethink their strengths and shift away from competing head-on in manufacturing.

“Most of our SMEs are not producing their own products, they’re reselling. So the advantage must come from how well they sell.

“Learn livestreaming, learn artificial intelligence, learn how to sell in multiple languages. Malaysians have the ability to sell, and that’s where we can win,” she said.

Tee said Malaysia’s strength in food and beverage offers a clear advantage, noting that the country’s diverse cuisine is difficult for others to replicate and could be successfully marketed globally.

Deputy Domestic Trade and Cost of Living Minister Datuk Dr Fuziah Salleh said the challenge is not only market competition but also Malaysian consumer habits, which tend to favour low prices over quality.

She said only about 30 per cent of Malaysian consumers prioritise branded or higher-quality goods, far lower than the 80 per cent seen in many other markets.

“Sometimes consumers choose products just because they’re cheap, without looking at quality or safety. We need to educate consumers to make wiser decisions,” she said, adding that consumer awareness is a critical but often overlooked part of strengthening the domestic retail ecosystem.

On Chinese sellers offering the same products at lower prices, Fuziah said local businesses need to understand the market and adjust their strategies accordingly.

“If they sell the same product at a higher price, they cease to be competitive. They may have to choose different products or value propositions,” she said.

diKO8ZteNec

© New Straits Times Press (M) Bhd

Source link