Thursday, 26 January 2017

SOUTH KOREA CASE STUDY - Achieving competitiveness on global stage

Over the last few decades, we have seen the constant economic domination of only a handful of nations, which have set the benchmark of national success for all the world to follow.
Recent global events have suggested that although this economic might is still present, even the world superpowers cannot afford to be complacent about shift global trends.
Browsing through the numerous online forums and comment feeds, it seems that Malaysia's small market will forever hold us back from competing among the global players.
An online discussion about our national OEMs attempting to reach global competitiveness is often received with cynicism, and there is no way Malaysia's small industry can compete with the large car producing nations.
The best case study for a zero-to-hero story in the automotive history is none other than the globalisation of the South Korean automotive industry.
Most importantly, it is a classic example of an industry that emerged in the shadow of much more advanced players in the US, Europe and Japan.
The Korean automotive industry can be traced back to the 1960s, more than 20 years before Malaysia started the national car project in 1983.
It was a time when Korea was a poor country recovering from a divisive war in the previous decade.
The first phase of Korea's industry development saw The Shinjin Motor Company (now Daewoo) assembling knocked down CKD packs through a partnership with with is Japanese counterpart Toyota.
Interestingly, the Korean government placed a 25 year total ban on imported vehicles, which gave the then fledging domestic player time to mature.
The ban was only lifted in 1980, although high tariffs were still imposed on imported vehicles at the time.
In the 1990s, the South Korean auto industry began the gradual process of liberalisation, in order to spur its next phase of development - to increase competitiveness among their domestic industry players.
As the playing fields were equalised between local and foreign players, the next two decades saw the rapid emergence of Hyundai Motor group, the world's third largest carmaker today.
There are three things that make the Korean automotive industry an interesting case study.
Firstly, it is a nation that rose from poverty and spurred wealth through a technology based industry - seen in the immense talent and capability coming out of South Korea today.
Secondly, Korea built a strong foundation of assemblers and vendors, and embraced the liberalization model early on to spur innovation within its borders.
Third and most importantly, it is a nation that adapted very quickly to change. Koreans were quick to adapt to the third industrial revolution, by ensuring that their citizens had easy access to computers and the internet, allowing technology penetration within their societies to move at a rapid pace.
This created a society that was prepared to face a technological upsurge to face the challenges of the global export markets.
In conclusion, in our pursuit to participate in the global economy, it all starts with the belief that nobody is too small to start.
The key component is our adaptiveness to global disruptive trends.
The writer is the chief executive officer of the Malaysia Automotive Institute. This is the second part of a series in embracing change on the global stage.

Thursday, 19 January 2017

Vital to embrace change on global stage

The government has aggressively explored and became party to numerous trade deals, either bilateral or multilateral.
A stark contrast to past conservative policies, the gradual liberalisation of the Malaysian economy began seeing a more rapid acceleration.
This is seen through our strong  commitment to regional collaborations such as the ASEAN Economic Community (AEC), current negotiations within the Regional Comprehensive Economic Partnership (RCEP), as well as the controversial Trans Pacific Partnership Agreement (TPPA) to name a few.
At the same time, we have worked on several bilateral agreements to expand the reach of Malaysia's businesses with economies such as Iran and China.
All trade negotiations will be subject to difference of opinions and heated debate. Such debate exchanges are natural by-products of a democracy, as all international trade pacts are subject to scrutiny by the populace of participating nations, clamouring for clarity on the fairness of each deal.
Even the TPPA has been subject to uncertainty, seen through its opposition from the very start of negotiations, as well as withdrawal symptoms from the recent transition of administration in the United States.
Regardless, it is the government's position to shed conservative viewpoints surrounding global trade, and working more aggressively towards full participation in the global economy.
The logic is simple - Malaysia’s 30 million population is too small a market for us to rely on an inward-looking economy to develop and expand, and this holds true particularly for our local automotive industry.
It is important to embrace the change that is taking shape at the global stage – the world market is more open, consumers are more demanding, impact to environment is becoming more pertinent, etc. The underlying factor to be in control of this change is none other than to enhance competitiveness in all aspects, be it social, economic or governance.
Furthermore, trends are clear in showing that the way of conducting business will change because of technological advances in communication, as well as data transfer and collection.
For example, conventional marketing methods restricted small and medium industries to smaller areas and localities, due to tight advertising and marketing budgets in the past. Today however, the traditional out-bound marketing has been replaced with in-bound methodologies, i.e. the cost barriers of traditional airtime have been replaced with more affordable digital options, allowing marketers to focus more on exemplifying their content, product value and optimising consumer awareness towards their expertise.
Lastly, the world is closing on the pinnacle of globalisation, meaning that countries holding rigid on internal border economics have a high potential of losing competitiveness, making them less preferred trade destinations.
Therefore, despite the numerous polemics, the global economic movements and trends no longer provide much choice for smaller economies - the only way forward is to participate and embrace it.
Nevertheless, how we choose to embrace global participation makes all the difference - and if in our stride we choose the path of creativity, innovation, meticulousness and customer consciousness (to name a few), perhaps we don't play to stay, but we play to win.
This article is the first of a series in participating in the global economy as strong contenders. In future articles, we delve deeper into the intricacies of the global economic trends, as well as analysing our competitive advantage towards sustainable global competitiveness.
The writer is the chief executive officer of Malaysia Automotive Institute.

