Q&A: Local brands versus global brands in Malaysia

We asked three in-market experts for their take on the prospects for local versus global brands in Malaysia.

Participants:

• Prashant Kumar, senior partner, Entropia
• Aaron Cowie, CEO TBWA\Malaysia
• Sue-Anne Lim, chief data and strategy officer, Dentsu Aegis Network Malaysia

How much growth opportunity is there still for global brands in Malaysia?

Lim: There are opportunities abound because there's growth in the population - we've hit the 30 million mark and there's growth in the economy. We've clocked over 5 percent GDP growth in the last quarter over many months of gloomy economic conditions. Malaysia, despite it being plagued by internal scandals, and hard hit by the US currency, will always rebound. Global brands just need to monitor the shifting spending power and motivations behind trading up and down to cater to the people's needs.

Kumar: It depends. There is a burgeoning Malay middle class and a significant sub-segment within are ready for premium mass brands. As a middle-income country, most of the growth is expected to come from up-selling consumers to more premium brands. Also the halal segment is seeing great interest among the masses.

Cowie: Malaysia plays a big role in the global halal industry and is a recognised leader in the field. It is becoming an important economic driver for the country contributing to its GDP. The global Halal Economy is huge and very diverse, and estimated to be worth more than USD$2 trillion. China is the main export market for Malaysia, followed by Singapore and the US. The exports include halal ingredients, food & beverages, cosmetics and personal care, industrial chemical and palm oil derivatives. 

How are local brands trying to take on big brands in this country and what are the key rules / best practices for those trying to do so?

Cowie: With smartphones as their best friend, Gen Z in Malaysia have access to information at an instant from various sources locally and globally to verify information about a brand or seek points-of-view from their peers about a product. Not an easy group to convince for marketers. Malaysians are becoming increasingly vocal and engaging online but there is a growing aversion to online advertising. There is a need to trigger conversations through content instead.

Lim: We were really looking forward to the TPP, because that would have meant a more level playing field for local brands to compete better regionally. ASEAN is a huge market for us. However, even without it I think local brands could pose a very strong threat to global ones considering they can innovate and go to market faster than brands who were not born here. It's about making sure the brand can scale to be priced competitively. If you're talking about consumer goods then even more reason why this is the best time to launch attacks on global brands. They've long dominated the shelf space with budgets that local brands can only dream of. But with ecommerce and the power of social media, distribution could take a totally different turn. Local brands should leverage on this and disrupt the system.

Kumar: Staying focused, grounded and playing on local cultural nuances is key. As global brands seek global efficiencies via highest common factor among countries, they leave important gaps and a committed and entrepreneurial approach can definitely win.

What can global brands learn from local brand marketing?

Kumar: Successful local brands tend to be highly entrepreneurial, finding the right balance between elaborate process controls and speed of local insights and execution. They seem to have their ears really close to the ground, and go where the elite urbane marketers may take an easy way out.

Lim: Global brands normally lead marketing innovation in this country. It’s not surprising; with the budgets they have, they can dominate presence and experiment with new media. Local brands with smaller budgets will need to be more creative in how they spend, for example building their own community on social media and getting fans to be involved in the business itself. I think if at all, global brands would need to learn to be agile, continue to listen to the needs of the market and be proactive in creating new products, services and experiences.