Radio Interview: Market Entry for Malaysian Companies
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Maya
Good afternoon, this is the resource center. I am Maya Tan. Now in theory, penetrating exciting new markets should be simple. Particularly if you have a strong product or service offering. However, it could still be daunting, once cultural, linguistic and demographic factors, as well as exchange rates and country risk, are taken into account. The Eurasia Consortium Malaysia has successfully assisted the transition of Malaysian businesses into global businesses, and this year they are propelling more Malaysian businesses from the fashion, spa, F&B sectors into the UK, US, Japanese and the Middle Eastern markets. Here to tell you more is Dr. Stuart Kewley, Chairman of The Eurasia Consortium with their global headquarters in the UK. Welcome…
Dr. Stuart Kewley
Thank you Maya. It’s great to be here.
Maya
Tell about the work you’re doing with Malaysian businesses. I believe one of your success story from last year is with the apparel label Mimpikita ?
Dr. Stuart Kewley
What we try and do is we try and focus on the differentiation of their product. And that is critical to us because without differentiation, there is nothing different. And what we do is, we design the market access strategy on behalf of the company. The thing that makes The Eurasia Consortium and the Malaysian division, TECM, The Eurasia Consortium Malaysia quite different is that we actually implement the strategy on their behalf. So essentially we become their team on the ground and this has been very very typical of Mimpikita ’s story. We worked with them from about 2014 and we brought them into the UK market. The whole kind of engagement during that time was to really build visibility around their brand. They were an unknown product within the European market. Great designs, absolutely beautiful clothes but they were unknown and the irony that they faced is that they were established designers in their own right in Malaysia yet they were relatively unknown in the UK market. So it was about building traction, building visibility, and a kind of response-ness to the brand and that campaign ended when we launched them on fashion scout and London Fashion Week. And that was their Spring/Summer 2016 collection and it was very well received at that time. And the girls were very happy about this and you know, this was really exciting for them but really that was just the start. And what we’ve done subsequently is to really build traction in the market, in and around sales. We also have really decided to engage more deeply with the company in Europe. So what we did was, we created a UK subsidiary for Mimpikita called Mimpikita London and Eurasia Consortium, because we have an investment dimension within the company and we’ve taken 50% equity stake in Mimpikita London.
Maya
So it’s just not step by step process, but it’s also opportunity in terms of investment.
Dr. Stuart Kewley
We’re really hands on. We believe in the brand. We believe in the company and we want to actually build the company. So where we are right now with Mimpikita is about generating revenue streams. And again that’s one of the unique features of Eurasia in the sense that we try and generate a revenue stream within 3 months of engagement within the market and that kind of helps to underwrite the initial capital outlay for the company. So it’s quite important.
Maya
Well, how would you rate the potential of companies from Malaysia that you observe, or who come to you?
Dr. Stuart Kewley
You know, Malaysia is a great market. We actually were in China for quite a long time and we actually began to look for alternative regional hub for our operations and Malaysia came in as number one. And the reason behind that was the common legal system with the UK, common taxes with the UK, English is the second language here so it’s widely spoken. And it’s really a great place. You have a highly skilled, well educated workforce. I can be in Shanghai in 7 hours. I can be in Tokyo in 6. I can in Ho Chi Minh City in 4-5 hours you know. So it’s a great place for us to be. And I think the potential here is enormous. There’s a few things that Malaysian companies need to kind of work on. A lot of it’s to do with confidence, a lot of it’s to do with moving away from being too introspective, and a lot of it is to do with really being able to showcase more comprehensively outside their home market. The wonderful things that they’ve actually go to offer.
Maya
Well, the sentiment out here in Malaysia is that the economy is all doom and gloom. Although the ringgit has strengthened somewhat at this point.
Dr. Stuart Kewley
That’s right. And the pound has dipped because of the Brexit.
Dr. Stuart Kewley & Maya
Chuckles…
Maya
But what are your views on going international in uncertain times such as this?
