Chinese Firms Must Match Malaysia’s Business Tempo to Thrive, Experts Say

Chinese companies are increasingly expanding into Malaysia, but the primary obstacle isn’t related to policies or funding. Instead, it’s about timing—the way business is conducted in China, with its rapid growth and high-energy environment, often clashes with Malaysia’s relationship-based approach and slower pace of work, said several experts familiar with both markets.

Beyond issues like factory setup, compliance, and staffing, many Chinese businesses in Malaysia are advised to temper their expectations, according to Zhang Huiqin, known locally as Xisi, who has resided in Penang for 14 years and runs a small consultancy assisting Chinese firms investing there. She emphasized that the challenge isn’t just about expectations but whether companies can disconnect from their legacy operating systems from China and adapt to local realities.

In recent years, Chinese manufacturers have been entering Malaysia at an exponential rate, especially in sectors like semiconductors, new energy vehicles, and lithium batteries, which are now visible in Penang, Kedah, and Selangor. Investment and machinery movement are faster than ever before.

China’s efficiency systems were developed over more than four decades of reform and opening-up, and trying to transplant this model into Malaysia isn’t straightforward, Xisi noted. It’s not about anyone’s inability but about environmental differences.

She explained that companies tend to run their Chinese operation software on Malaysian hardware, which often results in incompatibility. The only solution is to shut down the old system completely and start anew, she said.

Local partners feel the mismatch in timing most acutely. Jat, a senior Malaysian lawyer with extensive experience working with both local and Chinese companies, observed, “Chinese teams want things done today, but what they really mean is yesterday.”

Within Malaysia, the process of obtaining a business license can vary greatly from one state to another, and even between different local authorities within the same state. It can take anywhere from two weeks to two months, and sometimes the paperwork gets stuck in administrative limbo. Understanding these differences is essential for any entrepreneur entering the market, he added.

Differences in Business Philosophies Lead to Challenges

Chinese companies often commit to purchasing a plot if it meets their needs, only to reopen negotiations even after a suitable site is found. While this might seem like standard practice to Chinese firms, it can be perceived as a breach of trust by local partners, undermining relationship-building, according to Xisi.

In a market where relationships hold significant weight, bypassing local intermediaries to deal directly with senior figures—referred to as “skip”—can be seen as disrespectful. Once local partners feel sidelined, their level of commitment may diminish, she explained.

Media relations also reflect cultural differences. Chinese tech companies, for example, tend to keep a low profile and usually work through trade associations or third parties rather than engaging directly with media outlets, Tan Hu Chuan, head of the northern region at a Chinese-language business newspaper, told Yicai. 

Consumer-focused firms in sectors like food, beverages, and entertainment are generally more proactive in direct communication. However, when such channels are lacking, small details—like a national symbol—can slip through. Tan cited an incident where an AI-generated recruitment poster featured an incorrect Malaysian flag, illustrating how even basic details can be overlooked due to cultural insensitivity or automation errors.

Respect for local customs is crucial for fostering an inclusive work environment. Loo Lee Lian, CEO of a Penang-based investment promotion agency, said that understanding local traditions enhances employee engagement, strengthens talent retention, and facilitates better integration into the community.

Finding the Right Pace

Loo noted that successful companies usually follow a certain pattern: those that truly embed themselves in the local economy—by developing local supply chains, capabilities, and value—tend to thrive long-term and generate widespread benefits. They adopt a long-term perspective, focusing on sustainable growth rather than quick wins.

Recently, foreign investors have been more cautious, looking beyond short-term advantages like tariffs and instead focusing on supply chain resilience, Loo explained.

For example, Trensor, a Chinese manufacturer of pressure sensors, plans to open its first overseas factory in Seberang Perai. Its approach will be “based solely on merit, regardless of nationality or ethnicity,” with local employees having the opportunity to reach senior management, said Zhou Wenbo, general manager of the Malaysian branch.

Another strategy involves recruiting university graduates. A faculty member at Xiamen University Malaysia mentioned that top Chinese companies such as Huawei frequently visit campuses for recruitment. Students are optimistic about building careers with Chinese firms, she added.

This university, located in Selangor south of Kuala Lumpur, enrolls about 10,700 students from various countries and has produced over 7,700 graduates, with the largest number being Malaysian citizens.

Adjusting the rhythm also requires understanding local cultural attitudes, such as the concept of Tawakkul—often translated as “doing your best and trusting God to handle the rest.” Alternatively, it’s summarized as “tie your camel first, then trust in God,” emphasizing diligent effort followed by acceptance of whatever happens next.

Jat advised companies to communicate clearly and unemotionally, then turn to problem-solving. Building good relationships relies not just on efficiency but also on mutual respect and long-term trust.

The Next Wave of Chinese Business

Historically, Chinese entrepreneurs like Chung Keng Quee migrated south to Malaysia, establishing community structures that remain a part of Penang’s history, now preserved in local museums.

Today, new Chinese firms are arriving with innovative products in electric vehicle batteries, sensors, and chips. Prominent brands such as Heytea, Luckin Coffee, Din Tai Fung, DJI, and Xiaomi are visible in Kuala Lumpur’s malls, alongside local names like Proton, which is backed by Chinese automaker Geely.

As of mid-2024, Chinese companies have invested in 531 manufacturing projects across Malaysia, totaling approximately $19.8 billion USD and creating over 88,000 jobs. In the EV battery sector alone, companies like EVE Energy, Semcorp, and Kedali have poured nearly CNY 20 billion (about $2.9 billion USD) into the market over the past year or so, according to government figures.

Bilateral relations were bolstered when a high-level visit from the Chinese president to Malaysia last April marked the 50th anniversary of diplomatic ties. The nations jointly announced plans for a strategic partnership and signed over 30 agreements, including arrangements for visa-free travel.

Since then, flights between the two countries have increased, encouraging more cross-border trips. A recent Chinese-language film, “Dear You,” shot in Malaysia and supported by a field visit to Penang, performed well overseas, exemplifying cultural tourism and business ties.

Experts agree that for Chinese companies in Malaysia, the challenge isn’t just physical relocation. It’s about the mindset shift needed to adapt to Malaysia’s distinct rhythm—an effort where time, not capital, is the most significant investment. As Xisi put it, “I prefer to go slow—because slow is fast.”