‘Think Big’ yes, but first Malaysian business owners must stop thinking cheap

There’s a thought provoking piece in the business section of freemalaysiatoday.com that reports more Malaysians buying Chinese made goods ‘out of economic necessity’.

The article says that Malaysians look past the stigma of Chinese products even though there are concerns that they of inferior quality and possibly even dangerous compared to products from other countries.

The article quotes Mr Yeah Kim Leng, professor of Economics at Sunway University Business School who says, “the open market system brought about by globalisation and increased connectivity was intensifying competition for local businesses.”

The President of a local consumers association supports Mr Yeah’s point of view saying that even though many Malaysians are concerned about the quality and legitimacy of China made products, they are prepared to basically risk their lives because Chinese made goods are readily available and cheaper than Malaysian products.

Another economist and Klang MP Charles Santiago is quoted as saying, “Malaysians were buying food from China out of economic necessity despite their misgivings about the quality of the items.” He went on to say, rather worryingly, “There is no excuse for eating toxic food. We must ensure that the food coming into the country fulfils all international health standards.”

I agree with Mr Santiago, there is no excuse for eating toxic food. And in the last twenty years there have been reports out of China of adulterated baby formula. Factories using industrial-grade salt to pickle vegetables then spraying them with banned pesticides before shipment, soy sauce made from human hair, counterfeit alcohol and fruits and vegetables with unacceptably high levels of illegal pesticides.

In our house we stopped buying any foods and most other things from China more than 10 years ago. I don’t care what it costs, I’m not going to jeopardise the lives of my family in an attempt to save money which if they get sick is a false economy anyway. More on the false economy later. But it seems we’re the exception not the rule.

I think there is a deeper issue here. My theory is that there is a culture in Malaysia of ‘if it’s cheap, its good value.’ I think we’ve lost sight of what constitutes value. There are many reasons for this. We’ve been ripped off or know of people who have been ripped off, time and time again by unscrupulous companies from just about every sector and in particular automotive/property/food/transport/healthcare/hospitality and so on.

One patriotic Malaysian friend of mine (and I won’t be popular for quoting this), suggests some Malaysians have been let down so many times and have become so cynical about what companies promise that they now believe it’s better to pay the minimum amount for something and then if it doesn’t deliver on the promises made, well at least the bare minimum was spent.

At the same time, he believes this has created a stubbornness which in turn has made them unable to make sensible decisions when confronted with difficult scenarios.

He suggests that is why many people will spend 30 minutes stuck in traffic to avoid a RM1 toll charge. The fact that the wear and tear on the car engine, the petrol, the lost productivity and stress cost so much more than the RM1 toll charge is irrelevant. The goal is to avoid the RM1 toll charge.

It’s the same with people (and this is not just restricted to Malaysia) who make a special trip to fill up their petrol tank because the next day, petrol is going up by 2 sen a litre. Much of what is saved, is spent on the extra journey, the fuel used in the inevitable long queue and the time spent away from more important things. In almost all such cases, the action delivers a net loss or at best, an immeasurable gain.

And that’s why Malaysians are now buying toxic food. It’s not deliberate, it’s just a natural progression. How many times have you heard a conversation along the lines of:

Q: ‘How was the nasi lemak?’
A: ‘Good, it only cost RM6.’

Hardly the breakfast of champions but never mind, it only cost RM6

The fact that the dish was 80% rice, included 3 peanuts, two ikan bilis, a tiny serving of sambal, the scrawniest chicken wing and 1/8th of an egg is irrelevant. And that’s before we even discuss the source of the oil used in the cooking, the supply chain and the hygiene of the foreigners who cook the food. What’s become important is that it only cost RM6.

What’s all this got to do with the economy and in particular branding? Well for Malaysian businesses to compete against any foreign firms, not just those from China but also those from Europe, the USA and north Asia, they need to move on from the mentality of competing purely on price.

To move on from a belief that they can only compete if they are the cheapest. To see their business not as a series of transactions, but as building relationships with their customers. Because this approach is unsustainable. There will always be someone out there, who can produce what you produce cheaper. And in this case that someone is China.

The economist Mr Yeah suggests that Malaysian firms should ‘think big’ and he’s right, Malaysian firms or rather the businessmen that run them, need to think big but only after they move away from the belief that what’s cheap is good or what’s big is cheap. And the good news is that it’s not a huge step.

International luxury houses such as Gucci, LVMH, Prada, Georgi Armani and Channel have for years dominated sales of luxury goods in Malaysia. Closer to home, Malaysia has proven it can build brands from scratch. Think of Royal Selangor Pewter, PappaRich, Sime Darby, YTL, Proton and Linghams sauces, probably the first Malaysian brand to go international and now available in 100 countries.

But these are the exceptions, not the rule. And it’s the middle ground that needs to change. To move away from the false economy of cheap is best. The false economy in Malaysia has become so chronically negative that it is having a detrimental effect on decision making across the spectrum. Even though it is now threatening lives.

I find it extraordinary that I am writing a blog post about people willing to risk their lives to save a few pennies. But everywhere I go, my team and I have discussions about brand tactics that are driven not by questions such as “What do we have to do to make our business the number one choice in our sector” but instead by questions like “How much does it cost?”

Recently I had a discussion with the head of marketing at the Malaysian campus of a British school with a unique 150 year heritage. The head of marketing wants a video for the school and he asked us to submit a proposal. He didn’t have a brief (which as head of marketing he should prepare) but wanted us to submit a proposal for ‘a school video’. When we asked the budget, he refused to share it.

So there was no brief and no budget. I explained that there were already a lot of videos of the school online (‘none of which are very good’ according to the most senior member of staff) and how is this one going to be any different? He replied that that was our job.

That we should ‘think out of the box’, to ‘propose something unique’, to ‘do something special’. When we explained that ‘thinking out of the box’ took more time and therefore cost extra and therefore we needed to know the budget to see if was possible, he refused to share it.

I explained that even without the ‘thinking out of the box’ requirement, the budget was crucial because it would determine the type of production. Did he want a script? Did he require a film crew to visit the school? Are we to interview staff/pupils etc? Would he like drone shots? How long does he want the video to be? SD or HD? And so on.

We realised that if we were to go this route, we could be submitting ideas for months before we accidentally created something he liked. We also realised that by not sharing the budget, there was a good chance that even if we created something he liked, he might not be able to afford it (or alternatively, we could propose something that didn’t utilise the full budget, to the detriment of the school) and that his decision would probably be based on price and so we reluctantly walked away from the business.

This mentality of ‘cheapest’ has a negative impact on his brand. Not because he didn’t get to work with us although thats one reason, but also because it makes the video a priority instead of making what the video can do a priority. It’s the business equivalent of buying potentially tainted food from China and ignoring that fact because the main thing is it was cheap.

This culture of cheapest is best has caused him to move from doing what’s best to market the school to getting a video done. It actually becomes a box ticking exercise instead of a useful tactic. And we’re seeing this time and time again.

Once a large percentage of Malaysians get past the ‘cheapest is best’ mentality, then only then can businesses have the confidence to ‘Think big’. It will require a cultural change in both how they think and how they run their businesses. Once they do that then we’ll see more successful Malaysian businesses become brands.

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