Dr. Stuart Kewley
It’s critical. You know since The Eurasia Consortium started, our view is that we operate in a global market place and we can’t get away from this. This is what kind of drives me crazy a little bit about the kind of introspection in the UK that we are seeing right now? You know. Perhaps moving away from the engagement with the European Union. We just need to operate in a global market place. We do more business outside of the UK than we do inside of the UK. We have more clients outside of the UK than we do British clients and that’s very very important. And this should be at the top of every company’s list. You know, with the creation of WTO 1994, the liberalization of global markets, there’s no excuse to actually go overseas and I think the Malaysian government understands this. And it’s trying to forge a deeper integration in particularly around the ASEAN states you know and elsewhere through the trade agreement that they’ve signed right now. So think it should be critical. And I think again is really really important, we used to think multinationals. Now we think of micro-multinationals, these smaller firms. Due to the change in communication, due to the ease of movement across borders. You know, it’s much easier nowadays.
Maya
Well, what are your views on the TPPA and how it’s going to affect these micro-national companies?
Dr. Stuart Kewley
It’s a tough one you know. And it’s really about integration. I think the harmonization of the regulation is critically important and that means in many instances that which you’ll need to do is probably you will need to find the government level, the government stepping up, and the mutual recognition etc. which is critically important. But then that should also… I suppose the flipside of these agreements is that it looks good on paper, but in reality there’s old segments that’s not been fully liberalized. But on the other hand, it creates opportunities and these opportunities really should be exploited.
Maya
And so for a company like Mimpikita , this little, micro-multinational company, what are the benefits? Access to markets? access to funds?
Dr. Stuart Kewley
Yes, the kind of feedback we got from our discussions with Mimpikita is that really there were two challenges they were facing within the Malaysian market. The kind of ‘me too’ companies that were coming along and the girls were working very hard on unique and original designs, and as soon as the designs hit the market place, companies would crop up, not necessarily from Malaysia, they were actually replicating those designs, and undercutting them in terms of their costs. So this was a real IP problem for them you know. So that was one thing and then the perception was the Malaysian market isn’t a huge market and it’s quite intensively competitive in the sector that they operate. So they were looking at moving into a market whereby they’re able to command a higher price point in that market for their products. Yeah and that’s exactly what we’re trying to do. So the way which we have taken into the UK market, as I said the first engagement was really looking at building brand visibility. We achieved that goal at fashion week. What we’re trying to do now is we’re trying to generate sales and it’s kind of interesting. I’ve actually just come back from MODA. As you may know, MODA is the largest fashion trade show at NEC in Birmingham. So we were there with Mimpikita from Saturday, Sunday, Monday, Tuesday. Set up was Saturday, we concluded on Tuesday. And the strategy behind our engagement with the market is that we operate on multiple levels with Mimpikita. On the one hand, we know there’s a certain demographic that will be attracted. Particularly the spring/summer range and that demographic is the boutique owners. What people don’t really understand is that the United Kingdom doesn’t end at the Watford Gap. So you know, as soon as you leave London, there is life outside there. We are actually based in Oxford. We are not based in London and you have areas of pretty significant affluence, in what we call our market towns. And generally what happens is that what people may live in the cities, the Leeds, the Manchesters, the Londons, Birmingham, these big cosmopolitan cities, then when they get married and have kids, they don’t want to live in the cities anymore. They move out to the country because it’s a small country. I can be in London in one and half hours and I live in the Cotswold. So I have a quality of life and I can still make it to the nation’s capital. Within these market towns, we have these independent boutique owners that are looking for Mimpikita product and they have quite an affluent clientele. They are not challenged by the traditional competitors from the high street because they’re in slightly smaller market town. Their demographic is slightly higher, slightly older, more mature, but they’ve got spending power.
Maya
They’ve got spending power and also they’ve gone beyond the high street right?
