From New Villages to the Global Market

WHY are so few new Chinese businesses selling online?

Adrian Wong Chee Yun left his fledgling sales career in Kuala Lumpur and returned to Bentong, Pahang, in 2006 to run the family soy sauce business, Cap Tangan.

The Cap Tangan brand, sold under the banner of Kichap Bentong Sdn Bhd, was founded in 1980 by his father Wong Yin. It was sold mainly in the Bentong, Raub and Klang Valley areas visiting the small town.

Now, with support from Tunku Abdul Rahman University in digital business transformation, Cap Tangan has grown from 2 million ringgit before tax in 2017 to an expected 4 million ringgit this year.

Finally, in January this year, the brand was unveiled at e-commerce giant Alibaba’s visitor centre in Hangzhou, as evidence of the company’s success in entering the online retail market.

Wong, who has a degree in food processing and baking, attributes its success in part to the rich blend of Japanese Kokumi spices, which produces a unique combination of umami and rich sweetness.

The second part is entering the e-commerce market through UTAR’s New Village E-commerce Project (UNVEP), which was launched in 2017 to help Chinese New Village businesses like Kichap Bentong Sdn Bhd digitally migrate to global platforms like Lazada and Shopee.

Yet eight years later, very few businesses in Malaysia’s 627 Chinese villages have achieved the online success that Cap Tangan has, despite resources provided by institutions such as UTAR.

Wong discusses with UTAR students how Kichap Bentong operates at their factory in Bentong, Pahang.

Most small and medium-sized enterprises in the 627 villages still serve customers within their villages or neighbouring suburbs.

Commercial successes like Adrian’s family business, located in China’s New Village, are still rare, says Unovate deputy director Prof. Winnie Wong Whee Yen.

Dr Wong, who has headed the project since 2016, emphasises that he is open to any suggestions aimed at improving the company’s operations, which allows it to operate online.

“Mr Adrian is very positive and committed to digital transformation,” he tells the Sunday Star.

As part of the project, a number of university departments are offering their expertise in improving business processes, marketing, sales, running e-commerce platforms and gaining popularity on social media.

In return, students get the opportunity to work with product owners who are embarking on a digital transformation. They look for companies with products that have the potential to go global and conduct further market research.

Students will help businesses set up social media and e-commerce platform accounts, as well as display products, operate an online store and increase sales.

“Most importantly, hands-on learning allows students to learn the secrets of digital transformation,” says Dr. Wong.

The UNVEP programme was launched on 23 November 2017 at the Sungai Long University Campus by MCA President Datuk Seri Dr Wee Ka Siong. It aims to help small and medium enterprises and SMEs promote local products and food through e-commerce platforms such as Shopee and Lazada.

Through this program, new villages are expected to adopt the latest and emerging digital technologies to improve their operations. The program has currently covered villages in Kuala Lumpur, Selangor, Perak, Pahang and Negeri Sembilan

But UTAR says the project’s adoption rate is not encouraging, with only 13 SMEs having been successfully trained and selling their products online to wider global markets out of hundreds of villages in these states. There are currently 627 Chinese new villages across Malaysia, according to data from the Ministry of Housing and Local Government.

“Digital transformation and awareness of digital commerce are not encouraging,” says Dr Wong, adding that there is a general resistance to change.

Wong: There is a general resistance to change and digitalization among new Chinese villages that are not moving to e-commerce.

Datuk Chris Lee Ching Yong, chairman of the MCA’s China New Villages Oversight Committee, outlines several reasons for the slow pace at which New Villages businesses are embracing global e-commerce platforms.

“Any small industry in the new villages, whether home-based or in small workshops, already has existing links with regular buyers and probably long-standing suppliers,” he says.

Lee believes small businesses in China’s new villages need permanent centres offering advice and assistance on digital transformation.

Most operators, he says, do not belong to the generation that is familiar with using social media and modern information technologies.

“Asking them to use Lazada and Shopee to manage their online interface would be too complicated,” he says.

One option is to hire young, educated workers who can use social media to promote their products.

“However, maintaining this online presence must be a constant job,” he emphasizes.

According to him, small businesses need a permanent service centre in the village, providing on-demand services that will help with digitalisation.

“If it’s something that’s part-time or a project, it’s not going to help the company,” Lee says. “If they need help, who are they going to turn to and who’s going to follow up?”

Datuk William Ng, national president of the Association of Small and Medium Enterprises of Malaysia (Samenta), says the key issues are complacency among existing businesses and the need for a mindset change.

“First, we are fighting complacency. Not every small business wants or, therefore, needs to grow. Second, the transition to digital requires a change in mindset rather than capacity building.”

Lee also agrees that there are business owners who may be stuck in the belief that their products are inferior in a global context.

“They’re not as confident in their products. They don’t think their products can sell globally,” he says. “If they sell them locally and someone buys them, that’s good enough.”