Read the second part of the series articles here:
Read the third part of the series articles here:

Thursday, 12 January 2017

Embracing the digital future

The first two parts of this series discussed the future challenges facing the nation’s automotive industry, and the need to adapt to new norms of consumerism, whom are more informed than ever about the products and services they purchase.
A central focus of this new age is the massive dissemination of data and information.
An example of such massive data flows can be seen just by opening our personal social media accounts, purchasing groceries online or hailing a ride on our smartphones.
This global wave of digitalisation has affected our daily lives, and most noteworthy, affects the operations, sales & marketing behaviours and functions of business in all sectors and industries.
It has become a major contributor to the global phenomenon called the fourth industrial revolution, or Industry 4.0.
Industry 4.0 is admittedly a vast subject, and has a high risk of over simplification.
The jury is still out on what this means for our future, but one thing is clear – the changes in lifestyles, commerce and personal interactions are moving at an alarming and unprecedented pace, creating the urgency for all industries to quickly react to remain competitive.
The begging question is obvious  – how do we, as an industry and as a nation, adapt to this rapid change?
We may not have a complete answer, but at least we should know where to start.

We know that Industry 4.0 is building on the digital revolution we have seen over the last couple of decades.
We also know that the most likely scenario of Industry 4.0 is a fusion of technologies within the physical, digital and biological spheres.
With this in mind, it is important that we develop the basic framework that satisfies the above – developing the infrastructure to collect, process and disseminate massive amounts of data into useful and strategic information, which is in turn delivered, processed or consumed by people from a multitude of talents, cultures and backgrounds, on different modes of applications and devices.
This specification makes up the basic construct of the Internet of Things (IoT) and Big Data Management.
A key ingredient of the National Automotive Policy 2014 (NAP 2014) is the development of a supply chain and human capital capable of not just basic production, but also skilled in the disciplines of product and process design.
With the advent of Industry 4.0, automotive design capabilities must be based upon large amounts of data comprised of various data inputs – concerns that affect the branding, manufacturing, after sales and environmental inputs from motorists, regulators, even data collected on our carbon footprints.
Recognising this, the Malaysia Automotive Institute (MAI) has developed numerous initiatives to address the needs of industry stakeholders in keeping up with the rapid digitalisation of industry practices.
For example, collaborative design and validation is now possible through MAI’s Design Engineering & Prototyping (DEP) programme, which allows product and process design activities to be performed collaboratively over the cloud, through large data centres premised in locations under MAI’s patronage.
DEP is one of the many programs under our flagship umbrella, called the MAI Intelligent Technology systems (MITS), which will introduce even more cloud based applications to address industry needs such as manufacturing optimisation, business intelligence, and tool life predictability.
It is our hope that in 2017, we will see increased participation of OEMs, vendors, materials producers and aftersales businesses on the digital bandwagon.
As the focal point of the automotive industry, we believe that the government’s investment in such infrastructure is optimised by our domestic players to achieve competitiveness, and most importantly adapt to the inevitable change in global economic norms.
The writer is the chief executive officer of Malaysia Automotive Institute.This is the third and final article in a series written in conjunction with the new year 2017.

Read the first part of the series articles here:
Read the second part of the series articles here: