Malaysia Retailer|Vol 7|No 2|2019|CommerceAsia

Vol 7 No 2 2019

MRCA’s Annual Chinese New Year Dinner Hatchery Zone at MIRF 2019 Bank Negara Projects 4.8% GDP Growth for 2019

Ganesh Kumar Bangah,

Commerce.Asia Makes it Easy for Sellers to go Online

WM RM9 / EM RM11

Founder of Commerce.Asia

8

Malaysia Retailer Vol 4 No1

MRCA Corporate Patrons

Event

1

A-5-2, 3, 3A, Level 5, Block A, Sky Park One City, Jalan USJ25/1, 47650 Subang Jaya, Selangor.

Tel: 603-5882 4333 Fax: 1 700 810 950 Website: www.mrca.org.my PRESIDENT Datuk Seri Garry K.S. Chua ROTOL FOOD-CHAIN (M) SDN BHD

FOUNDER PRESIDENT Dato’ Eddie Choon POH KONG HOLDINGS BHD

IMMEDIATE PAST PRESIDENT Dato’ Liaw Choon Liang, JP FOCUS POINT HOLDINGS BHD

PRESIDENT COUNCIL Dato’ Eddie Choon POH KONG HOLDINGS BHD Datuk Albert Chiang BONIA CORPORATION BHD Datuk Lee Hwa Cheng SINMA JEWELLERY CENTRE SDN BHD Dato’ Tay Sim Kim OSIM (M) SDN BHD H.E. Datuk Seri Nelson Kwok, JP HONORARY CONSUL OF THE REPUBLIC OF MOZAMBIQUE TO MALAYSIA NELSON’S FRANCHISE (M) SDN BHD Dato’ Liaw Choon Liang, JP FOCUS POINT HOLDINGS BHD Datuk Seri Garry K.S. Chua ROTOL FOOD-CHAIN (M) SDN BHD

DEPUTY PRESIDENT Dato’ Vincent Choo Kok Leong URBAN IDEA SDN BHD VICE PRESIDENTS Dato’ Liew Bin BRILLIANT MERCHANDISING SDN BHD Valerie Choo Yoke Shiem SIMPLY AWESOME SDN BHD Shirley Tay Bee Koo SUNRIDER INTERNATIONAL (M) SDN BHD Datuk Seri Dr. Chai Kee Kan KK SUPERMART & SUPERSTORE SDN BHD SECRETARY GENERAL Ken Phua Cheng Chuen BENTLEY MUSIC SDN BHD DEPUTY SECRETARY GENERAL Dato’ Bruce Lim Aun Choong SKILLS JOHOR SDN BHD TREASURER GENERAL Dato’ Alex Wong Che Sing HAP SENG STAR SDN BHD DEPUTY TREASURER GENERAL Dato’ Winnie Lim Yoke Chin SOLUTION RISK CONSULTANTS SDN BHD COUNCIL MEMBERS Seak Thean Pow BAGUS CURTAIN SDN BHD Dato’ Choi Wei Yee SUNLIGHT TAXI SDN BHD Dato’ Syed Kamarulzaman Dato’ Syed Zainol Khodki Shahabudin PERBADANAN NASIONAL BERHAD Dato’ Dr Edmund Lee Kim Hock KLUANG STATION F & B SDN BHD Datin Flora Tan Joo Hua TRANSTEL TECHNOLOGY (M) SDN BHD William Tang Chee Weng THE STORE CORPORATION BERHAD Brian Tham Jee Ping WATATIME (M) SDN BHD Nicholas Chong Kah Yean YFS CORPORATE (M) SDN BHD Jeff Yong Chun Loong KIMMA SDN BHD Raymond Woo Hai Siang ARORI (M) SDN BHD Sharan Valiram VALIRAM TRADING SDN BHD Jason Woo Wee Yoong CLARA INTERNATIONAL BEAUTY GROUP SDN BHD Malaysia Retailer Vol 4 No1

BOARD OF ADVISORS Dato’ Dr. Jennifer Low, JP GROUP MANAGING DIRECTOR, QUILL GROUP OF COMPANIES Tan Sri Dr Lim Wee Chai CHAIRMAN, TOP GLOVE CORPORATION BHD Tan Sri Dato’ Sri Leong Hoy Kum GROUP MD, MAH SING GROUP BHD Tan Sri Dato’ Sri Barry Goh Ming Choon CHAIRMAN OF MCT BHD Tan Sri Datuk Tee Hock Seng JP GROUP MANAGING DIRECTOR OF BINA PURI HOLDINGS BHD Tan Sri Datuk Ter Leong Yap EXECUTIVE CHAIRMAN SUNSURIA BHD PRESIDENT’S ADVISOR Tan Sri Dato’ Sri Tang Yeam Soon THE STORE CORPORATION BERHAD PRESIDENT’S ADVISOR FOR EVENT & PR Tan Sri Datuk Danny Ooi D’TOUCH INTERNATIONAL SDN BHD LEGAL ADVISORS Datuk Ringo Low RINGO LOW & ASSOCIATES Dato’ Dr Manjit Singh MANJIT SINGH SACHDEV, MOHAMMAD RADZI & PARTNERS HONORARY AUDITOR Dato’ Sri Raymond Liew Lee Leong MCMILLAN WOODS Datin Yap Shin Siang YYC GST CONSULTANTS SDN BHD OTHER FOUNDING MEMBERS Dato’ Chin See Keat Wong Chee How

MALAYSIA RETAILER is produced for MRCA by

HARINI MANAGEMENT SERVICES SDN BHD (609031-W) W-9-12, Menara Melawangi, Amcorp Trade Centre, 18, Persiaran Barat, 46050 Petaling Jaya, Selangor.

Tel: 603-7932 3259 Email: harini.mservices@gmail.com www.harini.com.my Publisher/CEO V.S. Ganesan Senior Editor Vimala Seneviratne Editor Rachael Philip Contributing Editor Khaw Chia Hui Creative Designer Goh Wei Lee Advertising Consultant Faridah Ismail Marketing Manager Karthik Ganesan Operations Manager G. Revathi PRINTER PERCETAKAN LAGENDA SDN BHD (406003-A) No. 2, Jalan Gangsa SD5/3E, Sri Damansara Industrial Park, 52200 Kuala Lumpur.

Tel: 603-6273 6599 Fax: 603-6273 6606 DISTRIBUTOR MPH DISTRIBUTORS SDN BHD (MALAYSIA) (5048-A) Ground Floor, Bangunan TH, No 5, Jalan Bersatu 13/4, 46200 Petaling Jaya, Selangor, Malaysia.

Tel: 603-7958 1688 Fax: 603-7956 5995 Email: distributors@mph.com.my All articles featured in Malaysia Retailer magazine represent the personal views of contributors and are not necessarily those of MRCA & Harini Management Services Sdn Bhd. All writers automatically agree to indemnify MRCA and Harini Management Services Sdn Bhd against any loss, costs, expenses (including legal fees), damages and liabilities that might arise from their own incapacity, negligence, breach of contract or other civil misdeeds. We reserve the right to edit all articles. All rights reserved. Copyright © 2019 by MRCA and Harini Management Services Sdn Bhd. No part of this publication may be reproduced in any form without prior written permission from the publisher. MRCA and Harini Management Services Sdn Bhd accept no responsibility for unsolicited manuscripts, photography, illustration and other editorial materials.

3

President’s Message Dear esteemed members,

Datuk Seri Garry KS Chua, President, 2016-Present, Malaysia Retail Chain Association

I’m proud to say that the retail industry is looking up in 2019 as compared to 2018.

