Swamped by China businesses seeking new markets
- warrenlim7
- Mar 3
- 3 min read
This article first appeared in The Edge Malaysia Weekly on December 1, 2025 - December 7, 2025
FOR decades, China was seen as the world’s factory, churning out steel, textiles, footwear, toys, electronics, automobiles — you name it. Its massive industrial output was made possible by a huge population and low labour costs.
That view of China is outdated. It is no longer exporting just manufactured goods. The world’s second largest economy is now also exporting business models, business mentality, consumer culture and entire service industries, with its influence increasingly felt across markets, including Malaysia.
A growing number of mainland Chinese-origin brands has entered the local market with speed and scale. In the food and beverage (F&B) space alone, names such as Haidilao, Mixue, Lucky Cup, Chagee and Luckin Coffee are changing what Malaysians think about service, pricing, sourcing and branding.
At the premium end, Haidilao set the gold standard for service intensity and customer experience. In the mass market, Mixue and Lucky Cup drove prices to levels local operators struggle to match.
This pattern is replicated in lifestyle, retail and services.
Pop Mart — famous for its highly sought-after Labubu collectibles — has turned designer toys into a mainstream retail phenomenon. Shein reshaped online fast-fashion habits with its ultra-affordable pricing, while HLA countered the trend by rapidly expanding its bricks-and-mortar stores.
The wave extends into other sectors. In the automotive sector, BYD and Chery have quickly become serious contenders with aggressive pricing and rapid model roll-outs, while car maintenance is being disrupted by Tuhu, a Chinese vehicle-service chain operating more than 7,200 workshops in China.
On the tech front, Huawei, Xiaomi, Vivo and Oppo have been steadily gaining market share in smart devices and home gadgets, challenging the supremacy of American and South Korean brands.
In social media, Xiaohongshu (known in English as RedNote) and TikTok are now cultural anchors for young consumers, while Lazada and Taobao — both controlled by the Alibaba Group — remain the favourite online marketplaces of many Malaysians.
Even Chinese entertainment content — from reality shows, palace dramas to animated films like Ne Zha — is becoming more popular with Malaysian audiences.
The pace of overseas expansion by Chinese businesses is also a reflection of the environment in China, where many sectors are grappling with oversupply, slowing demand and relentless price wars.
Profit margins have collapsed to the point where a number of companies are engaging in what some describe as self-destructive price wars. This feeling is captured by a stark, colloquial observation, that the companies prefer to “kill themselves rather than be killed by competitors”.
This suicidal sentiment is intertwined with neijuan or involution — a phenomenon of self-reinforcing, excessive competition, where companies continue to invest and expand even as returns weaken. Rather than focusing on new differentiation, businesses rely on undercutting rivals as a quick way to grab market share.
The result is a vicious cycle of narrowing margins, deteriorating industry conditions and a growing push for companies to look overseas for survival.
This dynamic is now spilling into Malaysia, where some mainland Chinese operators are shaking up the market with headline grabbing offers, such as photography packages priced as low as RM299, though such advertisements often do not disclose the full costs.
From F&B to renovation, fast fashion, wedding services and car workshops, local small and medium enterprises (SMEs) are under mounting competitive pressure amid the influx of and relentless expansion of mainland Chinese businesses here.
A survey by the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM), published on Nov 22, found that 45.1% of 245 Malaysian business owners polled are pessimistic about their industry’s competitiveness against Chinese businesses over the next five years.
Competition is described as “intense or very intense” by 70.9% of those polled, while 86.4% of respondents state pricing pressures as the most significant impact.
According to 52.9% of respondents, unlicensed operators — particularly in wholesale, retail, motor vehicle repair, construction, manufacturing and professional services — have created an uneven playing field.
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