4/2015 – Local brands and pioneers

by Tan Thiam Hock

Saturday, 7 March 2015

JUST like the three Chinese New Years before, my wife bought me another red shirt from British India. She has always insisted I wear a new shirt for the CNY. I do not mind too much as long as I am allowed to wear it over my old comfortable jeans.

So on the first day of CNY, feeling casually smart in my only new very red shirt with nice prints, I went to “pai neen” or pay my respects at Datuk Tan Chin Nam’s open house. Though slightly frail as he nears 90 years young, Tan’s memory was still good as he told me about his foray into building his first houses in Penang back in 1948 with just RM5,000 capital at that time.

I would describe Tan and his elder brother, Kim Yeow, as pioneer entrepreneurs, having started their business during World War II in pre-independence Malaya. Just like post-war Japan, Korea etc, our country was dependent on pioneer entrepreneurs like Tan and many others to invest and contribute towards the economic development of a fledging nation. As Tunku Abdul Rahman was busy setting up the civil service and education system, he relied on the pioneer entrepreneurs to set up financial institutions and invest in providing goods and housing for the population.

This was a race blind partnership between the government and its Malaysian business community. Tunku Abdul Rahman and his Cabinet needed all the capable entrepreneurs he could gather and the government issued all the necessary licences to kickstart the development plans. Just as you have pioneer entrepreneurs in Honda and Hyundai in other countries, we had our local champions in Malaysia.

Tan’s most memorable contribution must be the Mid Valley integrated development where he envisioned building the biggest shopping mall in Malaysia at that time, integrated with multiple office and residential blocks plus three hotels. His tenacity to complete the project during the major recession of 1998 has been well documented. The Mid Valley Mall to date is still the most popular mall in Malaysia based on foot traffic. With a smart merchandising mix of local and foreign brands, it is indeed a mall for all Malaysians and unsurprisingly popular with tourists due to its affordable hotels.

Pioneer entrepreneurs would not have been successful if not for the close partnership and support of the government and its agencies. Back then, the government was not competing with the business community. Fast forward to today, the government (federal and state) is the biggest business organisation in Malaysia. It is the largest employer with the largest ego. It is also the largest borrower with the highest debt. And that is not counting 1MDB.

When I decided to launch our local mass cosmetics brand, I knew that success depended on the two major pharmacy and beauty chain stores providing retail wall space to house our cosmetics alongside the top international brands. Despite the fact that Guardian Pharmacy and Watsons were both Hong Kong-owned (Dairy Farm and Hutchinson), their general managers and merchandising directors were far sighted and they believed in our local brand story.

Even though we have had excellent partnership and success with our retailers since the beginning, the pressure to perform has been unrelenting. We are measured constantly against the leading international brands in terms of volume and margin contribution. The landlord of our wall space measures our brand contribution on a per sq ft basis so the pressure increases every time the mall increases its rental costs. There is no preferential treatment for local brands and we do not expect any.

So it came as a surprise to me recently when two Cabinet ministers called on Petronas to be supportive of local brands like allowing British India to retain its shop space in the iconic Suria KLCC which is majority-owned by our national oil company.

At first glance, I thought it was a little bit unfair to label Petronas as unpatriotic for not supporting local brands. After all, Petronas has been our local brand champion since airing those race blind TV advertisements inspired by Yasmin Ahmad of Leo Burnett.

Petronas has spent billions promoting its brand both locally and overseas and with the success of its F1 campaign last season, it has truly become Malaysia’s most famous brand internationally. So this accusation of being not supportive of local brands has been a public relation disaster and, honestly, brand dilutive to Petronas.

I have been inspired by Royal Selangor Pewter and British India since 20 years ago and consider them as our “pioneer” Malaysian premium brands. It is a fact that they were among the first companies to venture overseas and that on a premium image. And iconic Malaysian brands like these deserve their prime location in an iconic mall like Suria KLCC. What has been a solid Malaysian partnership which started 18 years ago has somewhat turned sour for whatever reasons.

It is my fervent hope that both sides take a step backwards, stop this legal charade and recognise the importance of maintaining our founding fathers’ vision of a great partnership between the state and pioneering entrepreneurs. For a few ringgit less, Suria KLCC can show Malaysians and the world that we are united in presenting our best brands forward in an ever competitive global retail landscape.

Like the foreign investors in our stock market, foreign brands are also fair weather business partners. While the foreign brands will withdraw from our market during “strategically” non-viable economic times, tenacious local brands will always stay back and fight together through the good and bad times. That is why local brands are also known as home brands.

If it is of any help, I will ask my wife to buy two red shirts from British India–Suria KLCC come next CNY. That is only if the store is still there.

Published: http://www.thestar.com.my/business/business-news/2015/03/07/local-brands-and-pioneers/

Advertisements