New Zealand technology companies adding value and losing weight in Malaysia
It is now widely recognised that only by producing more high-value, low-weight goods and services can New Zealand earn a better living in the global economy.
According to the New Zealand Trade Commissioner in Malaysia Grant Fuller, there are a growing number of Kiwi companies involved in the weightless economy in this region. Activities range from exporting knowledge-intensive products and services to engaging in foreign investment and off-shoring production.
There are several basic requirements for high-value products and services to be successful in Asia, says Fuller.
“Customers in Asia are looking for innovative products and solutions that will address their particular problem, good service, distribution and after sales support, and a long term commitment to the local market”, he says. “We also advise exporters to look for opportunities that extend beyond Malaysia to the wider region to enhance the value proposition”.
Exporting New Zealand technology to Malaysia
With over 70 percent of Malaysia’s petrol stations now using their pay-at-the-pump terminals, New Zealand EFTPOS and payment solutions company ProvencoCadmus has evidently got the equation right.
The company has a business history in Malaysia dating back 20 years, but things moved into a higher gear in 2003 when it won a major contract to implement the world’s first fully integrated pay-at-the-pump EMV here (the then new global security standard for credit cards).
“This was a significant deal for ProvencoCadmus, with the initial roll-out involving over 500 petrol stations, 5,000 outdoor payment terminals and 1,000 indoor payment terminals”, says Global Sales and Marketing GM Stefan Lecchi.
To reinforce the new business expansion, ProvencoCadmus substantially increased its in-market presence in Malaysia.
“It was critical for us to be here to work with and support both the customer (a major regional oil company) and our local partner at the level necessary”, says Lecchi, “and our commitment has really paid off in terms of maintaining growth and market share in Malaysia.”
The Kuala Lumpur operation currently has a staff of 25 and operates as a regional hub for ProvencoCadmus as well as supporting the Malaysian market. “It’s much easier to get to India and China from Malaysia, and more efficient for terminals from India, the Middle East and Hong Kong to be sent to Malaysia for servicing”, Lecchi says.
Because Malaysia is the second largest pay-at-the-pump market in the world after the United States, wider benefits have also accrued from the Malaysian business. It has helped open doors in other markets including the Middle East, Europe, India and Hong Kong.
When it comes to doing business in Asia, Sales Director Asia for Kiwi technology company 4RF Communications Adrian Meredith emphasises the importance of relationships.
The high value technology business is never about the one-off transaction, says Meredith. “We’re aiming to establish long-term relationships that will see clients coming back to us when they want to extend or upgrade their remote connectivity solutions”.
These connectivity solutions are provided by 4RF’s high performance point-to-point microwave radio systems which in Asia are used by telcos, utilities and energy companies, and mobile phone operators. In Malaysia 4RF provides wireless solutions for national oil company Petronas’ offshore oil rigs.
Meredith has been covering the region from his Kuala Lumpur base for four years. During that time business has grown significantly in value as well as in geographical coverage – 4RF systems are now deployed in every Asian country except Bhutan and Cambodia.
It’s not always straightforward to calibrate this “web of relationships” that typically includes a local partner in each market as well as connections through them and around them to the client, says Meredith.
In Malaysia a local partner is required by law in order to bid for government contracts. Mandatory or not, Meredith recommends having a good local partner in each country to make the introductions and provide an understanding of the written and unwritten rules.
Meredith also advises cultivating a number of relationships within major client companies as a way of ensuring the relationship chain doesn’t break if your most important contact moves on. “Technology suppliers are most vulnerable to a generational change in equipment (to another company) when there is a major shift in personnel”, he says.
4RF’s Asian business tends to be product-only even though it offers comprehensive support services such as pre-sale consultancy, network design and path planning. This, Meredith explains, is because Asian technology buyers generally place far greater value on hardware than software, so are disinclined to pay extra for associated services.
Off-shoring IT services in Malaysia
The challenges are quite different for New Zealand’s largest locally-owned full-service IT company Datacom Group Ltd, whose expansion into Asia is a good example of a high-value, low-weight business proposition based on off-shoring in order to service its multinational clients.
With a staff of over 400, Datacom’s Kuala Lumpur site provides a comprehensive range of IT services but operates primarily as a contact centre for multilingual technical and customer support across Asia.
According to the Head of Datacom Southeast Asia operations Micah Riddell, Datacom today is probably the number one technical support company in Malaysia, if not the region. His claims are supported by a host of Malaysian and Asian regional contact centre awards, and a multinational client list that includes some of the most recognisable “tier one and tier two” technology brands in the world.
While the company’s move into Asia 14 years ago was in direct response to a major client’s need for support in the region, Riddell says the decision in 2001 to centralise Datacom’s regional operations in Kuala Lumpur was part of an overall growth strategy.
Malaysia offers a stable political environment, good telecommunications and other infrastructure, government support of technology investment, and perhaps most importantly a large pool of highly qualified Asian language speakers, says Riddell.
“The Kuala Lumpur site provides technical and customer support in ten languages so the ability to recruit multilingual university graduates is a significant advantage. Added up, these factors make Malaysia indisputably the best country in the region to operate this kind of multilingual technical support hub”.
Datacom’s efforts to build the Kuala Lumpur site up to scale have resulted in growth of over 30 percent annually in the past four years alone. “We started out with an existing workload from New Zealand and Australia, but have gone on to exploit the language and technical capabilities we have here to fan out across the Asian region and bring that local work into Malaysia”, says Riddell.
In addition to leveraging the highly qualified and skilled workforce available locally, Datacom is able to take full advantage of the foreign technology investment incentives offered by Malaysia’s Multimedia Super Corridor (MSC) initiative offering such benefits as high-tech infrastructure, R&D centres, tax breaks, strict IP laws and industry clusters.
With coverage now extending to the US and Europe, one challenge for the Malaysian site has been to ramp up its English language capacity. In response Datacom has recently set up a specialist English-workload contact centre in the Philippines, currently the “hot outsourcing spot” for English work, says Riddell.
Business out of the Kuala Lumpur operation remains solid despite the current economic climate, says Riddell, as during these times customers are typically more interested in outsourcing as a way of reducing costs internally.
“We see the downturn as an opportunity to reinforce long term relationships by reassuring our customers that we will support them through the bad times as well as the good. This is what being a high-value service provider is all about.”
by Rebecca Needham
Rebecca Needham is a New Zealand freelance writer currently based in Kuala Lumpur, Malaysia. She has a background in Asian trade and economic affairs, having worked as a policy analyst for the Ministry of Foreign Affairs and Trade.
