When foreign competitors arrive, what should local businesses do?
Originally written in Chinese. Translated with AI, reviewed by Gary. Read the Chinese original →
Recently I saw Singapore's Lianhe Zaobao discussing a trend.
More and more Chinese companies, Chinese restaurant brands and investors are moving into Chinatown. In one case the paper reported, a Nyonya restaurant that used to operate there saw its rent jump from about S$8,000 to nearly S$18,000, more than double, and it couldn't hold on for even a year. Once rents go up, many of the small shops that were there before can't survive. Slowly, the whole street starts to change.
This isn't only happening in Singapore. Over the past year it has become more and more visible in Malaysia too.
Many Chinese brands, restaurants and companies are entering Southeast Asia. So people naturally ask: when they come in, what should local businesses do?
I asked Alan about this before. He has worked in malls for many years and has a lot of experience. But his answer was that he had never seen anything like this either, and he is still figuring it out step by step.
Because this isn't a simple competition problem. Behind it is a bigger economic cycle.
Why are they coming out?
A while ago I went on a trip with 辉哥 (Brother Hui), and we talked about something similar. I asked him: if a Chinese car-service chain like Tuhu came into Malaysia and offered very cheap prices, what should local workshops do?
His view was very eye-opening.
He said we can't only look at "Chinese companies are strong". We should also ask the reverse: why are they coming out?
Many Chinese companies are actively going overseas because they face huge pressure at home. The market is brutally competitive, margins are thin, growth is slowing, so they look outward.
In other words, they aren't coming out because things are easy. They're coming out because things are hard for them too.
So from a macro view, it isn't that someone is especially strong and someone is especially weak. Everyone is looking for a way through the same cycle.
Instead of worrying, start with what hurts your customers most
But his second point was even more important to me.
He said that as a business owner, rather than worrying about others coming in, first think about what you can do.
If you run a local car workshop, don't just worry about foreign chains arriving. Ask what hurts your customers most.
For many people, the most annoying part of a car repair isn't the repair itself. It's having no car while theirs sits in the workshop.
So could you buy a cheap Proton Saga or Perodua Bezza, with a monthly instalment of six or seven hundred ringgit? Then tell customers: leave your car with me for repairs, and I'll lend you one to use.
It might cost you only twenty or thirty ringgit a day.
But for the customer, the experience is completely different.
This doesn't need big branding or a complicated strategy. It is simply standing in the customer's shoes and removing one pain point.
When we talk about competition, we immediately think of strategy, positioning, brand, capital and scale. But sometimes the thing that really works is the plainest one.
Do you understand your customers better than anyone else?
If you can't win on price, win on service
Yesterday I met another friend who sells factory machines. His machine costs about RM50,000, while a machine from China sells for only RM25,000. For the same money, a customer could buy two Chinese machines.
If it were only a price war, he would definitely lose.
So he changed the approach.
Instead of only selling machines, he started renting them to factories.
That way customers don't need to put down a big lump sum, and their cost pressure drops immediately. For many small and medium factories, this is more practical than buying a cheap machine.
More importantly, he backs it with service.
If a machine breaks down, he can send a technician. If it needs calibration, he has someone who can go. If there's a problem, he can fix it on site.
Chinese machines can be cheap, but it is often hard for them to also bring local programmers, technicians and engineering support.
And that is where local businesses have an opportunity.
Not everything has to be won on price. Sometimes a local business's real advantage is being closer to the customer, reacting faster, serving in more detail, and actually catching the customer's problem.
When we see Chinese companies and foreign brands coming in, the pressure is real, of course.
But if we keep looking outward, we will only get more anxious.
Today rents go up, tomorrow a Chinese brand arrives, the day after a platform changes its rules. The outside world never stops changing.
What an entrepreneur can really control is still their own business.
Who are your customers?
What hurts them most?
Can you make things more convenient for them, give them more peace of mind, and lower their costs?
None of this sounds sexy, and it doesn't look like a brilliant business model.
But many businesses die precisely because these basic things weren't done well.
We often think we lost on strategy. Very often, we lost on service.
We often think our rivals are too strong. Very often, we are just too far from our customers.
The more chaotic the world outside, the more we need to come back to the simplest question:
Can I serve one customer better today?
That may be the most realistic way for local businesses to face competition from outside.
Not by shutting others out, and not by complaining that the market has changed.
But by doing our own job well.
Because very often, the real moat lies in the details of how you treat your customers every day.