What's bad about Malaysia
From "Made in Germany" to "Made in Malaysia"
As a former colonial power, the United Kingdom and British values and products are still very popular in Malaysia. However, when it comes to mechanical engineering and engineering, and especially cars, products "made in Germany" are often the first choice.
In recent years, the image of "Made in Germany" in Malaysia has gotten a few scratches due to the diesel scandal and the delays in building the Berlin airport, but has not suffered any fundamental damage. German company representatives told Germany Trade & Invest (GTAI) that the quality of diesel in Malaysia is bad anyway, as is environmental awareness. The sales figures of the leading German car manufacturers in Malaysia, Mercedes and BMW, rose by 3 and 18 percent respectively in 2017, and at VW it was 8 percent. Only the weaker sales brands Audi and Porsche had to accept declines.
Which terms are associated with the label "Made in Germany" in Malaysia?
|3||Efficiency and high productivity|
|4||Robustness and durability|
|5||Reliability and trustworthiness|
Source: Research by Germany Trade & Invest
Machines "made in Germany" are in demand for demanding tasks
The black, red and gold label "Made in Germany" continues to be a strong selling point. This was the overwhelming opinion of the German companies surveyed by GTAI in Kuala Lumpur and Penang, the two most important economic centers in Malaysia. However, it also plays a different role for different product groups and market segments.
Technology manufactured in Germany is preferred, especially when there are high demands on precision and reliability. This applies, for example, to medical technology. When it comes to their reputation in Malaysia and this is rated on a scale from 1 (low) to 10 (high), German manufacturers are 10, Malaysian 5 to 6 and Chinese 1 to 2. If you have the money, buys "Made in Germany", states Hans Brenner, managing director of an international medical technology company.
"Made in Germany" is also an important selling point when it comes to selling machines and systems. "It is a seal of quality and stands for precision and high engineering skill," explains Francis Lee, ASEAN and Oceania sales manager at the German mechanical engineering company Trumpf. The customer often regards German products as the best of their kind and associates them with high productivity, innovation as well as robustness and durability.
How are German products and services perceived in Malaysia?
|German products and services?||Applies perfectly to||Partly applies||Is less true||Does not apply|
|have an above-average quality.||x|
|are comparatively cheap.||x|
|are particularly trustworthy.||x|
|represent high status.||x|
|are known / are well marketed.||x|
|are a good overall package compared to other products / services.||x|
|are easy to obtain.||x|
|have an attractive design.||x|
Source: Research by Germany Trade & Invest
Chinese suppliers have the edge when it comes to standard products
However, some things have changed in the sales of German machines in recent years. In the past, these were often almost unrivaled on the market, but now mainly Chinese products, some of them Indian, have been added - at significantly lower prices. For standard applications, German machines can often no longer keep up with the Chinese competition in terms of price.
Products with the label "Made in Germany" are still in demand when it comes to the highest level of precision and reliability, for example in the pharmaceutical and, in some cases, the export-oriented food industry. This is what Tim Groth, General Manager of Rieckermann Malaysia, reports in an interview with GTAI. Even when it comes to speed, productivity and low downtime, German machines are unbeatable. For niche and special applications, in which German machine builders are not infrequently world market leaders, they also continue to have good opportunities in Malaysia.
"German Quality - made in Malaysia" is also successful
German manufacturers are reacting to the price challenges of the competition by relocating production to more cost-effective countries - and are thus successful. Almost as good as products "made in Germany" are now products from German companies that manufacture them in Malaysia according to their standards. This is how well-known large companies such as B.Braun and Infineon proceed, for example, which have concentrated a large part of their global production on the Malaysian peninsula.
But there are also a number of small to medium-sized German companies, such as the manufacturer of condoms and machines, Rubber Richter Technology. The quality seal "German Quality - made in Malaysia" plays an important role for the products that are mainly exported, assures company founder Klaus Richter in an interview with GTAI.
However, a German provider of medical technology warns against watering down the label "Made in Germany" too much. For example, if a German manufacturer manufactures hip joints in China and sends them to Germany for packaging with the label "Made in Germany", there can be a problem with quality defects. To justify the label, important production steps and quality control would have to take place in Germany.
"Made in Germany" is not a sure-fire success
Relying on the "Made in Germany" seal of approval and seeing it as a sure-fire success is no longer enough in Malaysia. The competition has caught up. Even machines and systems from China have improved significantly in terms of quality. In addition, Asian and US competitors are flanking sales of their products with appropriate marketing and after-sales service.
The personal relationship between buyer and seller is more important in Asia than in Germany. When buying larger machines and systems in particular, customers expect the most direct possible contact with the manufacturer. That is why the presence on site, if possible through your own branch or at least a sales representative who works closely with the parent company, plays a decisive role. In terms of local presence, German companies, especially medium-sized companies, can still gain ground.
