Greater Kuala Lumpur, The Regional Headquarters Location For Multinational Companies In Asia
Business

Why Kuala Lumpur is the perfect regional business hub for Chinese investors in Asia

Kuala Lumpur is China’s preferred regional innovation hub, with access to ASEAN
1 July 2019: China is rapidly advancing into a new age of economy, from being the world’s global manufacturer to an innovator nation. The country was ranked 22nd in the Global Innovation Index 2018 (GII2018), reflecting the strategic direction that China’s top leadership has taken to position the economy to a more knowledge-intensive one that relies on innovation to maintain its competitive edge. 

Through its policy directions such as the infrastructure-related Belt-and-Road Initiative, and innovation-driven Innovate China 2025 roadmap, there is greater effort from China to align intergovernmental coordination for better regional cooperation as it realises its need to leverage on global network for its growth. 

In a similar vein to China, Malaysia is moving into an era of digital transformation to boost its economic growth, implementing policies to strengthen the digital economy agenda. As outlined in its National Policy on Industry 4.0 (Industry4WRD), Malaysia is poised as a key growth market in line with the country’s increased focus on automation and robotics in its manufacturing sector.

As China pursues its innovation ambitions, it looks to countries like Malaysia which is able to offer a facilitative environment that is supported by national policies, as well as cultural similarities that can support its talent and resource requirements. 
Malaysia good fit as test market to ASEAN 
Chinese technology companies are looking to expand outside their home market. As the country looks to strengthen its focus in four technology sectors, namely renewable energy, Internet of Things (IoT), medical devices and consumer technology, it needs to also ensure that their offerings support the wider needs of the markets that it is targeting. 

For instance, in fine-tuning the facial recognition feature of tech devices, software engineers and artificial intelligence technology companies need a test-bed of valuable benchmarks to gauge the accuracy of their facial-recognition algorithms. With ASEAN as their target market, these software engineers would need a group of people whose facial features reflect that of the greater ASEAN demographics. This is where a country like Malaysia fits perfectly in providing a representative test bed, given that Malaysia boasts a multi-racial profile of people.

Apart from the similarities of demographics to ASEAN, Malaysia also provides China with cultural familiarity as many people in Malaysia read, write and speak Chinese fluently. In addition to Malaysia’s skilled workforce, cost-competitive environment for doing business and access to the ASEAN market, there is strong support from government agencies such as InvestKL that helps to facilitate foreign MNCs who want to establish operations in the country. These are some of the key reasons that Malaysia is chosen as the preferred base for China to establish their regional innovation, research and development, management and distribution, centre of excellence, as well as service and maintenance hubs. 

We are proud to have China companies such as medical IT solutions developer United Imaging Healthcare using Malaysia as the regional hub for the development of their products which are aligned to the Southeast Asia requirements. JA Solar, which is a China-based solar development company, uses Malaysia as their base for their design and service requirements. Companies such as these are able to leverage on the capability and knowledge skills-set of the Malaysian workforce who are agile to adapt fast to the new knowledge required to fulfil the servicing requirements. 
Malaysia offers China access to ASEAN
If ASEAN were a single country, it would be the seventh-largest economy in the world. It is home to more than 600 million people and collectively, boasts a larger population than the European Union or North America. While the economies of ASEAN countries are at different stages of development, what they offer is the immense growth potential. It is an important market to China.

Both Malaysia and China enjoy a close relationship, with Malaysia being the first ASEAN country to establish diplomatic ties with China in 1974. Since then, bilateral relations and cooperation continue to strengthen and today, China remains Malaysia’s largest trading partner with a record high total trade volume of USD108.6 billion in 2018, according to China’s statistics. 

With Malaysia’s Greater Kuala Lumpur (Greater KL) aspiration to attract interest from international companies to be based in Malaysia, it gives the country an even better impetus to attract more high-quality and innovation-based China companies who are looking to set up an intelligent innovation hub in the region. 

To this end, InvestKL has seen a good level of interest from knowledge-intensive and high-technology China companies as they see the value of leveraging on the capital’s connectivity and business friendly environment. We look forward to supporting these high-value industries as they look to set up their regional base in Malaysia through the rigorous support of the government agencies.
Source: InvestKL