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Small- and medium-sized enterprises (SMEs) need to adapt and innovate, not imitate, says founder and president of the Limkokwing University College of Creative Technology, Tan Sri Dato’ Lim Kok Wing.

Through innovation, SME operators can make Malaysian products better and more appealing to consumers. Such products can also be properly branded, thus commanding a higher value, he says.

On the other hand, when they merely copy they will remain lagging behind their competitors, and the vicious circle will persist.

“A good example is Japan which continues to upgrade consumer products and promote leading brands successfully,” says Tan Sri Lim.

“For instance, their washing machines are in demand because Japanese manufacturers keep introducing new useful functions. Moreover, they design their machines to look attractive. Buyers therefore associate these brand-name products with quality.”

To most consumers, the very mention of the US conveys thoughts of advanced information technology. They therefore opt for US-made computers and ICT systems.

Likewise, Germany represents precision and reliability in the manufacture of electrical products and vehicles.

“Similarly, people relate Italy to sophisticated lifestyle merchandise while France comes to mind whenever they look for expensive perfumes,” notes Tan Sri Lim. “Switzerland has made a name for itself as the producer of quality watches like Swatch.”

Brand development

The world’s most high-tech countries are the most creative and innovative. They are also the richest.

“It has nothing to do with size,” he stresses. “Finland, for instance, is small but it is also affluent. It is the manufacturer of the world’s best-selling mobile phone “Nokia. It is a brand every one is familiar with, and many of us want to own a Nokia.”

Malaysian SMEs are weak in brand development. They have to work and think hard to make their brands popular. Also, he continues, they have to enhance their corporate image and make a good impression on their customers.

Instead of relying on OEM contracts, local SMEs should concentrate on original design and own brand development. When they are able to design their own products and promote their distinctive brands, they will be in a strong position to dictate both production and price.

In view of the country’s economic growth, Malaysian SMEs can ill-afford to remain complacent. They have to capitalise on opportunities and make advances.

“Our SMEs cannot compete with other developing countries on price,” says Tan Sri Lim. “In terms of production costs, Malaysia loses out to China and Vietnam. In China, the hourly wage is RM1. In Vietnam, the rate is even lower 50 cents. However, Malaysian workers are paid RM4 per hour.

“We can take advantage of their low production cost by setting up manufacturing bases there. Thus, we can stay competitive.” Meanwhile, a major concern is the reluctance of Malaysian SMEs to create their own brands. They have to make this move as soon as possible because time is not on their side.