Service has to be just as good as the product
Malaysian customers expect a high level of reliability, punctuality, competence and trustworthiness from a German company. The former trading house Rieckermann has a recipe for how to successfully market German machines and systems in view of the Chinese price competition. For investment projects, the company offers a complete package from planning to machine financing, delivery and installation to after-sales service. Smaller Chinese retailers with limited supply and service cannot offer this.
The market is price conscious
The high price of German products is undoubtedly one of the greatest challenges. Unlike Singapore, where quality comes first and price second, the Malaysian market is predominantly price-conscious. This is why sellers of German capital goods focus on the precision, efficiency and longevity of their products and thus the argument that they will pay off in the long term. However, the profit outlook for many Malaysian entrepreneurs, especially the small and medium-sized ones, is rather short-term. An investment should pay for itself as quickly as possible.
In order to keep up with the price, German machine, plant and vehicle manufacturers have in some cases switched to on-site assembly or parts production. Supplements from China are also used. The corresponding end products can then be marketed under the label "Engineered in Germany". It is important that the valued German characteristics are clearly recognizable in the products as well as the accompanying services.
How helpful is the "Made in Germany" label in Malaysia?
|mechanical engineering||3||Precision, efficiency, robustness and longevity are decisive for products in this industry, all properties that are associated with "Made in Germany".|
|environmental engineering||3||German products have a very good reputation in the industry.|
|Information and communication technology (ICT)||2||Unlike machines and automobiles, ICT is not regarded as an outstanding German export industry.|
|Energy Technology||3||The situation in the industry is similar to that in mechanical engineering.|
|Healthcare||3||When it comes to medical technology and pharmaceuticals, high effectiveness, safety and precision are essential. German products enjoy a high level of trust.|
|Consulting (architecture and engineering services||2||Historically, the industry is strongly Anglo-Saxon. German consultants do not yet have a strong market position.|
|Vehicle||3||The premium segment is dominated by German brands.|
|Furniture||2||German products can only be found in the premium segment, especially in kitchens. Suppliers from other industrialized countries are considered to be equivalent.|
|food||2||Dairy products often come from Australia and China. German products, especially pastries and confectionery, are also represented.|
|Personal care products / cosmetics||2||German products do not have an outstanding market position.|
|Laboratory and measuring equipment||3||"Made in Germany" scores with precision and reliability. German products are in the premium segment|
*) 0 = counterproductive, 1 = neutral (no effect), 2 = partially helpful, 3 = very helpful
Source: Research by Germany Trade & Invest
Germany's most important foreign competitor in the Malaysian market
|Branch||Main competitors||Reason / explanation|
|mechanical engineering||China, Japan, USA||Chinese companies offer affordable prices. Japanese and US companies score points with modern technology.|
|environmental engineering||China, Japan, USA||Price-related in China and technology-related in Japan and the USA.|
|Information and communication technology||USA, Japan, China||The USA and Japan lead the way, China offers cheaper.|
|Energy Technology||China, Japan, USA||Price-related in China, technology-related in the USA and Japan.|
|Healthcare||China, USA, France||Budget tightness helps China; the USA, Japan and Germany lead the way in terms of technology.|
|Consulting (architecture and engineering services)||USA, UK, China||Anglo-Saxon companies are traditionally well represented. In the construction sector, consultants from these countries come along with construction companies from Korea, China and Japan.|
|Vehicle||Japan, South Korea||Japan leads in technology and price. Korea is catching up due to price factors.|
|Furniture||China, Japan and USA||Standard products come from China, products in the premium segment from industrialized countries.|
|food||China, USA and Australia||Australian providers offer good quality and benefit from the geographical proximity. Products from China are inexpensive. Germany is represented in domestic specialties and in the premium segment.|
|Personal care products / cosmetics||China, USA and France||China is ahead in terms of price, industrialized countries in premium products.|
|Laboratory and measuring equipment||USA, China and Japan||China is catching up in terms of quality. The USA, Japan and Germany lead the way in terms of technology.|
Source: Research by Germany Trade & Invest
Sometimes in Malaysia, for example with consumer goods, you can see the label "Made in EU". If German manufacturers also produce in other European countries, in this case it is more honest than "Made in Germany". The latter, however, enjoys a higher reputation in Malaysia than "Made in EU". In the case of food and personal care products, the label of origin does not seem to play as big a role in general as it does for capital goods, which are subject to high demands in terms of precision, efficiency and longevity.
Nevertheless, German food and personal care products can be found on the shelves of inner-city supermarkets, on which the company name and the German location of the manufacturer are clearly marked. This is also the case for goods that are produced outside of Germany. Several medium-sized confectionery manufacturers "sweeten" their products with a black, red and gold "Made in Germany" label.
In 2018, Germany Trade & Invest asked its foreign employees in 43 countries how the label "Made in Germany" is perceived in their home country. You can find the complete texts for all the countries examined at www.gtai.de/made-in-germany
You can find more information about Malaysia at www.gtai.de/malaysia
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