Dr. Stuart Kewley
Absolutely correct.
Maya
They love discovering this exotic, exclusive new fashion label
Dr. Stuart Kewley
Exactly.
Maya
Yeah
Dr. Stuart Kewley
Absolutely. You’ve hit the nail right on the head. And that’s what Mimpikita is selling.
Maya
So that was your strategy for them.
Dr. Stuart Kewley
So that’s the one level. Now on the second level for Mimpikita are still quite a young on trend fashion house and so we need to cater to that constituency as well. So the people that come to MODA are the more mature independent boutique owners who are looking for as you mentioned, this exclusive, you know beautiful product coming out of Malaysia. On the other hand, the people that don’t go to MODA will be our other, kind of target market. That’s where Mimpikita are looking, that’s the kind of focus. So these are young urban professionals with disposable income they’re prepared to spend on fashion. When we did our market research, you know, we compared the French market and the UK market, and we found that the typical average, young, urban professional female in this range, will spend about £200 more. So they will spend that more than their contemporary in France. So this is a very important market for us. But how we engage with that market, the only time that they will go to those market town boutiques is when they go shopping with their mothers. So what we need to do is, we need to reach out to them, and how we do that is through a digital platform. And we are very much engaged in generating kind of pop up shops. We do a lot of digital marketing. We use social media comprehensively to reach out to these constituents of this market.
Maya
So you’re working very intimately with your clients. It’s almost like your baby!.. (chuckles)
Dr. Stuart Kewley
I can tell you where the product was made, who stitched it, who did the detailing, the beadwork on it etc. We need to know this! Because at the end of the day, we are Mimpikita in the UK and we want to make it a success.
Maya
What are the challenges that Malaysian companies commonly face in penetrating new market and are there any blind spots that they often overlook? Sometimes it’s not the matter of funding. They have the funding and then they barge in but then they find themselves short, you know?
Dr. Stuart Kewley
The two biggest challenges we’ve had really so far is with the company we worked with is the Food & Beverage company and also the nutraceutical companies. So they both are looking to move into the US market. In fact we’ve put them in the US market already, an then also into the UK market. The challenges that we’ve faced and they are very fairly significant challenges and maybe the trading agreements will address this in the long term. But the challenges that we have are regulations. So for the food & beverage company, they are FDA approved. They’ve received all the appropriate approval for their goods in the US market. But due to the lack of knowledge I believe, about the Malaysian produce within the regulatory bodies like the FDA, there are some kind of issues that come back again and again. We’ve spent a lot of time and a lot of effort lobbying these guys and try to help them understand that we have the FDA approval. It’s a bureaucratic hiccup more than anything else. We need to work hard to convince the US consumer that our product is unique, different. It’s not a generic Asian product. This is really Malaysian cuisine, it’s really delicious. And we have to work very hard to educate them in relation on how to use the product. So basically what we did, we are now selling the product on digital platforms within the US. We have our own website where you can buy. Obviously it all comes from Malaysia. We have a distributor in the US and you make your purchase on the website, pay in US dollars and get it shipped from the US. So that works very well… and then we moved this company on the Amazon platform as well. We sold more product in one week than we did on the other platform and website in a month. So that was very very good. The feedback we got from the people that were buying our product are “loved the product, it’s really delicious but we don’t k now how to use it”… So what we did, we flew one of our principles from the UK. She’s an American girl from Denver, and we sat down with the company, it’s a family company the company that we work with. We sat down with one of the daughters and we did a demonstration on how to cook the Masak Merah and that went down really well. We got a professional production company in, loaded on the website and we said “If you like this product, we’re discounting it right now and if you want to know how to use it, follow this link” and we saw our traffic increase by 50%.
Maya
Wow! That’s amazing.
Dr. Stuart Kewley
So that was great. That was really, really good. That’s the solution to that kind of problem.