In Bank Negara’s annual report released in March, it is expected that the domestic economy will have a growth of 0.5%, from last year’s 4.3% to 4.8% this year.

This is underpinned by expected 30 million tourist arrivals in 2020, an increase from 28.1 million in 2017. These tourists are expected to bring in RM100 billion in total receipts, roughly RM3,332 in per capita expenditure.

The report found that shopping made up the biggest component of tourist expenditure last year. Some RM28 billion, an increase of 4.6%, was spent here.

This was followed by accommodation (RM22 billion), food and beverage (RM11 billion) and local transportation (RM5 billion). While by 2020, each tourist is expected to spend RM1,088 on shopping, a slight increase from RM1,070 in 2017.

I sincerely hope our members will take a closer look at the report that is done in collaboration with Tourism Malaysia. Use the data to calibrate your business in order to leverage on the positive outlook. This is one area we should tap into.

Tourism can have an immediate and direct impact on the country’s economy.

Meanwhile, our flagship event – Malaysia International Retail & Franchise (MIRF) exhibition – will be taking place from 18 to 20 July 2019 at KL Convention Centre.

This year we will be introducing a Hatchery Zone, an incubator programme by MRCA to assist in the establishment and development of new retail businesses.

It will be a platform for startups to exhibit their products and services to the market and public as well as drive the industry by ensuring a fair marketplace for startups to cultivate.

This year, MIRF will centre around franchise brands, a focus on the two-way relationship between franchisors and franchisee. Franchisees are able to view the benefits of a readymade business operation that includes the products, services and even well-established brand recognition. I implore everyone to join the exhibition as it is the place where top industry leaders gather as well.

I’m also proud that our Who’s Who Directory 2018 is met with stunning success. To show our appreciation, MRCA hosted a high-tea that was attended by the top management of the 80 companies and other invited guests. It was organised to acknowledge the support and contributions of the companies that participated in the directory which was spearheaded by Dato’ Vincent Choo, our Deputy President.

The 308-page hard cover Who’s Who Directory 2018 serves as a gateway for businesses to network with members of MRCA’s core disciplines, and understand the association better.

In addition, MRCA held its annual Chinese New Year banquet. I would like to thank the Minister of Transport, YB Anthony Loke, our guest of honour for attending the event. Special thanks also goes to our OCs of the event, Dato’Liew Bin and Jeff Yong for successfully putting together the event. Every year we come together to celebrate an auspicious time where members get to mingle and network. Themed Old Shanghai, some 1,000 guests thoroughly enjoyed themselves while donating generously to raise RM160,000 for the MRCA Branding Education Charity Foundation under Chairman Datuk Albert Chiang.

We will be holding our 22nd Annual General Meeting on the 25th of April and I look forward to seeing all members for the meeting.

I would also like to wish our Muslim brethren Selamat Berpuasa during the coming Ramadan month.

“ENRICHING MEMBERS FOR THE FUTURE” Malaysia Retailer Vol 7 No 2

CONTENTS / VOL. 7 NO. 2

12 MRCA Annual CNY Party

18 Appreciation High Tea

DEPARTMENTS 3 President’s Note

ON THE COVER

COVER STORY 6 Commerce.Asia Makes it Easy for Sellers to Go Online Retailers who want to venture online have less of a headache now thanks to Commerce.Asia, a complete eco-system that is able to cater to all their needs.

FEATURES 12 MRCA Annual CNY Party

18 Appreciation High Tea 20 MIRF 2019 Introduces

‘Hatchery’ Zone to Spur Startups

25 Web Bytes Expands Footprint in Ganesh Kumar Bangah, Founder of Commerce.Asia Photography: Song @ Picture This

Malaysia Retailer Vol 4 No 1

ASEAN with Xilnex

26 Taipei Exhibition Draws Quality Crowd

34 Luen Heng Food and Beverage Sdn Bhd in High Spirits

28 Tapping into Tourism to Stimulate Retail

30 Tourist Arrivals to Hit 30

Million, Expenditure to Touch RM100 Billion in 2020

32 Bank Negara Projects 4.8% GDP Growth

34 Luen Heng Food and Beverage Sdn Bhd in High Spirits

36 Leading Change Positively and Profitably

Cover Story

6

Malaysia Retailer Vol 7 No 2

Cover Story

7

Commerce.Asia

Makes it Easy for Sellers to go Online

Retailers who want to venture online have less of a headache now. Ganesh Kumar Bangah tells RACHAEL PHILIP his two-year-old outfit Commerce.Asia is a complete eco-system able to cater to all their needs.

Photography Song @ Picture This Malaysia Retailer Vol 7 No 2

Cover Story

8

f there is someone who understands young entrepreneurs trying to break into the digital space it has to be Ganesh Kumar Bangah, founder and executive chairman of Commerce.Asia.

Ganesh started out in the working world at 17, operating his own cybercafé.

By 23 he was the youngest CEO of a listed company. The e-payment enabler MOL was listed on Mesdaq in 2003.

It was also the year he made his first million.

By October 2014 the company made its debut on the Nasdaq, it was also Southeast Asia’s first company to list on the Nasdaq. Ganesh was MOL Global Inc’s first CEO and subsequently Executive Chairman.

“There’s a gap between startups and SME operators or retailers,” said Ganesh. “SMEs want to go online but they are confused by all the technology. They are not sure who to trust. Tech enablers, meanwhile, who provide these technologies, want - Ganesh Kumar Bangah, Founder and to reach out to SMEs but Executive Chairman of Commerce.Asia have no financial track record and no clout. Despite this they are encouraged by government agencies who want local startups to reach out to local retailers,” said Ganesh.

Enter Commerce DotAsia Ventures end-to-end solutions for brands, Sdn Bhd (Commerce.Asia). The company businesses and SMEs via enablers, was formed two years ago. Ganesh said namely Sitegiant, Shippop, Letmestore, he was semi-retired after exiting MOL Kumoten and Famsy. and was helping young startups grow their business.

SITEGIANT “I was looking at SMEs. There is • An omnichannel eCommerce platform a big challenge for SMEs to launch that processes more than USD 100 themselves online. They have to juggle million worth of sales annually many things on their own, such as • Allows eCommerce sellers to warehousing, logistics, payment, listing list products to over 30 local and to market places. international marketplaces, such as “Commerce.Asia has created an Lelong.my, Shopee, Lazada, amazon and ecosystem especially for retailers. It ebay, with just a few clicks has taken us two years to build this • Sitegiant Facebook Commerce saves ecosystem. With our enablers, we can sellers’ time dealing with customers help retailers promote and market their on Facebook, and at the same time products and services online,” he said. converting page visitors to customers • The synchronise function allows sellers to sync from their webstore HOW DOES IT WORK? directly to the many marketplaces Commerce.Asia’s Enterprise offers

I

“Commerce.

Asia has created an ecosystem especially for retailers. With our enablers, we can help retailers promote and market their products and services online.”

Malaysia Retailer Vol 7 No 2

instantly. The stock count from the webstore and all other places will sync back

SHIPPOP • A one-stop delivery solution that

sends parcels domestically and internationally for eCommerce businesses.

• Provides a single integrated interface with multiple logistics and courier providers locally and internationally.

• eCommerce merchants can pay as per use and avoid excessive operation cost

LETMESTORE • An on-demand automated fulfilment

management system.

• Provides a front-end system that allows real-time tracking and managements of stocks located at their

9

warehouse. Businesses only pay for the space utilised with no minimum tenure.

• Offers labelling, pick up and pack services • Merchants have more time to focus on sales and marketing instead of stock keeping and processing.

KUMOTEN • The largest dropshipping platform

in Southeast Asia with over 100,000 products to choose from.

