• Malaysia, a country dominated by young professionals, is a premier market for Hong Kong's branded/ODM products in the developing ASEAN, given its higher income, 26 million consumers and stable business environment.
  
  
• Hong Kong's name is well received in both the business and consumer sectors of Malaysia, making it a potential market for relevant Hong Kong companies.
  
  
• Electronics is among the keys, as the electronics industry there, by far Malaysia's largest export earner, is increasingly using China's parts and components. Auto electronics is another niche, given that the country's automobile industry is expected to increase its auto electronics applications.
  
  
• Consumer goods suppliers should observe Malaysia's uniqueness. Not only food and cosmetics, but also clothing and footwear, for instance, are areas that could enjoy gains in the market if certified to conform with Muslim "Halal" standards. Paradoxically, winter items are also in demand, despite the country's tropical climate.
  
  
• Malaysia's demand for financial, professional and logistics services is aided by rising Malaysia/China trade. Hong Kong's services providers are among the priority choices of services users in Malaysia, especially for managing their China investments, thanks to Hong Kong's expertise in the Mainland's businesses.

On the back of the China-ASEAN trade and economic cooperation, the Malaysian market is being increasingly explored. This is because Malaysia has the third highest GDP in ASEAN (just below Indonesia with a low per capita GDP and the less stable Thailand), and its per capita GDP is just behind tiny Singapore and Brunei.

Notably, the Malaysian economy has recovered fully from the downturn during the Asian Financial Crisis a decade ago. Foreign exchange controls have also been replaced by a managed floating regime. Business confidence has been restored, evidenced by the fact that foreign investment has gradually returned to the country.

Merchandise Opportunities

The booming export sector, fuelled by strong demand, especially from China, has stimulated Malaysia's appetite for various industrial inputs, e.g., electronics and auto parts. Input demand from certain labour-intensive industries like textiles, clothing and leather goods, nonetheless, is small owing to the small-scale production there. But this bodes well for foreign suppliers of relevant finished goods to the country.

Further, incomes have risen steadily among Malaysians, eliciting demand for both consumer goods and durable items. To successfully tap the consumer market, suppliers are advised to observe the country's brand and fashion culture. Although Malaysians are increasingly influenced by American and European styles, Asian culture and fashion are, in fact, more important there.

As fashionable products are sought after among young Malaysians, foreign fashion brands and retail chains are increasingly present in the country. Hong Kong retailers also have a presence there. Prominent examples include Bossini, Guardian (Dairy Farm) SaSa, Giordano, Baleno, Esprit, G2000, U2, Watsons, City Chain and TSL 謝瑞麟.

Services Niches

Services are another niche area, because of the smaller services sector in Malaysia. Indeed, Malaysian companies are eager to source efficient and cost-effective services from Hong Kong in order to help resolve business problems with their Chinese mainland counterparts, in both trade and investment areas.

Services in demand include financial, legal, logistics and other professional services, which are facilitated by the fact that Malaysia has emerged among the major ASEAN investors in China. Demand for certain specialised services like architecture and interior design will likely be on the rise as well, due to the expected increases in the country's construction and infrastructural development in the next few years.

Nevertheless, direct access into Malaysia's services sector has remained relatively difficult, as the country is just at the early stage of liberalising its services sector. Services providers may therefore make use of the Hong Kong platform first to cater for the services demand stemming from the increasing trade and investment of Malaysia with China.

This new report is available at TDC's Retail Outlets. It can also be purchased through the TDC Bookshop section in the TDC's trade portal: info.hktdc.com.