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PHYSICAL FACTOR: SUMMARY
Market is well connected to major economies
• Market is concentrated on specific region of the country
Good logistics for business is possible
• Fierce competition could exist since sellers and buyers are concentrated in the same area
SOCIO-CULTURAL FACTORS: RELIGION
61.3
19.8
9.2
6.3
1.7 0.7
1
Islam
Buddhism
Christianity
Hinduism
Others
Atheist
Unknown
SOCIOCULTURAL FACTOR: HOLIDAYS
• Malaysia celebrates 10 different national holidays (Eid Celebration, Chinese New Year,
Christmas, Diwali, etc.,)
• Countless other states holiday
• Holidays = Sales & Shopping
SOCIO-CULTURAL FACTORS: SIGNIFICANCE
Culturally diverse market –Firms needs to cater local needs and taste
Various holidays and celebrations leads to event based sale – intense price war could occur
Young population – potential to ecommerce is greater
FINANCIAL FACTOR: INTEREST RATE
3.25
0.25
4.92
3.25
0
1
2
3
4
5
6
Malaysia US
Benchmark
Lending
Last Revised Lending Rate: Malaysia (2011) , USA (2012)
FINANCIAL FACTOR: PAYMENT SYSTEM
• Streamlined interbank transfer via MEPS –Malaysia Electronics Payment System
• MEPS controls every aspect of implementation and standard of electronic payment
• Other relevant payment service providers are Visa and MasterCard
FINANCIAL FACTOR: SIGNIFICANCE
• High lending rate and no capital gain tax could affect mode of financing
• Reliable payment system eases transaction and leverage the potential for e-commerce
POLITICAL AND LEGAL FACTOR: FDI
Stance of FDI: Aims at liberalizing the economy together with advancing local business.
Therefore, all FDI related merger, acquisition, expansion and etc., must have permission from
MDTCC
POLITICAL AND LEGAL FACTOR: FDI
• Ownership: Malaysian must own 30% of stake for first 3 years of incorporation
• Workforce: Should be reflective off all racial composition of Malaysians
• Product Composition: 30% of the sale space must be occupied with local products.
• No FDI in convenience store, mini market, provision shop and etc., with <3000sqm
POLITICAL AND LEGAL FACTOR: EMBARGO
As leader of Organization of Islamic Countries (OIC), Malaysia does not do trades with Israel.
Some of Israeli related firms face seasonal anti-Israel boycott.
POLITICAL AND LEGAL FACTOR: SIGNIFICANCE
Rigid and political and legal requirements poses challenges to firms in several aspects such as supply chain, management & administration,
funding and others.
MACROECONOMICS: TAX RATETax USA (%) Malaysia (%)
Corporate 35 25
Sales 9.60* 6
Social Security – Employer** 7.65 13
Social Security – Employee** 7.65 11
Total 59.9 55
Capital Gain (Equity) 0 %– 20% 0%
*National Average (Forbes,2012)**Including Medicare
MACROECONOMIC FACTOR: SIGNIFICANCE
Overall, firms does not face too much challenge since the factors such as tax rate, inflation and
economic growth remains stable.
OTHER FACTOR: TOURISM
• Tourism contributed MYR 47B to GNI (2012)
• Tourist arrival for 2012 was 25.03 M
• Generated MYR 60.0 B in tourist receipts
• Tourists contributed 30% of retail revenue
OTHER FACTOR: SIGNIFICANCE OF TOURISM
• High tourism activities allows firms to make more profit
• Also promotes competition and forces retailers to be more competitive and creative
in terms of marketing, cost structure and others.
OTHER FACTOR: INTERNET PENETRATION
• In Malaysia, only 0.8% of retail business was done online and it is expected to increase to 1.4% by 2016.
“The MRCA does not see the emergence of the online shopping as a threat towards their brick and mortar
businesses”.
Nelson Kwok, President of Malaysian Retail Chain Association
OTHER FACTOR: SIGNIFICANCE OF HIGH INTERNET PENETRATION
• High internet and mobile penetration, coupled with young population and good payment
system, could boost the underdeveloped e-commerce segment.
COMPETITOR ANALYSIS: KEY PLAYERSParent Company Subsidiaries Operation Style
Tesco (UK) Tesco (M)** Hypermarkets
Dairy Farm (HK) Giant Hypermarkets
Cold Storage Supermarket
Guardian Health and Beauty
Aeon (JPN) Jusco Hypermarket
Carrefour* Hypermarket
Berjaya Corp (M) Parkson Department Store
Econsave Hypermarket/Supermarket
7-Eleven Convenience Stores
Rocket Internet (GER) Zalora Online Fashion Store
Mudah.my (M) Mudah.my Online Marketplace
MYDIN (M) Mydin Wholesale Wholesale
*Was originally a subsidiary of Carrefour (FRN) but bought by Aeon in 2012.** Offer full online shopping
STRATEGIC PLANNING: OVERALL STRATEGY
?Culturally diverse market
Strong nationalistic sentiment
Legally required to include 30%
local products Strong cultural
sensitivity
Various cultural and
religion celebration
STRATEGIC PLANNING: OVERALL STRATEGY
MULTIDOMESTICCulturally diverse market
Strong nationalistic sentiment
Legally required to include 30%
local products Strong cultural
sensitivity
Various cultural and
religion celebration
STRATEGIC PLANNING: ENTRY METHOD
?30% citizen ownership
30% of the product must be
local product
Culturally diverse market Fierce
competition in concentrated
markets
Steep learning curve
STRATEGIC PLANNING: ENTRY METHOD
PARTNERSHIP&
JOINT VENTURE30% citizen ownership
30% of the product must be
local product
Culturally diverse market Fierce
competition in concentrated
markets
Steep learning curve
STRATEGIC PLANNING: FINANCING
?
No capital gain tax for
equity
30% stake must be
owned by local citizens
High lending rate - 4.92%
STRATEGIC PLANNING: FINANCING
Equity Financing
No capital gain tax for
equity
30% stake must be
owned by local citizens
High lending rate - 4.92%
STRATEGIC PLANNING: FOCUS SEGMENT
Online Marketplace and Online
Store
High Internet Penetration
Young Population
Good Payment System
High Mobile Penetration
Low Competition
in Online Segment