• Seamlessly automate that integrates with marketplaces. Customer orders on marketplaces will be automatically pushed to Kumoten for instant order fulfilment processing. This means low capitals and overheads.

• List dropship product images and details seamlessly with just a few clicks

FAMSY • A digital-to-garment merchandising

platform with over 15,000 t-shirt designs with dropshipping facility.

• Provides an app that allows

merchants to create an online store within minutes and start selling online.

• Offers wholesale pricing for users without the need to commit to any stock. Merchants can earn between 3070% in profit margin without an upfront investment.

GOING FORWARD

At some point retailers will think about how they can grow their businesses.

Ganesh aptly points out that in the old days technology was the biggest barrier.

This is not the case today.

“The challenge today is no longer technology but having an excellent go-to-market strategy. This strategy can be taught and learnt. There is a methodology to reach out to customers,” he stressed, effectively flipping business growth activities from something often described as a hunch or intuition into a science and logic.

In 2017 Ganesh met GrowthX founders Sean Sheppard and Andrew Goldner when he was mentoring at

Malaysia Retailer Vol 7 No 2

Cover Story

10

From left: Dr. Lee Yuan Harng, Chief Operating Officer of Commerce.Asia Data, Ganesh Kumar Bangah, Founder & Executive Chairman of Commerce.Asia and Dr. Tom Tan, Chief Operating Officer of Commerce.Asia.

market acceleration program comes in. It is messaging catered to different crowds,” explained Ganesh.

“One can sell anything online but what is your niche? The market acceleration program will help you develop product market fit, it will help merchants put themselves in the shoes of the customer, it will help them develop a brand which people can trust.”

He said Commerce.Asia combines the platform with managed services, training and warehousing for a onetime set up fee of RM10,000, a monthly retainer plus commission on sales.

On the notion that selling online is cheaper and involves little investment, Ganesh said that entrepreneurs must change this mindset.

“Many times we’ve heard that SMEs and retailers have failed in their venture.

I think that entrepreneurs should invest in their online business as if it is another outlet. Online is the future.

“My job is to find the best technology to make that available to retailers. Right now there is too much of a simplistic view of selling online. We need to be more sophisticated to reap the success.”

Besides Enterprise and the business school for ecommerce, Ganesh’s compendium of solutions for online retailers also include data and insights from data to help entrepreneurs succeed.

DATA BANK

the Google Launchpad Accelerator in San Francisco. In November last year Commerce.Asia launched its Silicon Valley-based GrowthX Academy and GrowthX Accelerator in Malaysia.

The academy presents the crucial skills and methodologies required to grow businesses online, namely a business growth mindset, growth marketing and user experience design, among others. GrowthX Accelerator,

Malaysia Retailer Vol 7 No 2

meanwhile, offers a Market Acceleration Program (MXP), namely a formula for startups as well as companies to commercialise their innovation.

“Market acceleration is a process. It is a business growth strategy teaching entrepreneurs about digital marketing.

An e-merchant may get a programmer to help him or her get onto the technology market online but who is your target market? This is where the

In March Commerce.Asia acquired PanPages Lab Sdn Bhd which owns the largest database of SMEs in Southeast Asia – seven million companies in Malaysia, Singapore, Thailand, Indonesia, Cambodia and the Philippines. What drove him to make the acquisition?

“We cannot deny that data is key in this day and age. I built the ecosystem and now I need to go to the SMEs. The data helps me tap into the right customers. I am looking at an entrepreneur who has two or more outlets and one FB page. Why two outlets? Because here is someone who would likely set up an online outlet where capex is cheaper.”

His target in three years is to capture 70,000 SMEs that process RM2 billion in sales. He said both the ecosystem and PanPages will feed off and nourish each other making it a win-win situation for entrepreneurs.

11

Malaysia Retailer Vol 7 No 2

Feature

12

MRCA Paints the Town Red with Annual CNY Party lthough it was a few weeks after Chap Goh Mei, the grand ballroom at Sunway Resort Hotel and Spa shimmered and swayed to the spirit of new beginnings and fresh starts.

It was the MRCA’s annual banquet celebrating the Lunar New Year. The theme for the grand night -- the Peak Moment – paid tribute to the successes of members in the community. Most of the 1,000 guests observed the dress code – Old Shanghai. Many donned jackets and elegant silk cheongsams, accessorised with fedora hats and long beaded necklaces.

Guest of Honour YB Anthony Loke, Minister of Transport Malaysia, in his speech, touched on the need for a solid logistics and transportation industry to support the many categories of the retail industry.

Dato Liew Bin, Vice President of MRCA, said it was customary to share the joyous occasion with members of

A

Tossing Lou Sang by VIPs.

Malaysia Retailer Vol 7 No 2

the association, ushering in the good fortune of a new cycle in the Chinese calendar. Dato’ Liew Bin together with Jeff Yong were the Organising Chairpersons for this year’s banquet.

“We want to emphasise the special moments we share as members of this big family, gathering members and guests for this auspicious event,” said Jeff Yong.

Datuk Seri Garry Chua, President of MRCA, in his speech, noted that last

OCs for the night, Jeff Yong (left) and Dato’Liew Bin.

year the association welcomed an alltime high of 486 members. This year, he said, is pointing to a great start for the association and the retail industry.

“May the Year of the Boar bring us good health, a roaring economy and personal happiness,” he said.

It was also a night for a good cause.

The evening saw guests generously donating towards the MRCA Branding Education Charity Foundation, which received a sum of RM160,000.

13

Datuk Seri Garry Chua, MRCA President.

YB Anthony Loke, Minister of Transport Malaysia.

Malaysia Retailer Vol 7 No 2

Feature

14

Malaysia Retailer Vol 7 No 2

15

Malaysia Retailer Vol 7 No 2

Feature

16

Malaysia Retailer Vol 7 No 2

17 “There is vast improvement in MRCA every year. This year the decorations are unique. The responses from the MRCA members and friends have been very good. The event has recorded a good turnout. Well done, Datuk Garry Chua!” ~ Datin Yong Maylene, Styleicon Prestige Founder

“This is a fantastic platform. Personally, I come to mingle and network, and I enjoy the company. The energy is amazing here. There are many old friends and new acquaintances to meet. So much to learn – from business tips to life experiences. The Year of the Boar will likely be a good year for us. We are looking forward to the launch of some of our projects and to the handover of completed projects. Minister Anthony Loke in his speech spoke about Prasarana Malaysia Bhd’s My100 unlimited travel pass. We are happy to say that our projects are MRT linked.” ~ Evon Moo, Assistant Manager (Sales and Marketing) OSK Property

“The MRCA has managed to capture the Chinese New Year mood although the season is over. This was a well-organised event. I am feeling very positive about the Year of the Boar. We must be positive in order to move forward in life and in business. I am looking forward to a better year.” ~ Datin Valerie Yap of Blackhem

“The music band is outstanding. The cover screen and the two photo booths are great. I find it very happening and I’ve already made my Facebook posting! All MRCA events have a very high standard, and I look forward to them. Only at these events do you see people moving around, chatting and mingling with friends. It’s almost like it is not a sit down event. It just goes to show that the association is doing a good job bringing its people together.” ~ Ace Tang, CEO, Big Orange Media Sdn Bhd

“It is a well-organised event. My wife and I love the theme Old Shanghai, and we are dressed for it. The food is better than I had expected. The Year of the Boar will be a good one for us. We hope to expand our Food and Beverage business in the second half of the year.” ~ Huey Hiew, Branding Consultant, Luxury Ingenious

“I have been invited to join the Chinese New Year dinner for many years now. I always look forward to it. I enjoy the friendship and fellowship at the event. This year will be a good year for the business.” ~ Datin Jessica Tong, Chief Editor, Asia Success Media Group

“Events like these connect people in the retail ecosystem.

