MDEC’s GAIN to help local companies expand their fields
By Tan Jee Yee August 28, 2019
- GAIN has helped successful tech companies in their regional expansion
- Improvements in inter-governmental relationships, company validation can help
“I WOULD say that we’re at the right place at the right time,” says CompAsia Sdn Bhd founder and CEO Julius Lim (pic, above). He is telling Digital News Asia how his company – which facilitates smartphone financing and trade-in solutions for consumers – managed to undergo “hypergrowth”.
The company recorded a jump in revenue of US$1.197 million (RM5 million) to US$7.185 million (RM30 million) in just three years, and has penetrated countries including Singapore, India, Thailand, Taiwan, Hong Kong and the Philippines.
“We were in a market that is very huge, and the opportunities are there. Used phone businesses are usually run by mom-and-pop shops, and are very fragmented with no professional firms doing it. We are providing professionalism to a trade by working with telcos and companies like Samsung and Apple,” Lim elaborates.
It’s bolstered by increasing interest in used smartphones. Lim says that, 10 years ago, only two million used smartphones were sold globally. This year, sales are projected at 200 million units – driven, in part, by developing markets like Southeast Asia, where smartphone penetration is still growing.
It may not be a unicorn in the tech forest, but all in all, CompAsia is a Malaysian success story – a local company that has seen massive expansion and growth in the region. Yet it’s not without its hiccups and hitches.
Lim says that penetrating other countries in the region has its set of challenges. Familiarity with the market is one – going into a new market that they’re unfamiliar with means undertaking more risks. At the same time, capital constraints become an issue.
Help is thankfully within reach, and the extending hands come from agencies like the Malaysia Digital Economy Corporation (MDEC) and their programmes like the Global Acceleration and Innovation Network (GAIN), which is designed to catalyse the expansion of Malaysian tech companies with the potential to become global players.
Through MDEC and GAIN, CompAsia is able to meet investors and partners to facilitate fundraising. More importantly, they are connected to partners both locally and regionally that complement their business, including app-development companies. They’re also able to consult with Malaysian companies that have penetrated regional markets themselves for guidance.
According to MDEC, Malaysia’s digital economy is projected to contribute 18.2% of the nation’s GDP by 2020, a number that has risen from 17.8% in 2015, when it provided RM206.1 billion to the country’s economy.
It’s important then, for Malaysian tech companies to not just grow locally, but seek out markets within the region. For this, initiatives like GAIN become pivotal in helping them grow.
Lim is speaking to Digital News Asia at the conclusion of a GAIN Forum session, in which promising local tech companies – which number up to 150 under GAIN – come together to talk about their successes and challenges.
For some of these companies, outward expansion is inevitable. MDT Innovations Sdn Bhd chief operating officer Sim Hon-Wai (pic, right) tells Digital News Asia that they are “forced to expand”, as the Malaysian market is too small for this IoT (Internet of Things) enabler company.
“Foreign markets and clients in other countries have bigger buying power. They pay better, and are likely to invest top dollar where Malaysian clients may adopt a look-and-see attitude,” Sim says, in explaining the motivating factor for their expansion.
Like CompAsia, MDTi is a success story by all accounts. It is the winner of the Ernst & Young Technology Entrepreneur of the Year 2015; and this year, it has received investments from SBIF Islamic Fund II (Brunei) Limited and COPE Private Equity totalling US$14.25 million.
MDTi focuses on IoT value chains ranging from neutral network solutions to intelligent wireless communications, with solutions found in Fortune-500 semiconductor firms, hospitals and retail chains across China, Malaysia and Australia.
How GAIN helps
Like CompAsia, MDTi’s expansion wasn’t all smooth sailing. The company faced issues with establishing trust as a Malaysian company. Additionally, there are costs involved with exporting their services.
“The time and effort taken in order to convince a third party – especially in other countries – is double, sometimes triple that of Malaysian clients,” Sim says.
Funding seems to be the most common issue for Malaysian tech companies as they expand overseas. Securemetric Technology Sdn Bhd executive director and CEO Edward Law (pic, above) says that as his IT security company (specialising in software licensing protection and public key infrastructure) were expanding to other markets, they had to do so using low-investment models. This means smaller offices and teams.
“It took longer for us to break through into the market,” he says.
Glueck Technologies Sdn Bhd CEO Albert Alexander (pic, above) similarly faced funding issues in expanding his company to other countries. In addition to that, the AI solutions company needed to properly educate a market that found it hard to see how its AI for audience measurement and analytics tools could provide a return on investments.
GAIN has helped mitigate some of these challenges. For Glueck, participating in GAIN’s Immersion programmes in Japan and Silicon Valley allowed them to connect with the ecosystem and also gain exposure to other countries and international players.
MDTi may have existed before GAIN as it was founded in 2015, but the introduction of GAIN has brought dynamic changes to how MDTi engaged with MDEC. Under GAIN, Sim says that MDTi was promoted as a Malaysian company that can provide quality sales and services through the Network’s programmes that serve to highlight Malaysian companies that do well locally.
As a whole, Sim says that GAIN has done a good job highlighting companies like them – which he describes as a “grown-up” company and not a startup – as micro multinational companies (MNCs) of their own. “Overall, through GAIN’s initiative, exposure on Malaysian tech companies has increased,” he notes.
For Securemetric Technology, Law says that they benefited from GAIN’s market access programmes and overseas immersion trips, which allowed them to reach other markets in the region.
GAIN serves to connect tech companies to local partners, investor communities, business communities, supporting associations and even co-working spaces. It’s heartening to know, based on the above testimonies, that it’s having a positive impact in the tech ecosystem.
There is still room for improvement, of course. Lim of CompAsia says that he will like it if MDEC and GAIN can help facilitate inter-governmental relationships, which will help companies navigate the regulatory and legal aspects of new markets a little quicker. “If the government can help us in some of these negotiations, they will have a much bigger impact,” he says.
MDTi’s Sim says that both agencies can help become validating agencies for foreign customers or potential clients in other countries. Foreign companies could, say, approach MDEC to inquire about companies like MDTi and get a testimonial. This, Sim says, could help make their sales cycles in other countries much shorter. “We don’t have to go pitch multiple rounds before we get a buy-in decision,” he notes.
Law, on the other hand, hopes that GAIN can organise more targeted programmes and sessions. For instance, specific conferences, forums or immersion trips that are in the cyber-security industry could help companies like his to reach more industry-specific partners. This, he feels, will be a good supplement to the broader reach that GAIN has now.
Ultimately, Law is grateful for the opportunities GAIN has provided. If anything, he is impressed that this community of tech companies can come and openly voice their thoughts – whether positive or negative – through forums like GAIN’s. “I think it’s very good for us to share with the government and the community, and find ways to overcome problems,” he says.
Sim agrees. “GAIN has done a tremendous job getting ministers to engage with us. It’s good that we can have a conversation – it’s important because we need to understand Malaysian policies in terms of promoting tech and tech services. With this first-hand info, we can better prepare and plan for ourselves,” he says.
“With this engagement, other companies and us can be propelled to further growths.”