I don't mean to say that all, but I think some Chinese products are of very high quality. For example, brands like Huawei have a very strong presence. I want to try the 'Mate XT (trifold phone)' released by Huawei in Malaysia, but I'm worried about the price.
On the 19th in Pavilion KL, the largest shopping mall in Kuala Lumpur, Malaysia. A Malaysian woman in her 20s, who met with reporters at a Huawei Mate XT pop-up store operating for a week starting that day, said this. There were large screen advertisements installed on two walls outside the shopping mall, where advertisements for Chinese corporations like Huawei and Xiaomi were constantly playing.
Chinese corporations are actively targeting Malaysia, the hub of Southeast Asia. As the trade war with the United States intensifies, China's efforts to find new markets align with Malaysia's need to attract investments to boost its economic growth. Previously, Malaysia has been regarded as 'China's backyard' due to its large ethnic Chinese population and geographical accessibility, and China's influence over this country is expected to further expand. Behind this is China's ambition to increase its dominance in the global market using Malaysia as a base.
◇ Chinese brands spread throughout Malaysia… BYD is number one in electric vehicles
In Kuala Lumpur, traces of Chinese capital could be found everywhere. Upon exiting Kuala Lumpur International Airport, large billboards of Huawei's Mate XT welcomed tourists on the road leading to the city. Inside Pavilion KL shopping mall, there were many Chinese consumer goods brands, including the representative hotpot brand 'Haidilao', household goods store 'Miniso', milk tea brand 'Babaochaji', and smartphone brands 'Honor' and Huawei. The same is true for automobiles. The Malaysian automotive brand 'Proton', in which the Chinese Geely owns 44.9%, was commonly seen, along with numerous dealerships for BYD (Build Your Dreams), China's largest electric vehicle company, and Changan Automotive.
China has had a close relationship with Malaysia since before. According to China's Ministry of Commerce, China has maintained the position of being Malaysia's largest trading partner for 15 consecutive years until 2023. Last year, the trade volume between the two countries reached $190.2 billion (approximately 273.7 trillion won). The ethnic Chinese infrastructure is also one of the links connecting the two countries. The ethnic Chinese population in Malaysia is about 7.68 million (as of 2023), accounting for 23% of the total population. Due to capital regulations in China, the demand for migration to Malaysia has increased, resulting in a growing ethnic Chinese population.
Recently, Chinese industries have further accelerated their offensive toward the Malaysian market. This is necessitated by the need to discover new markets due to trade conflicts with the United States. China has noted the geographical advantages of Malaysia. A report by China's Ministry of Commerce titled 'Guide to Foreign Investment Joint Ventures by Country: Malaysia (2024 Edition)' states that "Malaysia is located in the center of Southeast Asia and can serve as a bridge not only to the ASEAN market but also to the Middle East, Australia, and New Zealand, and it possesses solid economic growth prospects with abundant raw materials and high-quality human resources."
Malaysia is also in urgent need of attracting foreign investments to boost its economic growth. The growth rate, which was 8.7% year-on-year in 2022, plummeted to 3.6% in 2023. As the interests of both countries align, Chinese investments in Malaysia are rapidly increasing. China's direct investment in Malaysia, which was $7.92 billion (approximately 11.4 trillion won) in 2019, surged by over 70% to $13.48 billion (approximately 19.4 trillion won) in 2023. Lee Seong-gi, head of the Korea Trade-Investment Promotion Agency (KOTRA) Kuala Lumpur office, said, "For Malaysia, China is the most important partner for boosting domestic consumption."
Especially in the smartphone and automotive sectors, the offensive by Chinese corporations is intense. According to market research firm Euromonitor, Samsung still holds the top share at 26.0% (as of last year) in the smartphone market, but China's Xiaomi is closely chasing with 23.7%. Apple is in third place with 13.8%, followed by other Chinese companies such as Vivo (11.7%), OPPO (11.5%), and Honor (4.4%). Huawei, which held the global launch event for Mate XT, aims to be among the top five in local sales in Malaysia this year. The director noted, "With the rise of Chinese smartphones and the increasing demand for premium smartphones in Southeast Asia, many are switching to Apple iPhones, and Samsung, which has maintained its top position in Southeast Asia, is likely facing significant concerns recently."
As Malaysia is an oil-producing country, internal combustion engine vehicles still dominate, but in the electric vehicle market, China's BYD holds an overwhelming number one position with a market share of 39.3% (as of last year), surpassing Tesla at 23.6%. Recently, the Chinese Chery Automobile's SUV brand 'Jetour' has also aggressively claimed the number one spot for electric vehicle sales in Malaysia last year. The Malaysian electric vehicle market has shown rapid growth, with sales increasing from around 700 units in 2020 to approximately 134,000 units last year, a twentyfold increase. In response, BYD is preparing for market expansion by announcing the establishment of a complete knockdown (CKD) factory.
◇ Chinese industries also eye Malaysia's digital sector
Chinese industries are showing movements to actively target Malaysia's digital sector in the future. A representative case is when China's ByteDance announced its plan to establish an artificial intelligence (AI) hub in Malaysia last June, intending to invest 10 billion ringgit (approximately 3.3 trillion won). Huawei is also actively participating in building a 5G network in cooperation with Malaysian telecommunications company Maxis. The Ministry of Commerce noted in a report, "Recently, the digitization process in Malaysia has accelerated with a series of initiative announcements, and it is consistently promoting the construction of digital infrastructure such as 5G and big data to continuously improve the environment for the development of the e-commerce market." Sustainable businesses like solar energy are also cited as areas of interest for Chinese corporations.
The penetration of Chinese industries into Malaysia is expected to progress rapidly, supported by the friendly relations between the two countries. Last June, Li Qiang, the Premier of the State Council of China, visited Malaysia and stated, "China and Malaysia occupy the most important position among regional countries and provide standards and models for others." Malaysia, which had previously claimed a neutral stance in diplomacy, has recently shown pro-China movements. It has taken a relatively conciliatory attitude towards the South China Sea issue, where China and Southeast Asian countries are engaged in territorial disputes, and has expressed intentions to join the emerging nation coalition 'BRICS' led by China and Russia.