(Yicai) June 26 -- Malaysia has drawn a wave of investment from China in recent years, thanks to its political stability, infrastructure, and multilingual workforce, but one of the steepest local challenges for Chinese companies remains competing for talent against established multinationals, according to recruitment professionals.

In the state of Penang, experienced engineers are mostly passive job-seekers who must be actively recruited, said Chiew Peng Chuah, co-founder of Malaysian headhunting firm ProTalent. Telents routinely have multiple offers at the same time, while salary expectations have risen 20 percent to 30 percent from earlier hiring cycles, with top engineers favoring long-established US and European employers, including AMD and Robert Bosch, over unfamiliar Chinese entrants, she noted.

Malaysia has a population of roughly 34 million people, with Penang sitting as the heart of what many call "Eastern Silicon Valley." The state's electrical and electronics cluster attracted about MYR11.3 billion (USD2.8 billion) in investment last year, of which 78 percent came from overseas, and Chinese firms entering the market must compete for talent with Intel, Broadcom, and Texas Instruments, companies that have spent decades cultivating local relationships.

Chuah spent 15 years at Jobstreet, Malaysia's largest recruitment platform, before founding ProTalent. Her client base had long gravitated towards US and European multinationals, as well as Malaysian talents going overseas, with Chinese clients a more recent addition.

In every meeting with a new Chinese client, Chuah finds herself explaining the same structural reality that career progression in Malaysia moves at a different pace. "Managerial positions are typically held by people over 40," so companies applying China's norm of favoring younger managers often struggle to find candidates with the experience they require, she pointed out.

There is a subtler mismatch in the talent pool, where Chinese companies often set their sights on ethnic Chinese employees who can communicate with headquarters in Mandarin, she said. However, ethnic Chinese make up only about a fifth of Malaysia's population, and not all of them read or write Mandarin Chinese, she noted. “Just because someone looks Chinese does not mean they can read Mandarin Chinese.”

The cost of bringing workers directly from China also increased after Malaysia overhauled its employment pass framework on June 1, in what was the most significant revision since 2016. The minimum monthly salary threshold for Category I passes was raised to MYR20,000 from MYR10,000 (USD4,877 from USD2,438) and above, for Category II to MYR19,999 from MYR10,000, and for Category III in the manufacturing sector to MYR7,000 from MYR3,000 (USD1,707 from USD731).

The impact goes beyond higher pay, with the new rules also requiring companies sponsoring Category II and III pass holders to submit verifiable succession plans showing that local talent is being developed to fill those roles, as well as to provide paid internships for local students for each expatriate hired. For Chinese companies, the visible pressure is the wage bill, but the deeper requirement is building a credible localization pathway.

In addition, a brand-building gap makes competition even harder. For example, Intel has been in Penang since 1972, while Broadcom's local history spans over 50 years, so their names are woven into local talents' career aspirations. 

"They grow up seeing these brands," Chuah stressed. "When they graduate, these are naturally their first choice." 

Established multinationals also invest systematically in employer branding, including local events, media coverage, and campus outreach, said Su Ching Khoo, a senior manager at ProTalent. "When they post a job ad, applications flood in." 

In comparison, Chinese companies are often unknown, Khoo noted. For example, one such state-owned company that had been operating in Penang for three or four years, with a strong reputation in its industry, found that senior roles could be filled, but candidates for ordinary engineering positions were sparse, she added. “Many people simply had no idea that the firm existed.”

Even after finding the right candidate, getting them through the door takes time," Chuah stressed. Top talents are almost always employed, with resignation notice periods in Malaysia typically running two to three months, she added. "Ideally, firms want the person to start tomorrow, but that is simply not how it works here." 

Chuah recalled one case where a Chinese company had signed an engineer, only for the candidate to accept a counteroffer from their existing employer within weeks of the start date and pull out. 

The working hours are another friction point, she pointed out. US and European companies typically offer flexible start windows so employees can drop children off at school and arrive between 7 a.m. and 9 a.m. without being considered late, but Chinese firms tend to apply the fixed clock-in systems they are familiar with, creating obstacles for parents, she stressed.

The talent pool is also shrinking, while retaining people is getting harder than attracting them, according to Khoo. US and European companies invest systematically in retention, including career development frameworks, flexible arrangements, stock options, environmental, social, and governance credentials, the quality of direct managers, and the proximity of the office to employees' homes, she pointed out.

"You can have four generations working under one roof," Khoo noted. However, "you cannot use a single strategy to keep all of them," and many Chinese companies focus on hiring fast but do not invest the same energy in keeping the people they have hired, she said.

Competition from outside is compressing the pool further, with Micron Technology, ASE Group, and Google from Taiwan and the United States have extended their recruiting reach onto Malaysian campuses, locking in graduates before they have even finished their degrees, Chuah added.

Hong Kong companies are also recruiting in Malaysia, while some have gone further, bringing local ethnic Chinese talent to India for project work, she said. “We already have very few people, and so many countries are competing for them.”

Chinese companies considering a move into Malaysia should build a strong human resources strategy first and invest in a healthy company culture, Chuah stressed. “If you want to keep people, you have to win their hearts first.”

Editor: Martin Kadiev