From beauty salons to restaurants: Chinese businesses expand across Malaysia, putting pressure on local firms
The rapid growth of such businesses has unsettled some local businesses, who say foreign entrants are undercutting prevailing market prices.
Chinese automotive service chain Tuhu Car Care has grown to more than 13 outlets in Malaysia since entering the market three years ago. (Image: CNA)
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KUALA LUMPUR: A growing wave of Chinese businesses is expanding across Malaysia, attracting customers with competitive prices, longer operating hours and digital-first services.
From beauty salons and restaurants to automotive services, Chinese operators are becoming an increasingly visible presence across the country.
However, their rapid growth is also raising concerns among local businesses struggling to keep pace.
LOCAL BUSINESSES FEELING THE SQUEEZE
At Sunway Velocity, an integrated commercial township on the outskirts of Kuala Lumpur, Nanjing Street is home to a cluster of Chinese restaurants, supermarkets and lifestyle stores.
Mandarin features prominently on shopfronts, menus and signboards.
Many of the businesses are run by Chinese nationals, while their customers include visitors from various parts of China.
Guangdong native Jason Li opened his first hair salon in Malaysia earlier this year after facing what he described as cut-throat competition in China’s hairdressing industry.
“Competition in China is incredibly intense, with hair salons everywhere,” said the hairstylist at DFH Hair and Beauty Salon, which is already planning more outlets in Malaysia. “I believe Chinese hairstylists can better serve local customers.”
His salon offers haircuts and hair washes for under US$10, while a perm and hair treatment cost about US$30. Its products are imported from China, and most of its staff are foreigners.
It also stays open until midnight – a few hours later than many Malaysian hair salons, which typically close by 8pm.
The growth of such businesses has unsettled some local operators, who say foreign entrants are undercutting prevailing market prices.
Malaysian Hairdressing Association president Ann Wang said Chinese operators are prepared to work exceptionally long hours while keeping prices low.
“They’re extremely hardworking and willing to put in long hours – some up to 18 hours a day,” she added. “Whether it’s a restaurant, hair salon or photo studio, their prices are very low. They don’t follow market rates.”
Wang wants the government to further raise financial barriers to entry for foreign operators to protect the domestic industry.
Entities seeking to expand are now required to undergo a social impact assessment.
CALLS FOR A MORE LEVEL PLAYING FIELD
The same competitive pressure is emerging in Malaysia’s automotive servicing industry.
Chinese automotive service chain Tuhu Car Care has grown to more than 13 outlets in Malaysia since entering the market three years ago.
Its app allows motorists to compare prices and book services online, while the company can tap its extensive supply chain in China to offer competitive prices.
Its expansion has left Malaysian operators looking for ways to respond.
“What Tuhu does – which I really admire – is being able to simplify the whole booking process, the car registration process,” said Clement Lim, executive director of Malaysian tyre and automotive services firm Lim Tayar.
“We have no good answer right now. We just try to learn what they are doing and try to adapt on a daily basis.”
The speed and scale at which foreign operators are entering different sectors have become a concern for Malaysia’s small- and medium-size enterprises.
“It all started off with maybe the hotpots that seemed harmless at one point, but now they are everywhere in every sector,” said William Ng, president of the Small and Medium Enterprises Association of Malaysia.
“We are not against legitimate foreign operators in Malaysia. What we really want is (for them) to adhere to the local rules and include some of our local players into the supply chain and ecosystem.”
Ng said stricter minimum requirements for local hiring and the use of locally sourced components could help ensure Malaysian companies benefit from foreign investment.
But industry players also acknowledge that Malaysian businesses must learn from their new competitors and adapt to remain competitive in the long run.
Source: CNA/ca(oc)
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