Expanding one’s business overseas requires careful strategising and planning, and should not be done haphazardly just for the sake of going overseas, cautions Abu Fitri Abdul Jalil, CEO of Malaysia Marine & Heavy Engineering (MMHE).
He urges companies expanding into a new market to have a thorough evaluation of the local rules and requirements, and the local issues, “and it’s always wise to make sure you also have an exit plan.”
“I’ve seen many Malaysian companies venturing overseas getting their fingers burnt and not knowing when to retreat. It’s alarming, especially for listed companies that are comparatively small... They are too quick to venture overseas, just for the sake of going overseas. At the end of the day, all their business in Malaysia goes into subsidising their ventures overseas,” notes the industry veteran with more than 20 years experience.
Abu Fitri believes that those wanting to venture overseas need to determine what strengths they have that they want to market, how they will complement those strengths, and whether they want to get into a niche or low-cost market. Going low cost is not always a war one wants to get into, he says, adding that many Malaysian companies lose at the low-cost battlefield.
Wan Ruzlan Iskandar, Scomi Energy’s President of Oilfield Services, adds that some Malaysian companies like to project themselves as competitive in the low-cost sense when venturing overseas without truly understanding the real issues on the ground there. “Suddenly they find out they are not low-cost anymore. And worse still, once you’re already in there, you can’t just simply pull out from a contract or project,” he says.
“No organisation will be free of mistakes but the advice is: Make brilliant mistakes,” stresses Wan Ruzlan.
Scomi knows the value of learning from mistakes, having paid the “school fees” for its failed venture in Sudan.
“We’re still learning but I would like to think we have learnt quite a bit from our experience in Sudan. We’re in Turkmenistan, which is certainly not an easy country to be in, and God willing, we are doing well there.”
Wan Ruzlan stresses on the importance of continuous learning as rules change constantly. “Get your homework done and have balls of steel,” he says.
Lessons can also be learnt from other people’s mistakes, but alas, many are just not paying enough heed.
“People have gone to those countries and they have burnt their fingers and yet you have different groups of people coming to the same countries, making the same mistakes!” laments Abu Fitri.
“I think what we’re lacking, especially among Malaysian companies, is collaborative spirit. Everybody seems to want to strike on their own, not wanting to do enough homework. Everybody’s just too eager to pack their bags and jetset. And the saddest part is many find it so easy to pour money abroad, especially when it’s not their own equity – that’s the biggest worry,” he says.
Wan Ruzlan believes one should also examine one’s true motivation for venturing abroad. “Some companies feel that Malaysia is not a big enough market for them, or that the Malaysian market is not ready for their product.”
Scomi got into oil and gas and then into the international scene via acquisitions. It started with the acquisition of Kota Minerals and Chemicals Sdn Bhd (KMC), a company specialising in the supply of drilling fluids and mud engineering services for the oil and gas industries. It subsequently bought into Oiltools International Ltd.
By acquiring Oiltools, Scomi gained an international infrastructure and immediate access to the overseas market. “I suppose the motivation then was to allow the mud business that we had, which was predominantly a Malaysian-based business, to go overseas, riding this ready infrastructure,” says Wan Ruzlan.
MMHE, meanwhile, had no real drive to move overseas except in support of PETRONAS operations abroad. After all, its role is to provide support to the nation’s oil and gas industry for PETRONAS.
But with the oil and gas activity in Malaysia slowing amid low oil prices and deferred projects, MMHE is now looking outwards. “There are just not enough jobs domestically. Therefore now, the compelling reason is to survive. We have to go out and look for jobs,” he shares.
Since Abu Fitri took over the helm of MMHE in March, it has been eyeing opportunities overseas, in particularly collaborations with other yards and engineering companies to offer a one-stop solution. “The business world today looks for complete total solution. People don’t just look at products or services. If you want to be successful overseas in whatever business, you have to think of a complete total solution. Which means that you have to be customer focus, service oriented, and your product has got to be good,” he says.
Wan Ruzlan concurs. He said Scomi, through collaboration with its partners, have come up with its own innovative products to differentiate itself. “We need that differentiator when we go overseas because our business is almost like a commodity,” he says.
It’s a challenge for a Malaysian company holding its own against the big boys. “We would have problems trying to convince even our local companies to accept our products but thankfully, we have these products. Our marketing in certain countries is quite aggressive and we’ve gained the trust of big national oil companies overseas with our products.”
Wan Ruzlan notes that notwithstanding today’s challenging global environment, there are still opportunities out there. Rig count in the Middle East, for example, is still increasing. “Of course they are taking advantage of the lower cost environment but still, if your processes, people and products are good, you’ll be able to offer a good value proposition which hopefully will be a win-win.”
Talking Heads: Creating conversations around Malaysians who have successfully gone global – Produced by the Economic Transformation Programme.