Today is all about celebrating the Chinese New Year as friends. To some this may look like a roomful of competitors but at MRCA we are not competitors but collaborators who grow together. And, I guess, we just find an excuse to celebrate!” ~ Dato Bruce Lim Aun Choong, Deputy Secretary General, MRCA

Malaysia Retailer Vol 7 No 2

Feature

18

Appreciation High Tea More than 200 people from 80 companies who contributed and participated in producing the MRCA Who’s Who Directory 2018 were honoured at the event. ttended by the top management of the 80 companies and other invited guests, the event was held at the Tropicana Golf & Country Resort Kuala Lumpur. It was organised by MRCA Deputy President Dato’ Vincent Choo to acknowledge the support and contributions of the companies that participated in the directory.

In his speech, Dato’ Vincent acknowledged the support of all the members who contributed towards making the publication a success.

He also pointed out that the official directory of MRCA showcased the people and companies behind the association.

MRCA President Datuk Seri Garry Chua, in his speech, pointed out that the part of the proceeds from the Who’s Who Directory will be channelled to the MRCA Building Fund. He also spoke about the current retail scene and the challenges the retailers face.

A

Malaysia Retailer Vol 7 No 2

He also thanked all those who were involved in making the Who’s Who Directory a success.

The Directory, the first of its kind for MRCA, relates the story of its formative years, leading to the recent years when it solidified its position as the country’s most influential retail body. MRCA has been supporting the development and globalisation of the retail, licensing and franchise industries it represents, in Malaysia and overseas.

The 308-page hardcover Who’s Who Directory 2018 serves as a gateway for

businesses to network with members of MRCA’s core disciplines, and understand the association better. It also features messages from patrons and key people within the association, informative write-ups, success stories, tribute pages to contributing council members, and key particulars of MRCA members.

The Who’s Who Directory 2018 was published by Harini Management Services Sdn Bhd for MRCA. Harini Management Services Sdn Bhd also publishes Malaysia Retailer, the quarterly official publication of MRCA.

Feature

19

Malaysia Retailer Vol 7 No 2

Feature

20

MIRF 2019 Introduces

‘Hatchery’ Zone to Spur Startups The 4th edition of the Malaysia International Retail & Franchise (MIRF) exhibition will have a new zone called “Hatchery”, an incubator trade program by the Malaysia Retail Chain Association (MRCA), especially for startups. Expo also projects a 10% increment in revenue growth targeting RM90 million through the focus of franchising. he introduction of the zone, an initiative by MRCA, was announced at a press conference held at Menara MATRADE recently. The event was graced

by Datin Rusiah Mohamed, Director, Exports Promotion & Market Access Division of Malaysia External Trade Development Corporation (MATRADE).

The exhibition, themed ‘Franchise Forward’, will be held at the Kuala Lumpur Convention Centre from 18th to 20th July 2019 and is expected to draw 18,000 visitors from 10 countries worldwide with a targeted revenue of RM90 million.

T

Malaysia Retailer Vol 7 No 2

MIRF 2019 is set to attract more than 200 exhibitors nearing 400 booths and kiosks for local and including 50 booths for foreign exhibitors from Taiwan, China, Vietnam, and Singapore, among others.

The exhibition will emphasise the role of MIRF as a platform for franchisees to explore the franchise venture industry.

MRCA President Datuk Seri Garry Chua said the incubator trade program is to enable startups to have a chance to showcase to their peers and the public their innovative products and services.

“We hope, with this initiative, we are able to assist them to solidify their brand foundation,” he said.

He also pointed out that MRCA, as an association, has the responsibility to govern and ensure that all parties in the retail and franchise industry have a fair chance in the marketplace. “Therefore, we initiated our incubator program called Hatchery Zone.”

Datin Rusiah Mohamed applauded the efforts by MRCA in incorporating the Hatchery Zone for startups in this edition of the MIRF this year. “The retail and franchise industry is an important part of our nation’s economy and this exhibition is a positive move to spur growth. This is an excellent avenue for the retail and franchise industry

21

to develop effective strategies to operate in an increasingly dynamic and challenging environment.”

MATRADE, she added, continues to support the local franchises and retailers to expand their businesses overseas.

Currently, there are 65 Malaysian franchise brands operating in over 66 countries with more than 4,200 outlets.

It also provides financial assistance through its Market Development Grant (MDG) and Services Export Fund (SEF) to SME’s with the aim of defraying some expenses incurred when the franchise companies and retailers undertake promotional activities overseas.

“In 2018, RM253,226 were disbursed to franchise companies under the MDG as compared to only RM9,056 in 2017, contributing to a growth of 132%. This clearly indicates the franchise industry continued endeavour to expand overseas,” she stated.

On its part, MATRADE will continue to provide its support and commitment to the retail and franchise fraternity by working together to develop easier access into new and emerging markets

Malaysia Retailer Vol 7 No 2

Feature

22

Malaysia Retailer Vol 7 No 2

through its network of 46 offices abroad, said Datin Rusiah Mohamed.

Organising Chairman, Raymond Woo, said the MIRF is a great place for innovation, economy stimulation, growth, development and exposure for the businesses involved in the retail and franchise industry.

“We aim to continuously provide the latest, best and the highest quality products and services to the consumers.

The convergence of many great brands and enthusiastic startups under one roof is fantastic for networking, collaboration, partnerships and, most importantly, exposure. We have an increase in the number of exhibitors and booths this year and we hope to continue this growth to become the leading exhibition for the retail industry in Southeast Asia.”

Dato’ Liew Bin, MIRF Advisor said that he was pleased to see the transformation in size of MIRF over the years and recognized as one of the most vibrant, innovative and prestigious retail trade show in Southeast Asia.

This year’s edition of MIRF will also include the MRCA Retail Conference which will be held on 19th July 2019 at the KLCC Ballroom. In collaboration with the Kuala Lumpur and Selangor Chinese Assembly Hall (KLSCAH), there will also be a Food Gift Mini Expo to introduce to the new concept of food gifting to the market.

The exhibition will be centred around franchise brands which focuses on the two-way relationship between franchisors and franchisee. Franchisees are able to view the benefits of a readymade business operation that includes

23

the products, services and even wellestablished brand recognition.

The franchisors will also benefit from this mutual relationship such as speed of growth, increasing brand equity, customer loyalty and international expansion.

MIRF 2019 is endorsed by Ministry of Domestic Trade and Consumer Affairs (KPDNHEP) and MATRADE. MRCA 2019 corporate patrons are Maxis, Fusionex International, Quill Automobiles and RHB Bank.

MIRF 2019 is supported by Taiwan External Trade Development Council (TAITRA), PIKOM, Hong Kong Trade Development Council (HKTDC), The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM), Department of Trade and Industry Philippines (DTI) and Malaysian Association of Convention and Exhibition Organisers and Suppliers (MACEOS).

THE HATCHERY ZONE

Introduced for the first time, the Hatchery Zone is an incubator program by MRCA to assist in the establishment and development of new retail businesses.

The dedicated zone serves as a multi-purpose platform for the retail industry by: • providing an avenue for startups to exhibit their products and services to the market and public • presenting an opportunity for the retail industry to grow and develop further to meet the changing consumers’ needs by presenting innovative ideas, services and products • and driving the industry by ensuring a fair marketplace for startups to cultivate.

