By SHAHEERA AZNAM SHAH / Pic By AFP
Global businesses including Malaysian companies are focusing on delivering goods for the Chinese market as the country’s consumer spending power expands.
According to HSBC Holdings plc’s report entitled “Navigator: Made for China”, international businesses noted that e-commerce platforms are the key to attracting more Chinese consumers.
These businesses are confident that the quality of their products will appeal to the Chinese market.
HSBC Bank Malaysia Bhd CEO Stuart Milne said China’s fast-growing consumer market has prompted international businesses to evaluate their business relationship with the country.
“To succeed in the future, international businesses must be ‘Made for China’ as the country is no longer the world’s factory.
“While ‘Made in China’ goods are found in stores and online around the world, the rapid development of China’s economy means that their people are shaping the strategies of international businesses,” he said.
The report gathered views from 1,205 small and large companies in 11 global economies that are exporting to China, of which 100 of them are Malaysian-based firms.
The survey revealed that 42% of the respondents currently selling to China identified partnerships and distribution agreements with local companies as the prominent factor in driving their sales growth.
Also, 38% of the current exporters to China highlighted that being able to provide distinctive, superior products and services is the catalyst to enhance their business globally.
The report stated that China’s rising powerful consumers focus on quality, innovation and convenient access to products and services through digital e-commerce platforms.
“According to government estimates, China is going to import US$8 trillion (RM33.52 trillion) worth of goods in five years from 2018 to 2022.
“That is equivalent to an average of US$1.6 trillion a year, which is about the same as the GDP of Canada or South Korea in 2017,” it said.
It added that global businesses opined that technology-related products and services would achieve the fastest growth in China, signalling the Chinese consumers’ preference in sophisticated products that are able to enhance their lifestyle.
“In Malaysia, 42% of the respondents said exports in the technology services sector, such as information and biomedical technology, would grow the fastest.
“The consumer electronics, as well as food and agriculture products were also identified as expected leaders in export growth to China,” it said.
Moving forward, businesses said the demographic under the age of 40 will become the driving force for Chinese demand, adding that both physical and online presence is important in reaching them.
“Moreover, 38% of businesses believe that growth will come from those who were born in the 1980s, while another 23% opine that it will be driven by those born in the 2000s.
“The importance of having e-commerce platforms is clear as the (under-40 demographic) have grown up alongside the phenomenal expansion of online shopping platforms, which recorded sales of over US$1 trillion in 2017,” it said.
However, businesses are of the view that the need to customise products and services to meet the Chinese market remains the primary challenge faced by Malaysian companies.
“The top three challenges for Malaysia companies considering selling to China are the competition from international companies, adapting to Chinese tastes and a lack of market knowledge.
“Businesses are looking to overcome these challenges by improving their own distribution network of distributor relationships, setting up local partnerships and increasing the usage of e-commerce platforms,” it said.