Maya
I’m speaking to Dr. Stuart Kewley, Chairman of The Eurasia Consortium. We’re discussing taking businesses global and the challenges involved. Next up, have you got what it takes to take your business global and how. Our resource center, BRM 89.9. Good afternoon, you’re listening to resource center. I’m Maya Tan. Dr. Stuart Kewley, Chairman of The Eurasia Consortium from their global headquarters in the UK is here discussing the work that The Eurasia Consortium is doing in taking Malaysian businesses global. Now, in your experience, what are the elements that a company should have that would make it a prime candidate for going global? Whether it’s market penetration or whether it’s getting investors.
Dr. Stuart Kewley
So there’s a key criteria that we look for. Unfortunately, we have to say no to companies more often than we say yes. Because we don’t want to waste their time and we don’t want to waste our effort and their resources.
Maya
And where do they normally fall short?
Dr. Stuart Kewley
Because there is nothing that really differentiates them from the competitors and they fall into all the usual traps that companies fall into. So they are exercising price leadership you know… We had this with one of the Russian companies we were working with. And they were a great company. They did testing equipment for contaminants in brown field sights. When we started working with them, the quality of their product were soviet grade. It was really lots of grays and blacks and big chunky things and all that kind of stuff and the guys worked really really hard. We worked with, we brought an industrial designer in to help them to actually configure out their product just to make it more streamed line and more contemporary. And that worked fairly well. But really the kind of the USP that they were trading on was that they were cheaper than everybody else. But they hadn’t looked outside of their own market and they were being squeezed in terms of their price points by similar companies coming out of China which could comprehensively leverage on their actual labor cost at that time, to give them competitive advantage. Now, we did have some successes with the Russian company in the sense that we took them to a trade fair in Munich. And then what we did is we tracked the hits on their website and subsequently we found that most of the hits were coming from two locations, either Turkey or Indonesia. And therefore that’s the kind of efforts that we make in marketing their products within that market. But getting back to the original question, the real issue that many companies has is they don’t or they can’t differentiate their product or their service and that fundamental thing we look for. If that product or service has a critical differentiation that we can leverage on we can then actually really squeeze the life out in terms of marketing it, that really works well for us. And you know, when we were working with Mimpikita, we looked at the product. It was beautiful. It was well put together. It was stylish. It was… the materials… and we knew we had a winner looking at that company.
Maya
Would you advocate that all businesses, ideally, especially in our connected world today, have world domination card on the get go?
Dr. Stuart Kewley
Absolutely. You know when we first started our business in 2009, our market was the global market place. That’s really where companies should be looking for. It can be quite daunting and it can be quite difficult. But you have some really really good professionals from the Malaysian government you know, like MATRADE etc. that will assist Malaysian companies that actually wants to go overseas. They are not going to do it for them you know, but what they will do is provide market information. We’re quite fortunate in the UK. The similar organization in the United Kingdom is called UKTI, United Kingdom Trade and Investment. Basically, I would get emails from these guys twice a week with market opportunities in the sector that I want to go into and that’s very useful for us because they actually do the filtration for us. So I don’t have to go through reams and reams and reams of material you know. I get what I need. So the leverage, and utilize the resources that’s available like MATRADE etc. think about the markets, and do your market research, do your homework. We’re quite fortunate because that’s we do. So instinctively we have a feel of what market works. One of the designers that we’re working right now, the men’s wear industry, we want to take him to Japan. Because we know that the level of quality and sophistication of his design would work very well in Tokyo. It’ll work very well in London as well, so we’ll take him to the UK market. But we’re looking at those two markets as the kind of target. So they should do the homework definitely. They should think about which market they should look at. They need to think about the price point and where the competitive advantage lies, and also things like the exchange rate as well and the competitive environment within that market.