MATRADE’S PROGRAMMES FOR SMES

Some of the programmes by MATRADE to help SMEs grow their business locally and abroad are:

• Mid-Tier Companies Development Programme (MTCDP) Franchise companies which has benefitted from this programme in increasing their expansion and presence globally are Marrybrown, Papparich, Secret Recipe, Coolblog, Oldtown White Coffee and Ms Read.

• The Women Exporters Development Programme

(WEDP), Youth Exporters Development Programme (YEDP) and Bumiputera Exporter’s Development Programme (BEDP) They are targeted for export support facilities, each specifically tailored to boost export learning and performance of these three groups of companies.

• The Go-Ex programme Targeted at export-ready companies or high potential

exporting companies venturing into new products or new markets. The programme will provide customised advisory and marketing assistance by leveraging appointed Market Advisors and Market Linkers to significantly improve the companies export performance.

• Malaysia Services e-Directory (MSeD) This directory provides a

one-stop centre to obtain information of export-ready medium-sized SMEs. This initiative allows potential retail enterprises/franchises registered under MATRADE to leverage the platform to access and share trade information as well as establish hassle-free communication between international partners/ buyers with the registered enterprises.

Malaysia Retailer Vol 7 No 2

Feature

25

Ooi Boon Sheng, CEO of Web Bytes Sdn Bhd (left) with Jerry Lee, Executive Director and Chief Investment Officer of GD Express Carrier Bhd.

Web Bytes Expands Footprint in ASEAN with Xilnex The homegrown software development company teams up with GDex to venture into new markets and offer new retail solutions. eb Bytes Sdn Bhd (Web Bytes), is expansion to more ASEAN countries with Xilnex, its cloud-based point-of-sale (POS) retail management solution, through its collaboration with GD Express Carrier Bhd (GDex) which has a 30 per cent stake in Web Bytes.

Ooi Boon Sheng, CEO of Web Bytes Sdn Bhd said the company now plans to expand its innovation footprint with its new retail solutions of mobile POS and self-service kiosks, and to expand to Vietnam and Thailand via joint venture in the coming months.

“We see strong potential in ASEAN for Xilnex to provide retailers with greater efficiency and speed-to-value in a fast-changing market environment.

The growing popularity of e-wallets, the need to cater to multi-store operations and the increasing cost of labour in these countries are some of the key drivers of demand for our new retail solutions,” he stated.

As part of the collaboration, Web Bytes will leverage GDex’s network and expertise in expanding to ASEAN, while

W

Web Bytes provides GDex with the technical know-how in cloud computing in the development of GDex’s mobile apps and myGDEX cash portal, to further spur the growth GDex’s core business.

Since 2015, Web Bytes has expanded to Cambodia and Singapore by offering Xilnex through reseller companies. A physical office was set up in Indonesia in September last year.

Jerry Lee, Executive Director and Chief Investment Officer of GD Express Carrier Bhd said that ASEAN is an important market for GDex and technology plays a key role in helping the company remain competitive in the digital era. “We will continue to collaborate with Web Bytes to create technological synergies and to jointly strengthen our foothold in the region.”

Recently Web Bytes also collaborated with Super Gem Resources Sdn Bhd, the company which operates the LOL stores, by providing them with the personalised ordering tool for their new made-to-order platform, Cozmic Lab.

“As part of our innovation journey and expansion, we are embracing New Retail technology, which is about leveraging data from every aspect of a brand to improve the customer experience. Our collaboration with LOL to enable customisation and treating each customer as an individual is a step in that direction,” explained Ooi.

Ooi Boon Sheng, CEO of Web Bytes Sdn Bhd explaining about Web Bytes’ expansion plans to ASEAN.

Malaysia Retailer Vol 7 No 2

Feature

26

Taipei Exhibition Draws Quality Crowd The international exhibition for chain and franchise marked its 20th anniversary with a stronger show encompassing local and foreign businesses. bout a dozen MRCA members led by MRCA council member Raymond Woo, who is also the organising chairman of MIRF 2019, were in Taiwan recently to attend the official opening of Taipei International Chain and Franchise Spring Exhibition (TICFE).

The delegation, including those from other Asian countries, were also hosted to a welcoming dinner by the Taiwan hosted by the Association of Chain and Franchise Promotion, Taiwan (ACFPT).

The TICFE is the largest international franchise show in Taiwan hosted by the Association ACFPT. It is a platform for brand owners to showcase business concepts, penetrate new markets and expand their global footprint.

This year’s event was held in on

A

Malaysia Retailer Vol 7 No 2

April 12-15. More than 130 top brands were represented, giving visitors the opportunity to have face-to-face meetings with executives from top franchisors. Dubbed as the “best gateway to find suitable franchises” the event also gave retailers the chance to build their brands in the franchise industry.

Formed in 1995, the ACFPT is the largest and most experienced chain and franchise promotion organisation in Taiwan. The association has more than 350 members in 110 franchise sectors, operating more than 200,000 units with over one million employees, generating up to NT 1 trillion annually.

The association feels that its members play a pivotal role behind Taiwan’s economic growth and job

opportunities. One of its main objectives is to support its members and boost interchanges among them.

The association keeps its members up to date on the latest trends by absorbing the latest know-how. As a result, members have a sound franchising systems under the integral supporting and guiding mechanism of the association.

The association has hosted a number of events that have been known for being some of the largest and most professional international franchise exhibition. It also works closely with other fellow associations around the world. The outcome attained in the international exhibition embodies the association’s efforts to guide franchisors to grow and expand their operations overseas.

27

ACFPT has also promoted learning programs for its members, and helped the members develope markets abroad.

The members have teamed up with their foreign counterparts in visits and data exchange programmes. Foreign companies have also been guided on how to develop markets in Taiwan.

Workshops are an integral part of educating ACFPT members. These workshops are meant to keep members informed with the latest information and to teach them recent market developments for both the domestic and the international markets.

Chain and Franchise Strategies, Retail Store Management and Chain and Franchise Management are among the workshops provided by the association.

Members are also encouraged to exchange information and experiences at their monthly meetings held at its four branches in Taipei, Taichung, Tainan and Kaohsiung. Other events organised are dinners and excursions to local businesses.

Ten years ago the ACFPT set up the Cross-Strait Franchise Business Centre in Shanghai, China, to help its members with brand development in the Chinese market. This centre also provides members with overseas service and knowledge of local laws, tax codes, renting an office, local market studies and local expertise. By opening up this centre, members can take full advantage of the intermediary expertise to help promote their Taiwan brand.

Malaysia Retailer Vol 7 No 2

Feature

28

Tapping Into Tourism To Stimulate Retail The retail sector is looking at a growth of 4.9% this year in tandem with the gross domestic product. This, however, can change with the arrival of more tourists. alaysia is a shopping destination with international-standard shopping malls, a good representation of imported brands, and quality goods and services. Despite this the retail sector is expected to see a flat growth of 4.9% this year. Last year was 4.8%. President of MRCA Datuk Seri Garry Chua sees a way out.

“We have been underscoring in tourism. This is one area we should tap into. Tourism can have an immediate and direct impact on the country’s economy,” he said on air recently as a guest in Bernama’s Property Hot Seat.

The show was co-hosted by Dato Sri Vincent Tiew and Chris Tan. “Malaysia is generally seen as a shopping haven and a holiday destination with good resorts. Our food caters to a variety of culinary

M

Malaysia Retailer Vol 7 No 2

styles and religious restrictions,” said Datuk Seri Garry.

By next year the country is expected to have 700 malls. This for a relatively small population of 32 million. We need “external push” to drive retail, Datuk Garry added.

Adzman Shah Ariffin, exco member of the Bumiputera Retailers Organisation (BRO) was also a guest on the show. He said the government is looking at the tourism and wellness sector.

