(Yicai) June 30 -- Chinese manufacturers are increasingly treating Malaysia as a production base rather than just a sales market, bringing their own design institutes and contractors while relying on local partners to adapt projects to Malaysian regulations and operating conditions, according to Dato' Seri lr. Lim Kok Khong, managing director of M.E.I. Project Engineers Sdn. Bhd.

As more Chinese manufacturing capacity moves offshore, firms entering Malaysia need help navigating local regulations, approval procedures, supply chains and business culture -- a role local architecture, engineering and project management companies are increasingly filling, Lim said.

Founded in 1988, M.E.I. has designed and managed manufacturing projects across Malaysia, including aerospace facilities in Kedah, food production plants in Johor, and semiconductor-related projects throughout the country's industrial corridor. Chinese companies have become one of the firm's fastest-growing client groups as outbound investment from China accelerates.

China was the largest source of approved manufacturing investment in Malaysia in 2023, and Chinese firms have continued expanding their industrial presence across multiple Malaysian states. As more manufacturing capacity moves overseas, local expertise is becoming increasingly important for companies seeking to establish long-term operations.

Translating Projects for Malaysia

Chinese manufacturers typically arrive with extensive experience in designing and constructing factories, but are less familiar with Malaysia's regulatory requirements, site conditions, approval procedures, locally available materials, and government agencies, Lim said. M.E.I.'s role is to bridge that gap.

Chinese design institutes often complete 30 percent to some 60 percent of a project's design before entering Malaysia, he said. M.E.I. then localizes those plans by adapting them to Malaysian regulatory requirements, substituting locally available materials where appropriate, and ensuring the facilities can be operated and maintained by local teams. In some cases, Chinese designers have worked alongside M.E.I. engineers from within the firm's offices.

Lim's experience with China predates the current investment wave. He worked on architecture and engineering projects in Shanghai in the 1980s and said that experience has given him a deeper understanding of how Chinese builders and designers operate than many of his local counterparts.

That background has shaped M.E.I.'s approach to Chinese clients. "We also went there to learn from them," Lim said of the Chinese design institute teams the company has worked alongside. He added that observing both their successes and mistakes has helped M.E.I. improve its own project delivery capabilities.

Cultural understanding has also become a key part of the firm's value proposition. Chinese investors often place significant emphasis on relationships and mutual obligations, with cost remaining a major consideration, Lim said. American clients, by contrast, tend to rely heavily on detailed documentation and strict compliance procedures, including policies prohibiting gifts and requiring all transactions to be declared. Korean and Japanese companies generally fall somewhere in between.

A local firm capable of navigating these different business cultures and preparing multilingual contracts enforceable under Malaysian law can help foreign investors reduce compliance and operational risks, he added.

Projects on the Ground

M.E.I.'s Chinese client portfolio spans multiple industries and regions. Sensor manufacturer Trensor, which established its first overseas production facility at Penang Technology Park, engaged M.E.I. as its local architect and engineering consultant.

Another client is Tianjin-based Rianlon Corporation, which broke ground in January 2026 on a MYR1.27 billion (USD306.2 million) research and development and manufacturing base in Johor, its first major integrated facility outside China.

In many projects, M.E.I. works alongside Chinese design institutes, providing local expertise that incoming project teams cannot quickly replicate, Lim said.

The experience highlights a challenge facing many Chinese manufacturers: navigating host-country industrial policies can be more difficult than constructing the factory itself. Despite the delay, the business relationship remained strong. Lim said a Chinese carmaker funded a visit by  M.E.I. personnel to its facilities in China for knowledge-sharing purposes because the company believed that “spending is an investment.”

Chinese investors have also evolved significantly over the past decade, Lim said. Earlier entrants tended to compete primarily on cost and focus on short-term returns, while today's investors place greater emphasis on quality, scale, and long-term commitment.

"They are here to stay instead of hit and run," he said, adding that many now view Malaysia as a platform for serving international markets rather than simply a domestic market opportunity.

Beyond Cheap Labor

Maintaining its role as a trusted local partner requires M.E.I. to evolve alongside both the market and its clients, Lim said.

Malaysia's construction industry has historically relied on successive waves of low-cost migrant labor, first from China, then Indonesia and the Philippines, and more recently from Nepal and Bangladesh. However, that model is becoming less sustainable.

"Malaysia needs to keep on moving from one stage to another stage," Lim said. “It's not labour intensive anymore.”

The company is investing in building information modeling (BIM) and artificial intelligence-assisted design technologies, although Lim remains cautious about relying too heavily on automation.

"AI will also sometimes make mistakes," he said. “But you are an engineer, you are experienced, and you will know.”

M.E.I. is also expanding its talent pipeline through internship programs with Malaysian universities and Japan's Toyohashi University of Technology. Lim believes practical experience is just as valuable as academic training, operating on the principle that “three years of practical experience equals three years of further study.”

In sectors where Malaysia still lacks deep expertise, including upstream chemicals, oil and gas, and large-scale infrastructure projects such as long-span bridges, Lim believes collaboration with foreign companies including Chinese companies makes more sense than direct competition.What ultimately distinguishes a capable local partner, he said, is years of experience navigating Malaysia's regulatory framework, supply chains, and business culture -- capabilities that cannot be replicated quickly by foreign entrants. That is where firms such as M.E.I. are likely to remain relevant as Malaysia enters its next phase of industrial development.

Editor: Emmi Laine