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China’s digital revolution and what it means for Malaysia

By Charles F Moreira, Editor

A new generation of digitally-connected consumers is transforming China’s economy. No longer is China just the world’s manufacturing hub but she also is leading the world with innovative ideas and products.

China’s economic growth is now also being driven by domestic consumption and a thriving services sector, with regions like the Pearl River Delta (‘Silicon Delta’) emerging as one of the new high-tech growth hubs.

With over 730 million internet users, China’s new generation of consumers and technology are set to re-shape the world, whether through the transformation of the retail landscape by e-commerce entrepreneurs, the emergence of Chinese smartphone makers as three of the world’s top five, or China’s growing leadership in sustainable infrastructure, and this will have an immense impact on the ASEAN region and Malaysia specifically.

In conjunction with HSBC’s Asian Outlook & BRI Forum 2018, the bank held a panel discussion entitled – China’s digital revolution: The opportunities and challenges for Malaysia at the Kuala Lumpur Hilton on 22 January 2018.

The panel comprised of Tamara Van Den Ban, Head of Digital Product Management and Digital Customer Experience, Asia-Pacific, HSBC; Simon Chung, Chief Operating Officer, ChinaSoft; Teoh Kok Lin, Founder/Chief Investment Officer, Singular Asset Management and Chairman, Digital Economy Committee of Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM); and Lim Chee Siong, Chief Strategy and Marketing Officer, Huawei South Pacific Region.

The discussion was moderated by Julian Ng, Founder of verylongrun.com, a financial literacy website.

On how technology changed the panellists’ lives in the past 12 months, Van Den Ban said that through her travels through many countries, she realised how dependent she was on having cellular connectivity and WiFi access and how she felt pretty hopeless without these.

ChinaSoft’s Chung believes that technology is part of our lives, whilst ACCCIM’s Teoh believes that more people cannot function without technology and by embracing it they will realise what it can help them achieve.

From Huawei’s Lim personal experience, not everybody can embrace technology, citing as an example his father who adapted well to using a smartphone whilst his mother had difficulties.

“As for me, share-ride booking applications have helped me save much money instead of driving”, Lim said.

Getting down to key point of the panel discussion, people in China are willing to adapt to new technology, including to perform money  transfers through their smart phones and e-payments and in theory, e-wallet technologies can even be used in Malaysia to pay for purchases in flea markets (pasar malam).

Banks such as HSBC can help by working with big and small mobile payment applications and solutions providers to develop and enable such payments.

Likewise, China companies with such technology can collaborate with Malaysian companies to develop and provide mobile payment applications, systems and services. Malaysian companies can also take advantage of China’s existing e-payment facilities such as WeChat, Alipay and others.

Malaysia’s Digital Free Trade Zone (DFTZ), a joint venture between the Malaysian Government and the Alibaba Group, began operation on 3 November 2017 and provides a platform for small-to-medium enterprises (SMEs) in Malaysia to conduct cross-border trade in goods via e-commerce.

It consists of an E-Fulfilment hub based at the KLIA Aeropolis, Malaysia Airports Holdings Bhd’s integrated air cargo and logistics hub in Sepang. The E-Fulfilment hub comprises automated and special-function warehouses, light industrial units, Customs clearance and inspection, quarantine, freight forwarding, local delivery, web hosting, IT services, insurance and other services.

According to Alibaba Group executive Chairman Jack Ma, this is the first digital free trade zone outside China. It initially aimed to attract 1,500 SMEs but at launch, Malaysia’s Prime Minister Dato’ Sri Najib Tun Razak said that close to 2,000 SMEs had shown interest to trade through the DFTZ.

In the pipeline are the DFTZ Satellite Services hubs, the first of which is planned to be located in the Catcha Group’s RM5 billion Kuala Lumpur Internet City (KLIC) development in Bandar Malaysia, announced by Catcha in March 2017, though no details are as yet available as to when development of the KLIC will begin.

Once completed, this Satellite Services hub will complement the E-Fulfilment hub as a premier digital hub for global and local internet-related companies targeting South-East Asia. The KLIC will be home to key players within the internet ecosystem to facilitate end-to-end support, networking and knowledge-sharing to drive innovation in the internet economy and the eCommerce industry.

Big data analytics will greatly help Malaysian companies in their business and Huawei’s Lim urges Malaysian companies to tap into the “data powerhouses” – in China and the United States, including Huawei, which can help them to move forward.

Lim also urged local telecommunications regulators to help mobile operators reduce their network and base station deployment costs, so they can provide a better quality network and services.

In making Malaysia an e-commerce hub for the ASEAN region, China companies can also work with the Malaysian government to educate Malaysian companies in the use of e-commerce and mobile commerce facilities.

 




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