“The sector is targeted to bring in 30 million visitors to the country by next year. This can generate RM100 billion in revenue but a lot more can be done for the sector,” he conceded.

“Tourism will be the biggest contributor to the world economy by 2030. Retail is a big component in any development. Retail is in fact

the attraction in some developments therefore there should be more focus on what retailers want in a development,” said Datuk Garry.

On the issue of oversupply in retail space, Adzman Shah said some 6 million retail space is expected to be available in the next two to three years. This does indeed sound like an oversupply situation. Here is the opportunity to grow retailers so that they will be able to take up the new retail spaces.

He suggested providing the right environment, schemes for financing, better education and training in entrepreneurship even at school levels.

“The challenge is to see how Malaysian brands can participate in filling up all these spaces. This is one way we can allow existing retailers to grow their business to take up the excess space.”

29

“Retail is, in fact, the attraction in some developments, therefore there should be more focus on what retailers want in a development” ~ Datuk Seri Garry Chua, President of MRCA Both guests agreed that while the top four malls in the country enjoy good take ups the second liners of malls must work harder to secure retailers to fill up the space. One way they can do this is to consult retailers and understand what retailers need.

On the topic of exclusive malls built for bumiputera retailers such as the Mara Digital Mall, Adzman Shah said this is one way the government is looking at lifting the B40 group.

But this is also an avenue to grow Malaysian brands.

“We want to see bumiputera brands growing with Malaysian brands,” he

said adding that BRO has 88 local brands from 69 retailers. Most of them operate from malls.

MRCA members, on the other hand, are more sustainable and prefer buying shoplots to reduce their overheads, said Datuk Garry. But there are limitations to this. Unlike mall, shoplots see low traffic. Datuk Seri Garry also said that there are not many bumiputera retailers in the association.

“MRCA is encouraging more bumiputera retailers to join us. We are willing to share and grow together.”

Do malls do fit-outs to cater to their clients’ needs?

Datuk Seri Garry provided the example of MRCA member Valiram who carries more than 200 top brands.

Adzman Shah, however, said fit outs are a challenge for bumiputera retailers.

“International retailers are enjoying fit out incentives and good rental terms.

It is different for local brands. Yes, it

looks as if the smaller retailers are subsidising the larger players,” he said.

To a question on whether pop-ups stalls and kiosks in the common areas in malls are a pain point for retailers at the malls, Datuk Seri Garry said small players too should be given the opportunity to do business. Everyone has to start somewhere.

“Pop-ups mean that small retailers can experience doing business in malls.

It is one way of exposing them and allowing them to test the market to see if their products are suitable, if it is the right fit or the right target audience,” said Adzman Shah.

On the final question on e-commerce and digital retailing, Datuk Seri Garry said businesses today must strike a balance between brickand-mortar and online store. This can ensure success for their businesses. He said MRCA members are breaking into the digital space.

Malaysia Retailer Vol 7 No 2

Feature

30

Tourist Arrivals to Hit 30 Million, Expenditure to Touch RM100 Billion in 2020 Retailers stand to benefit the most with a bigger number of tourist arrivals. Tourism Malaysia and various other stakeholders are working hard to promote Visit Malaysia 2020.

Malaysia Retailer Vol 7 No 2

TOP 10 ARRIVALS 2018 Country

Jan-Dec 2017

EXPENDITURE TARGET MARKET Jan-Dec 2018

Country

Top items purchased

Singapore 12,441,713 10,615,986

Brunei Foodstuff

Indonesia 2,796,570 3,277,689

Indonesia Apparel/clothes

China

Saudi Arabia

2,281,666 2,944,133

Apparel/clothes

Thailand 1,836,522 1,914,692

Thailand Apparel/clothes

Brunei

1,660,506 1,382,031

Singapore Apparel/clothes

South Korea

484,528

Iran Handicraft/souvenirs

India

552,739 600,311

616,783

Kuwait Apparel/clothes

Philippines 370,559 396,062

UAE Handicraft

Japan

India Handicraft/souvenirs

392,777 394,540

Taiwan 332,927 383,922

xx Apparel/clothes China Handicraft Hong Kong

n 2020 the government expects tourist arrivals to reach 30 million, an increase from 28.1 million in 2017. These tourists are expected to bring in RM100 billion in total receipts, roughly RM3,332 in per capita expenditure. For shopping alone, each tourist is expected to spend RM1,088, a slight increase from RM1,070 in 2017.

This was revealed in a report released earlier this year in collaboration with Tourism Malaysia.

Total tourists arrivals in 2018 stood at 25,832,354, a 0.4% drop compared to the year before. This drop in total tourist arrivals was not recorded elsewhere in the region. Countries like Vietnam, Indonesia, the Philippines, Thailand and Singapore saw arrivals increase by 20%, 13%, 9%, 8% and 6% respectively.

In 2018 Singaporeans were our largest visitors with 10.6 million tourists, a 14.7% drop compared to the year before. This could be because of the more hassle-free alternatives available for other destinations. Also, the growth in the cruise subsector and promotions

I

by airlines have contributed to the drop in tourists from Singapore.

Chinese travellers meanwhile increased 29% to 2.9 million in 2018.

This was attributed to the ease of visa facilitation into Malaysia, which includes e-visa and the extension of the eNTRI. Taiwanese travellers also increased 15.3% to 394,000 visitors, thanks to better connectivity in selected markets.

Last year non-ASEAN tourists spending increased 33.8% to RM36 billion against 2017, compared to ASEAN tourist whose spending dropped 13% to RM48 billion. Total receipts meanwhile increased 2.4% to RM84.1 billion.

The report identified Georgetown, Kuala Lumpur, Selangor, Johor Bahru, Kuching, Miri and Kota Kinabalu as main shopping zones.

Shopping made up the biggest component of tourist expenditure last year. Some RM28 billion, an increase of 4.6%, was spent here. This was followed by accommodation (RM22 billion), food and beverage (RM11 billion) and local transportation (RM5 billion).

Other components spent on by

Handicraft

tourists include medical (RM3 billion), international airfare (local carrier) (RM4 billion), organised tour (RM4 billion), organised tour (RM4 billion), entertainment (RM3 billion) and domestic airfare (RM3 billion).

According to data from Tourism Malaysia, on average each tourist stayed 6.5 nights in 2018 compared to 5.7 nights the year before.

To promote Malaysia Year End Sales Campaign 2019, the Tourism Ministry has organised a number of exciting events such as Miss SHOPhia Shopping Hunt 3.0, a scavenger hunt programme taking participants from malls to malls.

This will be held on September 15 2019.

Meanwhile, a Media FAMtrip will take place in May 2019. This half-day tour will receive 10 journalists from India.

There is also an opportunity for stakeholders to create high spending expenditure from international tourists by developing shopping activities or programmes in conjunction with Visit Malaysia 2020. Tourism Malaysia will provide Matching Grants to successful proposals.

Malaysia Retailer Vol 7 No 2

31

Feature

32

Bank Negara Projects 2019 GDP Growth at 4.3% to 4.8%

The Malaysian economy is expected to sustain its growth momentum, expanding by 4.3% to 4.8% this year, says Bank Negara Malaysia in its annual report late March. Last year the economy expanded 4.7%. he report said that domestic demand will remain the anchor of growth, underpinned by continued expansion in private sector activity.

Private consumption growth is expected to moderate, but remain firm supported by stable labour market conditions and continued wage growth.

The implementation of several government measures, particularly aimed at alleviating rising cost of living, is expected to further support consumption spending, especially by lower income households. Private investment activity will be supported by the implementation of on-going multi-year projects, particularly in the manufacturing and services sectors.