Maya
What are the factors should be considered when deciding how to go global? There are factors such as localization or navigating laws and regulations…
Dr. Stuart Kewley
I think you know, the real issue right now is the cost implication of setting up and one of the state that Malaysian companies think about is that they think they should have a physical presence within that market. And this has been suggested to us by a number of clients. “We want to have a physical presence” i.e. we want to have our own stores in London. And that is not right at the very very beginning because the capital outlay in related to that based on the returned investment, it just doesn’t match. You’ll be spending a lot for so little in return. What you need to do is you need to built traction within the market. You don’t have to physically be there to do that. You can sell within that market on a digital platform from your home market. As long as you have someone who’s capable of dealing with the distribution, and as long as you have someone even just support you, even if it’s a friend or relative, someone you went to university with, that can simply support the logistic side of things, so you know, when you order from Malaysia, and you’ve given a delivery time, you will get that product on that time that you want. So that’s one way, if you don’t want to work with an organization like ours, that’s one way you can engage with that market. And then based on the response, you know whether you are successful or less successful, you need to learn from those lessons. And you need to understand why you’ve been successful or less so. Maybe you’re not pricing your good correctly, maybe you’re going through the right channels, maybe you’re leveraging on social media as well as you could. But these are all tools or example and these are the digital platforms today make the world borderless I think, that’s why it’s important.
Maya
So I guess what you do is, you look at every company and I guess every company should also examine these factors. Look at the product, and then look at the world map and see you know, where it would really sell like hot cakes. And then consider what it takes to set up there or to even just penetrate the market but from here.
Dr. Stuart Kewley
Sure. We’ve got our models, we’ve got our ASIA paradigm ™ etc. and we’ve used other models. And one of the things that was kind of… What you need to kind of sometimes utilize is gut instinct and we were thinking of what market do we want to go into and we had this very nice model that kind of, just a filtration model and what came out is where we didn’t want to be. We didn’t want to feel uncomfortable, and we said “just tear it up!” you know, let’s just use our gut instinct. Now, we didn’t go in blind, we did our homework, but it has generated results for us. And one time in our company, 60% or our revenue was generated from the Chinese market. Now times have changed and we’ve diversified from China a little bit. One of the things maybe I didn’t mention is, when we engage in companies what we look for, is the capabilities analysis and that really looks into the internal dimension within the organization and that’s quite important for us because that also gives us an indication on whether or not we can actually work with that company you know…. Any company is dysfunctional at some level or another but we need to work through elements or issues before we can actually move into the global stage.
Maya
It would kind of determine sustainability of that company as well.
Dr. Stuart Kewley
You are absolutely right. Sustainability is critically important.
Maya
Well, this year you are taking several other companies international.
Dr. Stuart Kewley
Correct. Yeah…
Maya
Do you want to tell us a little bit about that?
Dr. Stuart Kewley
So in terms of our portfolio, we have about 5 fashion houses that we are working with. UK, Japanese market and maybe Shanghai, not China, markets that we will explore for those companies. And again, each of the companies are different from the other ones in terms of what aspect of to the market are we looking at, it’s going to be quite different. We have nutraceutical company as well and a well-being company we’re very keen on right now. We’ve just JV’d with them in the UK market and we actually took a 51% stake, equity stake in that company and of course we have current existing food & beverage company that we’re looking to really build traction in the US market. So we’re selling them a digital level, 2 digital platforms, but really where those guys should be is, moving in to a physical retail outlets. So right now we’re working on a number of distributors and some brokers in the US market. West Coast, East Coast, New York and San Francisco. Which is where our market research says there’s a demand for their product. But for those guys it’s a volumes game. The more they sell, the larger the traction within that market.
Maya
Thanks very much for being us. It’s wonderful to feel that passion emanating from you, you know. Helping these companies and doing business as well.
Dr. Stuart Kewley
Absolutely. Thank you for having me Maya.
Maya
Dr. Stuart Kewley, Chairman of The Eurasia Consortium in the UK. This has been the resource center. I’m Maya Tan for BFM, 89.9.