Malaysian Business Structures

After independence was gained in 1957, the Malaysian government placed great emphasis on the development of businesses owned and run by indigenous Malays to counter-balance the fact that up until that time most businesses had been developed by ethnic Chinese and Indian families.

However, the last currency crisis in the area saw a relaxation of this policy and restrictions on non-Malays buying into local organisations have been eased.

Despite the positive discrimination policies pursued by the government for a number of years, many local businesses are still dominated by Chinese interests and many senior employees of multi-nationals are also of Chinese extraction.

Most Malaysian businesses are extremely hierarchical in nature and indeed the three main religions of Islam, Confucianism and Hinduism all stress the over-riding importance of respect and duty. This need to show respect to whoever it is due will obviously manifest itself in a desire for a clearly defined hierarchy to be established where reporting lines are transparent and where bosses make decisions and then instruct their subordinates accordingly. (Many Western companies have had great difficulties in trying to introduce more of a matrix approach, which can leave local employees feeling confused and vulnerable.)

The impact of this hierarchical approach will form the basis of several of the following sections.

A brief overview of some key concepts to consider when doing business in Malaysia

Written and Produced by Keith Warburton

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Overview

Malaysia often appears very near the top of the tree in the ‘Best Country to Invest in’ league tables. With a highly skilled, well-educated workforce and a pro-business government Malaysia attracts high levels of foreign direct investment and Kuala Lumpur is rapidly becoming a destination of choice for global organisations who are looking to establish an Asian head office. In fact, more than 5000 companies from over 40 countries have established operations in Malaysia and that trend looks set to continue.

It would appear then that lots of global organisations consider doing business in Malaysia to be an attractive proposition. You should ask yourself why you haven’t considered Malaysia as a potential market if you are still to make that move. Political stability, great infrastructure, a highly motivated workforce and ideal geographic location make doing business in Malaysia sound like good business sense.

Yet Malaysia is a complex mix of different ethnicities all working and living together. This mix has produced a very distinctive local business culture which you need to understand before starting to build relationships and sell your good or services. Traditionally the minority Chinese section of society ran most business activities in the country but changing demographics and pro-Malay legislation have altered this picture over the past few decades. How have these changes impacted on day-to-day business dealings in Malaysia? What type of communication style can you expect from such a mixed-race culture? How do traditional hierarchical mindsets fit with the more modern matrixed approach used by so many foreign capital companies? You need to think about these things before you arrive in Kuala Lumpur rather than on the plane home. Don’t leave things to chance; do some homework.

This country profile provides an overview of some of the key aspects of Malaysian business culture in a concise, easy to follow-format. The document includes information on:

  • Background to business
  • Business Structures
  • Management style
  • Meetings
  • Teamwork
  • Communication
  • Women in business
  • Entertaining
  • Top tips