The normalisation of destocking activities by firms after the strong demand during the tax holiday period

T

Malaysia Retailer Vol 7 No 2

last year will serve as an additional support to growth. Public sector expenditure, however, is expected to weigh on growth.

The projected contraction in public investment will be due mainly to lower investment by public corporations following the completion of large-scale projects, while the expectations for a moderate growth in public consumption reflect the continued reprioritisation of government spending.

The external sector is expected to register a more moderate growth. While the export sector will soften in line with the more moderate expansion in global growth and trade activity, Malaysia’s welldiversified export structure will contribute to sustain gross exports expansion. Gross imports are also expected to expand on account of a turnaround in intermediate and capital imports.

Overall, the current account of the balance of payments is projected to remain in surplus, albeit narrowing to 1.5%-2.5% of gross national income.

SERVICES AND MANUFACTURING SECTORS TO EXPAND On the supply side, all economic sectors are expected to expand with the services and manufacturing sectors remaining the key contributors to overall growth. Both the mining and agriculture sectors are projected to record positive growth rates amid recovery in natural gas production and higher palm oil output. Growth in the construction sector is expected to moderate due to the completion of large petrochemical projects in the civil engineering subsector.

Labour market conditions are

Feature

33

expected to be stable, with continued employment and income growth, underpinned by steady expansion in services and manufacturing sectors. The unemployment rate is projected to be relatively unchanged.

In the long run, the rollout of government policies such as the tiered levy and social security contribution for foreign workers is a positive step in reducing the reliance on foreign labour and spurring the creation of higher skilled, higher income jobs in the economy.

Headline inflation is expected to be broadly stable, with a projected annual average of 0.7% – 1.7% in 2019. The inflation projection incorporates some cost pass-through from domestic cost factors, but the upward impact will be offset by the expected lower global oil prices and the implementation of price ceilings on domestic retail fuel prices.

Underlying inflation, as measured by core inflation, is expected to be sustained amid the steady expansion in economic activity and in the absence of excessive demand pressure.

Overall, the domestic growth projection is subject to several downside risks. As a small open economy, the unresolved trade tensions between the US and China, and a slower-thanexpected global growth will affect Malaysia primarily via the trade and investment channel.

The uncertain pace of the monetary policy normalisation in the US could heighten financial market volatility across emerging market economies,

sufficient level of international reserves further enhance the economy’s capability to withstand external shocks. Moreover, commitment by the government to fiscal, structural and institutional reforms will contribute to inclusive and sustainable growth going forward.

GLOBAL FRONT

leading to volatile two-way capital flows and currency fluctuations.

Volatility in global oil prices would also affect export performance and mining sector investment.

OVERSUPPLY IN PROPERTY MARKET On the domestic front, a re-occurrence of commodity supply disruptions, partly from unanticipated weather patterns, could affect the recovery in the mining and agriculture sectors. In addition, the oversupply situation in the property market could dampen activity in the construction sector.

Malaysia’s strong fundamentals and the diversified nature of the economy will help to weather these risks and vulnerabilities while preserving macroeconomic and financial stability.

These strong fundamentals include a healthy labour market, stable inflation rate, continued surplus in the current account of the balance of payments, deep financial markets as well as a strong financial sector.

Exchange rate flexibility and

This year the global economy is projected to expand moderately, following slower growth in both advanced and major emerging market economies. In the advanced economies, economic activity is projected to moderate. While labour market strength will continue to support domestic demand, moderating investments and external demand will affect overall growth.

In China, ongoing structural reforms to rebalance the economy are leading to slower, but more sustainable growth.

In other Asian economies, growth will likely moderate despite stable domestic demand, as exports react to the slowdown in the advanced economies and China.

Global trade developments will remain a key factor affecting the 2019 outlook. Prolonged policy uncertainty could adversely affect investment decisions and thus, longer-term productivity growth. Elevated investor uncertainty and bouts of volatility in the financial markets will pose further risks of greater volatility in capital flows to emerging market economies. Overall, the balance of risks to the global growth outlook is tilted to the downside.

Malaysia Retailer Vol 7 No 2

Feature

34

LHFB In High Spirits Over Recent Developments Fans of premium beer, wine and spirits are getting smarter when it comes to their drinks, thanks to traveling and the Internet. Luen Heng FB Sdn Bhd is upscaling to maintain its position as one of the top five importers of premium alcoholic beverages in the country, RACHAEL PHILIP writes. ocal distributor of premium beer, wine and spirits Luen Heng Food and Beverage Sdn Bhd (LHFB) eyes a more regional presence. Its partnership with Octopus Group, a Singaporean distribution company, LHFB, promises a wider reach for its brands across Southeast Asia.

“Just four years ago LHFB underwent an equity change. Its founders purchased both Carlsberg Malaysia Brewery Bhd’s and Luen Heng Agency’s stake in LHFB, and partnered the Octopus Group,” said Sean Soh, Commercial Director.

He explained that Luen Heng Food and Beverage Sdn Bhd was formed in 2008 as a joint

L

venture between Luen Heng Agency Sdn Bhd and Carlsberg Malaysia. Luen Heng Agency’s history, meanwhile, dates back to the 1950s where the late pioneers, Mr Soh Yew Ming and Mr Yan Kai Chan, bought the insolvent company in 1956.

The last six decades saw the company and its sister companies involved in fast moving consumer goods with a special focus on alcoholic beverages. It wasn’t until 22 years ago that the company zeroed in on premium alcoholic beverages.

“There was a gap in the market for premium alcoholic products. We made the strategic decision then to cater to this niche area. Over the years this has worked well for us. We have had strong business partners in the industry,” said Sean.

“Now, together with the Octopus Group, we plan to build a strong beverage company in Asia with great people, great brands and great business partners.”

UP-TO-DATE WAREHOUSING

Besides changes on the corporate front, LHFB built and moved into a larger warehouse facility and office building in late 2017. The warehouse has a built-up area of 107,000 sq ft including about 40,000 sq ft of cold room space.

“With higher ceiling height, it has 10 times the storage capacity compared to our previous warehouse, with about 30% of free storage space to cater to future expansion,” said Esther Choong, Operations Director, who overlooks Human Resources, Supply Chain, Finance and Administration.

The facility features a temperaturecontrolled room especially for wine, a smart system that maintains between 18 and 22 degrees in temperature,

Malaysia Retailer Vol 7 No 2

heavy duty pallet racks for spaceefficient vertical storage and Warehouse Management System supported by SAP Hana 4 ERP system.

“We import products from all over the world. We need a reliable system to ensure that we are not under- or overstocked. The system cuts out manual keying in of sales orders and effectively helps us make the decision when ordering stocks,” explained Esther.

To complement these advancements LHFB has its own fleet of bonded air-conditioned trucks to maintain the quality of their products.

If anything the bigger warehouse and the new partner shows that LHFB aims to scale new heights and look for more opportunities for their brands.

Looking at their customer base and the consumers of their products, Sean said the company aims to double their growth in the next five years.

“The market is growing fast and we want to be on top of it. We also want to look at the soft drinks and mixes market,” said Sean.

“Our aim is to provide a complete portfolio of beverages for beer, wine, spirits and selected non-alcoholic products, enabling our customers and end users the privilege of choice.”

COMPLETE PORTFOLIO

According to Sean, it is challenging to rely on a small number of products.

Instead, the industry is better served when suppliers maintain a large category of products for all the three segments. In this vein, LHFB is one of the top five alcohol importers in Malaysia. It is the largest importer of duty paid premium beer in Malaysia.

