- 2 months ago
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Chinese online marketplaces are rapidly changing the way Malaysians shop, offering factory-direct goods at prices many local businesses say they simply cannot match. Now, the government says it is moving towards tighter regulation of e-commerce platforms. So, can the government protect consumers and local businesses, without shutting out the benefits of greater competition? On this episode of #ConsiderThis Melisa Idris speaks with Dr Chin Chee Seong, National President of the SME Association of Malaysia.
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00:10Hello and good evening. I'm Melissa Idris. Welcome to Consider This.
00:14This is the show where we want you to consider and then reconsider what you know of the news of
00:18the day.
00:18Chinese online marketplaces are rapidly changing the way Malaysians shop,
00:23offering factory-direct goods at prices that many local businesses say they simply cannot match.
00:30Now the government says it wants to move towards tighter regulation of e-commerce platforms.
00:35So can the government protect both consumers and local businesses
00:40but without shutting out the benefits of greater competition?
00:44That's what we want to discuss today on the show.
00:46Joining me now is Dr Chin Chisiong, who is the National President of the SME Association of Malaysia.
00:53Dr Chin, thank you so much for being on the show with me today.
00:55Can we begin our conversation maybe by you sharing what your members are telling you?
01:00How significant of a threat are these ultra-low-cost foreign platforms to Malaysian SMEs?
01:09I think if you look at what currently most people are talking about,
01:14there's two sides of the story, I would say.
01:17One is the consumer, the other one were the business people.
01:20Now, the one making a lot of noises are the business people, right?
01:24Because they are affected.
01:25They feel that it is unfair and they couldn't compete pricing, price-to-price or product-to-product or whatsoever,
01:33right?
01:33But if you look at the, there's two sides, you know, being an association of companies, SME association,
01:39well, likely or unlikely, we will definitely want to protect our SME in terms of their businesses,
01:47not so much on protecting our market, right?
01:49Protect their business means have a fair playing ground, have a fair level ground.
01:54Because we are facing a lot of costs, you know, issues lately, right?
01:59Not only from renter or SST or whatever, from utilities down to, what do you call statutory requirements,
02:06statutory payment, you know, rent, licensing, you know, assessment, everything.
02:11So, what a lot of people are crying is that most of these, you know, call e-commerce,
02:17I think too much pressure on term or product.
02:19But, they say again, this is not happening the first time.
02:23When Lazada was coming in, when Shopee was doing their talk, you know, and later come Termu,
02:28everybody crying the same thing, right?
02:30Every business crying the same thing.
02:32They cannot compete too, right?
02:33But now, ping total come, hairball get bigger because it becomes so cheap, right?
02:37It becomes so cheap that the people worry, not only worry, they lose a lot of business because of the
02:44fact.
02:45But look at the other side of it, consumer is very happy.
02:49In my pocket, I have $100, I can buy more things, right?
02:53So, are we going to protect the consumer, right?
02:56Or protect the so-called SMEs or the business people, right?
03:03Not so much of protecting.
03:04It would say, I would say, what the government need to do is to make sure, okay,
03:10these people coming in, the product they're coming in, have to be so-called regulated.
03:15Regulated means, let's say you might have a power plug point from Ping Toto or Lazada.
03:20A power plug point may not be a serum approval.
03:23This is dangerous to be used in Malaysian market, especially, you know, it's not been tested properly.
03:29And also, if you notice, not only from this Ping Toto or whatever, a lot of other platforms,
03:34even Amazon, even some other platforms from Korea, they can sell some supplemental product,
03:42product that don't get approval to sell in Malaysia, cosmetic product for that matter.
03:46Will that affect our local companies, local e-commerce company?
03:51Definitely, it will, right?
03:53So, the fact is that we shouldn't just look at price war.
03:58You know, you're talking about price war, you cannot compete with China.
04:01Because their market is so big, they produce 10,000 product at the same price, of course,
04:07whereby we only produce 1,000 product.
04:09So, cost we cannot compete, right?
04:12That's no way.
04:13But we have other product they don't have.
04:15Okay, let's come to that.
04:17So, I want to come back to something you said.
04:19So, you're right, maybe it's really impossible to compete on price with a China manufacturer.
04:26But when you said earlier that you want to see a level playing field for Malaysian SMEs,
04:33what do you mean by that?
