Cheap and fast, Chinese products capture Malaysian consumers’ hearts

Once confined to e-commerce, Mainland China brands are now expanding rapidly across the Malaysian retail space, changing consumer habits and testing the resilience of local SMEs.

Chinese brands, like Mixue and BYD, have expanded rapidly in Malaysia over the past two to three years. (Setapak Central pic)

PETALING JAYA:

 Walk into any shopping mall in the Klang Valley today and chances are you will catch Mixue’s snowman mascot peddling RM3 ice cream or see long queues outside tea chain Chagee outlets.

Outside the malls, the shift is equally overwhelming. Chongqing-style mala hotpot or Xinjiang-style restaurants now dominate rows of shoplots, while electric vehicles like BYD and Chery glide past.

Mainland Chinese brands — from food and beverages to electronics and electric vehicles — are popping up in every corner of the retail space in Malaysia, an unlikely scenario just a few years ago.

The change in perception of Chinese goods, especially among young consumers, is part of a broader trend that is transforming Malaysia’s retail space.

This same trend has also become a challenge for local businesses, especially small and medium enterprises (SMEs). For starters, they have begun to see an erosion in their market share and, by extension, a decline in revenue.

Why Malaysia, why now?

Malaysia is a natural choice for Chinese businesses looking to extend their reach.

Firstly, according to economist Goh Lim Thye, Malaysia’s position as an open market, its strong trade links, and fast-growing digital commerce make it an attractive market for Chinese brands.

“Secondly, the high volume of trade and good connectivity through distribution channels to consumers enable businesses to scale efficiently,” Goh, who lectures at Universiti Malaya, told FMT.

“Retail entry barriers have also fallen, thanks to digitalisation, creating a platform-driven marketplace where brands can enter online and expand quickly,” he added.

There is also a push factor. Goh noted that slower growth in domestic demand in China has forced brands and businesses to look abroad.

Overall, China’s gross domestic product (GDP) rose 5% in 2025, but the growth was a tad slower, coming home at 4.5% year-on-year, in the final quarter of the year — one of the weakest quarters in decades.

“Against this backdrop, Chinese brands have a strong incentive to look overseas for additional growth, and Malaysia stands out as more attractive (than other countries) given its strong connectivity, open trade environment, and scalable retail and e-commerce channels,” Goh said.

Change in perception

Chinese goods have long been perceived as low-quality, and the stigma continues to persist, according to Aqilah Yaacob, a senior lecturer at the school of management and marketing at Taylor’s University.

However, novelty cycles driven by the Fomo factor — fear of missing out — have overshadowed the quality stigma, Aqilah told FMT.

“From blind-box toys to beauty products, the rapid turnover trend keeps scrutiny low,” she said. “Consumers are carried along by speed, price, and digital visibility rather than long-term trust or durability assessments.”

Aqilah said that many young consumers, particularly those who belong to the millennial and Gen Z age groups, no longer equate Western brands with superiority and view overpaying as naïve.

“Chinese brands have become ‘smart risks’. They are seen as good enough, and are socially endorsed, making them fast to adopt,” she added.

This is never more evident than in the fast expansion of Mixue in Malaysia. In less than two years since it entered the Malaysian market in 2024, the F&B business already has 500 outlets across the country, leading to the domestic trade and cost of living ministry to restrict further expansion last year.

SMEs feel the heat

There is also a downside to the boom in demand for Chinese products, and Malaysian SMEs are taking the hit hardest.

William Ng, president of the Small and Medium Enterprises Association of Malaysia (Samenta), said SMEs in certain industries have reported declines of up to 30% in revenue.

He blames it largely on price pressure.

“These foreign entities benefit from economies of scale and, in some cases, state-level support in their home country, making it possible for them to price very aggressively,” Ng told FMT.

He noted that the expansion of Chinese-owned businesses was first felt online before quickly spreading into the physical retail and services space.

“The scale is unprecedented because they are moving in as complete ecosystems, often bringing their own supply chains with them,” he added.

What local brands can do

Ng acknowledged that closing borders to Chinese products is not the answer for Malaysian SMEs.

Instead, he said, local businesses should learn from and start working with their Chinese counterparts.

He suggested that local SMEs integrate themselves into the supply chain by offering delivery and after-sales service at the local level.

“More importantly, our SMEs must go digital quickly and learn from the Chinese how they utilise the combination of scale, speed and technology to dominate markets abroad,” he added.

Aqilah said local brands should avoid competing on price or speed and instead compete on identity depth.

“Strategic options include co-creation with Chinese suppliers while emphasising hyper-local flavours, such as linking consumerism with patriotism, linguistic play, humour, and cultural rituals that foreign brands cannot authentically replicate,” she added.- FMT