(Yicai) July 10 -- Chinese companies are accelerating their push into Malaysia, with the challenge they face having little to do with policy or capital but rather rhythm, where the pace and way of working forged in China's high-growth environment runs against the local business logic rooted in relationships and operating at a different tempo, according to several professionals working closely with both countries.

Beyond building factories, compliance processes, and hiring challenges, almost every Chinese newcomer in Malaysia eventually receives the advice to lower their expectations from service providers with years of local experience, Zhang Huiqin, known as Xisi, who has lived in Penang for 14 years and runs a small consultancy serving Chinese firms investing in Malaysia, told Yicai. However, the problem is not the level of expectations, but whether companies can switch off the operating system they brought from China, she stressed.

Chinese manufacturers have been moving into Malaysia in growing numbers over the past few years, with semiconductors, new energy vehicles, and lithium battery production lines spreading across Penang, Kedah, and Selangor. Capital and equipment are moving faster than ever before. 

China built up its efficiency system over more than 40 years of Reform and Opening Up, so it cannot simply be transplanted to another environment, Xisi noted, adding that this is not a reflection of anyone else's capacity to absorb it.

Companies arrive and try to run their original software on a new machine, but the program is not compatible, Xisi said. The only way to make it work is to shut it down first and restart from scratch, she stressed.

The time-related mismatch is felt most directly by local counterparts, according to a senior Malaysian lawyer Jat who has worked with local and Chinese companies for years. "Chinese say they want something done today, but what they actually mean is they wanted it done yesterday."

Even within Malaysia, the process for obtaining a business license varies from state to state, and sometimes between local authorities within the same state, the lawyer noted, adding that it can take two weeks in one place, two months in another, with some still operating on paper. "These are things every entrepreneur coming here needs to understand."

Negative Effects Stemming From Different Business Ideologies

Chinese companies will commit to buying a plot if it meets their requirements, then reopen negotiations even though a suitable site is found, Xisi said. For them, this may feel like a routine second round, but for locals, reaching an agreement means a commitment has been made, which can erode trust, she pointed out.

In a market where relationship networks matter, bypassing intermediaries to deal directly with senior figures, or what is known as "skip," can also be read as a failure to respect local structures, she noted. Once a partner feels sidelined, someone who might have been fully committed may only give a fraction of that effort, she said.

The friction also extends to media relations, where Chinese tech companies, for example, typically prefer to keep a low profile and rarely approach the media directly, instead working through trade associations or third-party organizations, Tan Hu Chuan, head of the northern region at Chinese-language business daily Nanyang Siang Pau, told Yicai. 

Consumer-facing companies, in the liquor, food and beverage, and entertainment sectors, tend to be more proactive about direct engagement, he noted.

However, when direct communication channels are absent, even a detail as basic as a national flag can slip through unnoticed, Tan said, using as an example a Chinese company that used an artificial intelligence-generated image for a recruitment poster, but the tool produced an incorrect version of the Malaysian flag. "The AI got it wrong."

Sensitivity towards local culture plays an important role in creating an inclusive working environment, Loo Lee Lian, chief executive of Penang-based investment promotion agency InvestPenang, said to Yicai. Understanding and respecting local customs helps to build stronger employee engagement, improve talent retention, and integrate more effectively into the local ecosystem, she added.

Finding the Right Rhythm

Companies that do adapt tend to follow a recognizable pattern, Loo said. Those that genuinely integrate into the local ecosystem by building local supply chains, developing local capabilities, and creating meaningful local value, while also taking a long-term view, are the ones that establish themselves successfully and generate broader economic spillovers, she noted.

Foreign investor inquiries have become more measured in recent years, with companies increasingly looking beyond short-term tariff advantages toward the overall resilience of the supply chain, Loo pointed out.

The approach to promotion of Trensor, a Chinese manufacturer of pressure sensors that is building its first overseas factory in Seberang Perai, will be "pure meritocracy, regardless of nationality or ethnicity," with local employees able to reach senior management positions, noted Zhou Wenbo, general manager of the Wuxi-based firm's Malaysian branch.

Recruiting from universities is another way companies are approaching localization, with a faculty member at Xiamen University Malaysia saying that a growing number of leading Chinese companies, such as Huawei Technologies, have been visiting the campus for recruitment. "Students are very optimistic about their career opportunities at Chinese firms."

The university, located in Selangor, south of Kuala Lumpur, enrolls around 10,700 students from multiple countries, with domestic students making up the largest share. It has seen more than 7,700 graduates.

Getting the rhythm right also means understanding a philosophical disposition common among Malaysia's Malay majority. Tawakkul is often translated as "doing your best and then entrusting the outcome to God." 

Another common formulation reads: tie your camel first, then put your trust in God. Newcomers sometimes read this as passivity, but the emphasis is on full effort followed by acceptance of whatever follows.

"Discuss without emotion, then start thinking about solutions," the lawyer Jat noted, adding that companies need to understand that local working relationships are built not only on efficiency but on respect and long-term trust.

New Wave of Chinese Entrants

The nineteenth-century merchant Chung Keng Quee came south from China to make his living and eventually helped establish community structures that are now part of Penang's history, preserved in the Peranakan Museum in George Town, which was once his residence.

One hundred and fifty years later, a new generation of Chinese companies has arrived, this time carrying electric vehicle batteries, sensors, and chip designs. Chinese brands Heytea, Luckin Coffee, Din Tai Fung, DJI Technology, and Xiaomi sit alongside one another in Kuala Lumpur's Pavilion Mall, highlighting their strength, while locals also point out that Malaysian carmaker Proton Holdings is backed by China's Geely Automobile Holdings.

In addition, Chinese companies had invested in 531 manufacturing projects in Malaysia as of mid-2024, with a total investment of around USD19.8 billion, creating more than 88,000 jobs, said Tengku Zafrul, the country's Minister of Investment, Trade and Industry. In the EV battery supply chain, EVE Energy, Semcorp, Kedali, and others have injected almost CNY20 billion (USD2.9 billion) over the past year or so, Tengku pointed out.

The relationship between the two countries has also been reinforced at the highest level, with Chinese President Xi Jinping making a state visit to Malaysia in April last year, coinciding with the 50th anniversary of diplomatic ties. The pair issued a joint statement announcing plans to build a "high-level strategic China-Malaysia community with a shared future," while signing more than 30 agreements, including a mutual visa exemption arrangement.

Direct flight connections have since expanded, leading to an increase in cross-border travel. The Teochew-dialect film Dear You, released in Malaysia last month, performed strongly at the box office, becoming one of its top overseas markets. 

The movie's director had visited the Penang town of Bukit Mertajam three years earlier for field research, which is the same part of Seberang Perai where several new Chinese factories are under construction.

From hiring a single engineer and navigating approval processes to building lasting local networks, multiple experts said the real task for the growing number of Chinese companies entering Malaysia is not a geographical move but an adaptation to a different rhythm.

In that process, the real cost is rarely capital but time, or as Xisi puts it, "I would rather go slow, because slow is fast."

Editor: Martin Kadiev