MNCs find synergies in partnering with local SMEs

With small and medium enterprises (SMEs) playing an integral role towards economic growth, it’s not surprising for multinational companies (MNCs) to forge strong partnerships with them in an effort to grow their businesses exponentially. 

InvestKL chief executive officer Muhammad Azmi Zulkifli said a conducive business ecosystem collaboration can benefit both MNCs and SMEs tremendously. 

"With Malaysia being a business-friendly nation, both MNCs and SMEs can use this opportunity to leverage each other’s strengths to reach new heights."

As part of our motto to protect, retain and attract MNCs into Kuala Lumpur, we need to ensure that we can achieve the best outcomes possible for these businesses." 

Two MNCs based in Greater KL, namely PPG Coatings (Malaysia) Sdn Bhd and Signify Malaysia Sdn Bhd can attest to the multiple benefits of working closely with SMEs. 

Signify Asean chief executive officer Alok Ghose said it has multi-level engagement with SMEs. 

"For us, its been about thinking globally but acting locally, as different markets have different needs.

"By teaming up with the local players and manufacturers, we can determine what is needed locally and then actively work on that together." 

Signify is the world leader in connected light-emitting diode (LED) lighting systems, software and services and has recently increased its UV-C lighting production capacity and broadened its UV-C product portfolio to meet the growing demand for disinfection. 

PPG industrial coatings Asia Pacific general manager and South-East Asia region managing director Soma Swaminathan meanwhile says the benefits are shared when partnering with SMEs. 

"We have several vendor partnerships and one such is with a local engineering company where they help us with design and fabrication of some of our plant equipment. 

"We adhere to our global engineering standards and rather than have plant equipment manufactured offshore, we much rather work with a local partner to both shorten our lead times and also have local support for trouble shooting and maintenance." 

PPG is a leading global manufacturer of paint and specialty coatings products and in Malaysia PPG serves a wide range of end markets, namely automotive, industrial, marine, construction, consumer and aerospace. With its Malaysia and SEA headquarters in Petaling Jaya, PPG employs close to 600 people. 

Soma added that working with local SMEs also allows PPG to help upskill local companies by building their knowledge base in the coatings value chain as well as the sharing of world class business processes and best practices. 

"PPG in turn gains from the local knowledge of our partners to provide the most efficient and cost effective solution to our needs. Our goal will remain to forge long term strategic partnerships with local SMEs to drive innovation and productivity in all things we do. A good example is in the area of sustainability where PPG is committed to innovating sustainable products, reducing our carbon footprint and reducing waste and water consumption. We work with our local partners to generate new ideas and find new solutions to achieving this important corporate goal". 

Commenting on the lighting industry, Alok said the sector has been undergoing a huge transformation for over a decade, from conventional products to LED lighting. 

"Last year, we continued to see a decline in conventional lighting products. LEDs continued to scale up and brought on new possibilities that weren’t there before, such as smart lighting." 

Smart lighting is a type of lighting technology designed for energy efficiency, convenience and security. 

"Our businesses include business-to-consumer (50%); business-to-business (40%); and 10% comprising business with original equipment manufacturers. 

"Some of the partners here are pretty big and have an Asian presence. We partner with them to develop new products for new segments and supply to them not just the technology, but also the components," said Alok. 

Additionally, Alok noted that many of the company’s partners have been around longer than Signify.

"Therefore, they know the ecosystem. When we collaborate with them, we also get an opportunity to provide them with components and lamps and that is business for us. 

"But it’s also good business for them because when they go out into the market, there are certain technologies where quality plays a much more important role, so that they can proudly claim that this is Signify insight, for instance. Some of these partners will also have catalogues with our brands in it."

Despite being well-established players within their respective industries, Soma and Alok concurred that the business environment has been challenging this year in light of the Covid-19 pandemic. 

Soma said there weren’t too many disruptions while working with the more "established" SMEs. 

"For the established SMEs there has not been any issues. But for the smaller and newer ones, it definitely has had an impact. 

"Our strategic intent has always been to see where we can localise our supply chain. Transporting liquid paint over long distances is not our preferred business model. Localisation of our footprint helps build speed, efficiency and cost effectiveness so better serve our customer needs". 

Alok said things were off to a good start in the first quarter of this year. 

"In Malaysia, we are already starting to see things start to normalise over the past five-to-six weeks. However, there are still challenges. But we see this as an opportunity to reinvent ourselves." 

One challenge, said Soma, is the need to create greater corporate brand awareness to attract a future pipeline of talent in a mature industry like paint and coatings. 

One way PPG is trying to overcome that obstacle is to reach out to young, potential talent pools. 

"We also work with local universities to employ interns. Corporate brand awareness is important to create a pull factor for the younger generation who will form the next wave of our human capital.

"When you look at talent acquisition, that’s one way to do it." 

Alok said working closely with InvestKL has been very beneficial for global MNCs trying to enlarge its footprint not just in Malaysia, but also Asean. 

"We’ve worked with InvestKL for three years. They were instrumental in why Signify brought its Asean headquarters to Kuala Lumpur and that has provided us with a platform and a deeper understanding of the Malaysian needs, ecosystem, strategies and regulations." 

Commenting how MNCs and SMEs can benefit from each other, Azmi said: "Both parties can tap into collaborative opportunities within the local ecosystem to leverage each other’s strengths and reach new heights."

Shared benefits: Soma believes that working with local SMEs allows PPG to help upskill local companies.

Thinking, global, acting local: Alok says collaborating with SMEs provides an avenue to build its business in Malaysia.

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