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Globalization has been an increasingly big trend that has been sweeping over the entire globe since the last decade. It is a very important phenomenon to business analysts and economists around the world. Malaysia is also one of the countries that have been taken over by globalization. This is due to the developing status of the country. So, what is globalization in Malaysia? Let’s jump right into the basics.
Globalization in Malaysia: What is it and what you need to know
Definition of globalization
According to the Oxford dictionary, the term globalization means the process by which businesses or other organizations develop international influence or start operating on an international scale. People also utilize the word to describe the growing interdependence of the world’s economies, cultures, and populations, brought about by cross-border trade in goods and services, technology, and flows of investment, people, and information.
Potential opportunities of Globalization to businesses in Malaysia
Start selling exports to other countries which opens up foreign markets
Since Malaysia is a country with lots of resources, ranging from palm oil to natural gas, it certainly is not short of any items to export. With globalization, it increases potential sales, especially in countries with fast-growing markets. However, it can be expensive to sell abroad when factoring in transportation costs, exchange rate, and so on.
Open factories in other countries
Even though Malaysia is still a developing country, the labor costs are still relatively high when comparing to others. Some countries such as China, India and Pakistan have much cheaper labor costs. However, there is a possibility that the quality of the product may be not as good. There is also a possible ethical issue when workers have poor working conditions.
Import products from other countries to sell to customers from home country
It is no surprise that many foreign products are extremely popular in Malaysia. This is due to the interconnectivity we have with the outside world with internet and social media. With no trade restrictions, it could be profitable to import goods and services from other countries and sell them domestically. However, some products such as vehicles may need maintenance, which will come with a cost. In the worst-case scenario, the repair parts may not even be available.
Import materials from other countries to produce final goods in the home country
Now that there is free trade due to globalization, it can be cheaper to purchase supplies from other countries. By doing so, costs will be drastically reduced. However, there is a chance that the supplier is unreliable and deliver unsatisfactory components.
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Potential threats of Globalization to businesses in Malaysia
Employees may leave businesses that cannot pay the same or more than international companies
In some professions, especially those which require higher amounts of skill, employees will now have more varieties to where they can work and for which business. Therefore, businesses will have to make their best efforts to retain the tip-top employees internally. However, this could also encourage local businesses to use a range of motivational methods to keep their workers as well.
Key takeaways
Every cloud has a silver lining. While there are multiple benefits to globalization, it comes with its own flaws. Therefore, as a Malaysian, it is definitely important to learn and embrace this phenomenon.
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