LHFB has the distinction of introducing and successfully building the presence of some products in the

35

market. One example is the single malt whiskies, aggressively promoted and fast growing in Malaysia and Asia. Today the company carries some 30 different brands of single malt whiskies.

“We have been building our selection of single malt whiskies, starting with The Dalmore. Now we have one of the widest selection of premium single malts in the country. To add to our single malt portfolio, we are the authorised distributor of Erdington and Willian Grants & Sons,” said Sean.

“For wine, we began by aggressively promoting Malesan from France, a leading Bordeaux wine at the time, today we have close to eight brands from the major wine producing nations.

For spirits we have built a strong high energy drinks segment with labels such as Jagermeister and Jose Cuervo.

The beer portfolio is led by Hoegaarden and Budweiser. Incidentally, LHFB introduced Hoegaarden to the Malaysian market in 1997. It was the first wheat beer in the country. Unfiltered and made from natural yeast, the drink is cloudy and has sediments.

“In the early days, we received a lot of complaints from our customers and consumers. We met them and explained about the drink. That was a real challenge but it has paid off.

Hoegaarden is doing well in the market.

It is good to know that we started the trend of wheat beer in the country,” said Sean.

These days, Esther observes, trends among consumers change fast, thanks to the social media and consumers who travel more frequently abroad.

“People are experimenting and are keen to try new drinks. Wine drinkers especially have matured. They are very specific – no longer just white or red – but are picking out the region the

“We made the strategic decision then to cater to this niche area. Over the years this has worked well for us. We have had strong business partners in the industry.” ~ Sean Soh, Commercial Director. wine is produced like Barossa Valley.

They keep abreast with developments and trends around the world, they visit wineries. Info is readily available on the Internet,” she adds.

SAFEGUARDING A BRAND

LHFB’s portfolio of products is a labour of love compiled over decades. And it continues to grow. The company is constantly sourcing for new brands.

According to Sean, it takes careful planning to bring in brands that complement their portfolio.

“Timing is important. It must suit the market demand. In certain instances, we must foresee market demand and stay updated with the latest trend.

“Brands must add value to our business. For a brand to thrive there must be a long-term collaboration with the brand owners. It is important to have a good, honest and open working relationship with all our partners, as we aim to grow with them,” he said.

At the other end of the business, LHFB nurtures a good relationship with their customers – retailers, restaurant and bar operators. Some 40 staff are focused on marketing and sales, building relationships and helping with promotions.

Delivery is always on time. The team accommodates last minute orders, even if it is just one bottle, said Sean adding that everyone in the company is a salesperson.

“We create the best routes to consumers with a fully integrated sales, marketing and logistics platform that is cost effective and reliable. We have to be proactive in promoting our products at our clients’ premises so that our clients can grow their businesses and end consumers can enjoy the product responsibly.

“At the end of the day, it boils down to integrity. Our clients trust us with their brand and we, in turn, do not do anything to damage their brand name.”

COMPETITIVE INDUSTRY

Some challenges, however, are beyond their control, noted Esther. Contraband products and parallel products affect the growth of the brand. She lauds the efforts of the new government in trying to curb smuggling with better enforcement and heavier penalties.

“Meanwhile, we continue to tell our customers that we are the authorised distributors and we sell our products in the best condition possible. We have proper facilities, we pay duties, we guarantee the quality of our products.”

High duties are also challenging but LHFB prefers to see a glass half full in these situations.

“Malaysia is a multicultural Muslim country and duties are high but businesses must go on. The industry is good for the tourism industry. It is important that we strike a balance between duties and the selling price,” said Esther.

Malaysia Retailer Vol 7 No 2

Feature

36

Leading Change Positively and Profitably If leaders undertake change in the right manner, the results of change can be positive and profitable.

ver the last 25 years of undertaking consulting work in organisations, I have encountered some insights, hindsights and foresights regarding effective change. While it is true that many companies try to manage and lead change, many muddle through and the results are dismal. Some started out with a big bang approach but their efforts fizzled

O

Malaysia Retailer Vol 7 No 2

out all too soon when out of the glare of the limelight of initial change, initiative launch and publicity. Others encountered problems along the way because they went about change in a too methodological way. They only developed the knowledge and skills in people but left out the important part about change – overcoming resistance and winning the commitment of the people.

There is a better way to go about change. In fact, if leaders undertake change in the right manner, the results of change can be positive and profitable. Change should not be implemented in a haphazard manner without proper diagnosis, planning and a clear action plan.

By gauging the industry and overall environment, organisations can assess the possible impact those

external change drivers can have on them and then chart out in advance, a clear change management plan to implement the desired changes with specific measurable outcome involving a trained and inspired change execution team of people. People will be more supportive of change if leaders go about it in a more professional and productive manner.

POSITIVE CHANGE

What is positive change? It is about setting out change in the right footing.

It has to begin with a good intention to bring about benefits for both the organisation as well as the employees.

It should address the objectives for the company as well as the benefits for the employees.

However, for change to be positive, companies need to tune into channel “W.I.I.F.M.” (What’s in it for Me”) from the perspective of the employees as well. In this respect, while implementing change initiatives in organisations, leaders need to see how these programs can help improve the knowledge, skills and value of the employees besides the organisation.

In most cases of change initiatives implemented by companies, there are

great benefits for the employees, but very little is highlighted which affects the morale and commitment of staff towards change. A case in point, one company implemented a change initiative to promote multi-tasking for employees.

They only pointed out the objective of this change; which is to be efficient and cost effective to enable the company to compete and survive in the marketplace. There is nothing wrong with this objective. However, employees involved in multi-tasking should have been told that they would benefit from new skills development which would be done in a user friendly manner with plenty of support.

The leaders should also have pointed out that the new knowledge and skills imparted to them would enhance their value and make their work easier to complete in a less stressful workplace.

To be fair to the employees, the company should have pointed out that if everyone had put in their best effort, the multi-tasking initiative would bring about increased cost savings and productivity, a percentage of which would be given as reward, in terms of incentives and additional bonuses, to employees. Only then would such change initiative be viewed as fair and positive from both the organisation and employees’ perspective.

“People will be more supportive of change if leaders go about it in a more professional and productive manner.”

PROFITABLE CHANGE

I have also observed many companies implementing many change programs that look and sound good but have no tangible benefits. Some of them include team-building sessions with weekends get away and with many pep rally and promises of change and transformation.

The results are always similar. A few weeks after they come back from their team-building sessions, everything goes back to a normal routine; there is no implementation of action plans, no change and no improvement.

WHAT THEN IS A PROFITABLE CHANGE?

A profitable change is an outcome that is specific, measurable and has an eventual impact on some tangible benefits such as cost savings, increased profits or value that are desirable.

Not all such benefits can be realised in the short-term because some need medium or even long term to capture these “profits”, for example, new innovative products or services may take time before they are “profitable”.

The key is to capture the benefits that can be “profitable” to the company, a fraction of which can be passed on to employees in terms of rewards.

How then should a leader lead positive and profitable change in organisation? Companies do not pay leaders to identify problems; they pay them to solve them. They do not pay them to be comfortable with the status quo and warm their seats. In fact, leaders owe it to their organisations to address change – adapt to change, experiment, take risks, innovate, develop people and grow the company.

They need to take concrete actions to lead positive and profitable change.

Dr Victor S.L. Tan is the CEO of KL Strategic Change Consulting Group. He undertakes change management consulting and training. He is also the author of 10 management books. His latest book is Leading Change Positively and Profitably. For feedback for this article email him at victorsltan@ klscc.com or contact him at 012-390 3168.

Malaysia Retailer Vol 7 No 2

37