04:35Are the existing tax and regulatory rules to support Malaysian businesses, is that sufficient in your opinion?
04:42Okay, level playing field means, you know, for instance,
04:44the low value product coming in $500.
04:47Earlier, there's, you know, they're talking about tax, paying, even 10% tax, you already tax them, right?
04:53But we don't tax a company here.
04:56So, what we say means that if the e-commerce platform follow our regulation,
05:04get their product be tested, you know, product have been approved to come into Malaysia,
05:09then they have other costs, right?
05:12Maybe like serum testing costs, or also other that involve ministry or health testing costs.
05:17And that part will make a difference.
05:19So, we have to pay, you know.
05:21If we, our product in Malaysia, if you manufacture,
05:24I would say just manufacture of a power plug point,
05:26which is good enough power plug, right?
05:28You're subject to many tax, of course.
05:30Some other, you're talking about a company, expenses, you know,
05:35you have to pay, you know, more renter here, you have to pay your basic costs here.
05:42But even if platform don't have to pay, they have other costs, right?
05:47It's the only thing whether this company from China, for instance,
05:49are they paying our corporate tax?
05:51They don't.
05:53But there's a low value goods tax imposed, right?
05:56Do you not think that that has actually leveled the playing field at all?
06:01I think low value tax is whether you can't stop that.
06:06Because this is already a regulation, right?
06:09So, once you cannot stop something like that,
06:12even they pay tax, they do pay sales tax, right?
06:15So, it will never help.
06:18You know, it will never help that you can bring down their level playing field.
06:23It won't.
06:24So, when you talk about e-commerce platform and your physical outlet
06:28or whatever you have it here, there's no level playing field already.
06:32Unless you're talking about, I'm having a platform here in Malaysia
06:35and they are having a platform in China.
06:37You know what I'm trying to say?
06:38Our local platform, we sell our local product.
06:41And there's a way, the difference in level playing field,
06:44most people complain because we have a lot of costs to pay.
06:48The SME here have, you know, like say rental costs,
06:51you know, salary requirement costs, you know, manpower costs.
06:56But you cannot compare this against the platform.
06:59It's not, you know what I mean?
07:02It's not comparing Apple to Apple really.
07:04Unless you're talking about our platform here compared to their platform there.
07:08So, what are you telling your members?
07:10So, if you say that Malaysian SMEs cannot compete in this price war
07:16with factory direct goods from China,
07:19what should Malaysian SMEs realistically compete on?
07:24What should be the unique selling proposition of a Malaysian business
07:28if they're not trying to compete on price altogether?
07:32I think Malaysia has good products like quality, reputation, right?
07:36The quality is one more thing.
07:39And they're confident of Malaysian product by our consumer.
07:42And you're also international consumer.
07:45For instance, our HALA certification product.
07:47It's well recognized.
07:48And it doesn't mean that we can't do business in China
07:52or any other place with our good product.
07:54In fact, we can do better.
07:57If you look at our product that we have
08:00compared to whatever Chinese product they have,
08:03it is totally a different thing.
08:05You have to make it a different thing
08:06so that you can make it to compare and compete with them.
08:11You don't compete.
08:12Like, let's say, if they're producing a pineapple tart, for instance.
08:15They can produce pineapple tart cheaper than what we produce pineapple tart here.
08:19But our pineapple tart can be much more tastier than them.
08:22That's number one.
08:22Because we localize our taste.
08:24It's the same about the Malaysian taste, right?
08:26And we can have a better control in terms of health,
08:29in terms of healthy product, in terms of quality product.
08:33In terms, like I said, the HALA certification.
08:36The HALA certification is just not so much of the logo.
08:39It's the way they process the food,
08:40the way they get it prepared, you know, in laboratory,
08:44the sauce is coming.
08:45It is clean, you know.
08:46So, those are our advantages.
08:48You're talking about F&B product.
08:50But you're talking about physical product, for instance.
08:52If I produce a mouse, right?
08:54A physical mouse that you manufacture here,
08:56and you compare and manufacture in China,
08:58definitely you can't compare, right?
09:00But if you look at branded product,
09:03there are other products in the world
09:07where China also produce,
09:09but they can do better.
09:11It's not necessarily so, right?
09:12You look at Japanese product.
09:14They're based on their quality,
09:15based on their reputation, right?
09:17So, these are the things we should look at.
09:19And what we, Malaysians, should do is
09:21how to make our product more attractive
09:24and also make our cost getting lower
09:26using digitization, you know, automation.
09:31For instance, our biscuit product,
09:34Julie Biscuit.
09:35Julie Biscuit has been doing very well, right?
09:40And it's not the price that matters.
09:42They are not selling that cheap.
09:43Why they can produce a product that can sell well?
09:47So, it is not so much on a loan price wall.
09:50You know, you don't do that.
09:51We go by quality, by go by reputation,
09:53and go by whatever we have in terms of our branding.
09:57So, at this point in time,
09:58what would the SME Association of Malaysia
10:00like to see the government do?
10:03I think first thing first,
10:05we want to make sure those products,
10:07I would say the control part,
10:09the governance part,
10:11how we control this item coming is legit, right?
10:14We have to make sure that they got the right process
10:18or approval for healthcare product,
10:20you know, for food,
10:21and then for those electronic items.
10:24What other product coming must be,
10:27you know, certified
10:28and also been approved by our authority,
10:31safety product or whatever that matter.
10:33So, that become a level playing field.
10:36We got a lot of product coming in.
10:37They are cheap,
10:38but they do the other cost like testing,
10:40you know, whatsoever.
10:41And the more important thing is,
10:45why China product or other country product
10:47can come in Malaysia easily,
10:49and why our product cannot go to their country easily?
10:52Right.
10:53Because they have their process of testing their product
10:56and don't let else product go in.
10:57So, our case of monitoring the entry of the product
11:02coming to Malaysia,
11:04you know, how much can we make sure
11:05through our custom or whatever
11:07that anyone do a 40,
11:10they have to be penalized.
11:12So, we're strict in terms of all this assessment
11:14on the product coming in.
11:16Then, it makes us a better level playing field
11:21in terms of product to product.
11:23That is what I want to see from government.
11:25You know, obviously monitor the product coming in.
11:27Dr. Chin, do you see this
11:30being to the detriment of consumers
11:33and cheaper products
11:35and better competition in the marketplace?
11:38I think it's so subject to what kind of product.
11:41If you talk about the product,
11:43that is, it doesn't need any approval.
11:45For instance,
11:47I remember I just went to the net.
11:49I'm searching for a net
11:51to plug my mangoes.
11:56You know, I want to find a long bowl,
11:58I have a net to plug my mangoes.
12:00But I couldn't find anywhere around my area.
12:02You know, even the shops,
12:04you know, in hardware shops,
12:04I couldn't find.
12:05But I just go to online,
12:07I can find the product.
12:08And it's product to product
12:09and good quality.
12:10And I pay much cheaper.
12:13Right?
12:14So, it's convenient for the consumer.
12:16If you make your consumer,
12:17and this product,
12:18you can't get anywhere,
12:19and they are cheaper,
12:19doesn't mean it affect your business.
12:21Yes, you have a store in Malaysia.
12:23You're selling this netting.
12:24But your net, it's no good.
12:26The product cannot compete.
12:28And that product eventually
12:29also come from China.
12:31You know what I'm trying to say?
12:32So, if you're buying a China product from China,
12:34and buying a China product from SME here,
12:36yes, of course,
12:37the SME here has to protect it in a way,
12:39because they already bring the product
12:40and make it convenient for you.
12:42So, it sells on convenience.
12:44Why that DIY still can survive?
12:46And most of the product come from China.
12:48Right?
12:49It's because it's bad on convenience.
12:51It sells on convenience.
12:53It sells on quality,
12:54support from the locals.
12:56Right?
12:56So, the competition is there.
12:58But if you went to a store,
13:00went to a hardware shop,
13:01there's no service as well.
13:03And of course,
13:04I don't mind buying from the net.
13:05You know what I mean?
13:06Okay.
13:07So, there has to be
13:08some kind of differentiator
13:09to allow for competition to happen.
13:12Dr. Chin,
13:12thank you so much
13:12for being on the show with me.
13:13I appreciate your time.
13:14That's Dr. Chin Chi Xiong
13:15from SME Association of Malaysia.
13:18We're going to take a good break
13:19here on Consider This.
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