Chinese businessmen will step up direct links with counterparts in China to tap opportunities in Asia's fastest growing market, a trade group said today.

The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCIM) said many local small and medium-sized industries (SMI) lacked market networking ability and lost out when they operated through middlemen.

The ACCIM would launch a campaign Feb 21 to promote "mini shogososha", borrowing from the Japanese strategy of establishing trading houses to improve market share, said its president Soong Siew Hoong.

"The majority of our SMIs are underdeveloped. We have many good manufacturers but a lot of them are wearing blinkers," Soong told reporters.

"We want a new breed of Malaysian international trading companies to replace previous third parties which have been selling Malaysian products. We want mini shogososhas to represent our SMIs."

The ACCIM represents some 24,000 Chinese businessmen and trade associations in the country. Ethnic Chinese make up 26 percent of Malaysia's 23 million population but dominate the business sector.

Seriously affected

With 80 percent of foreign investment in Asia-Pacific sucked into China, Soong said a recent ACCIM survey showed 41 percent of respondents polled found China a threat, while 22 percent envisioned opportunities.

"This trend (dwindling investment) has seriously affected the Malaysian businessmen who generally benefited from the spin-off effect of foreign investment through subcontracting arrangements," he said.

Domestic competition due to rising imports from China as well as higher operating costs and prices of raw materials were identified in the survey as key problems facing Chinese businesses in Malaysia.

Soong said the businesses had coped well with the Asean Free Trade Area (Afta) and must now learn to adjust to the bigger challenge of globalisation.

Local Chinese businesses must forge alliances in China to take advantage of its low costs and skilled workforce, he said.

"China is like a giant who woke up from a long slumber. When it yawns, we all get blown off. So we better be friendly with China, synergise with them and work with them," he said.

Soong said Malaysia could win investment from China if it nurtured its own industries in the services and agricultural sectors and upgraded its manufacturing design capability to sustain exports.

Prospects weak

Local Chinese businesses must also be diligent in hunting opportunities in the developing world such as Africa and the Middle East, he added.

The ACCIM survey o­n economic problems facing the Chinese business community polled 170 respondents mainly in the manufacturing, wholesale and retail sectors, with SMIs accounting for 73 percent.

It found that majority of Chinese businesses expected prospects to remain weak for the first half of this year after a "stagnant, if not deteriorating" economy in the second half of 2002.

Sales and production have fallen, and investment was declining due to excess capacity in the market and uncertainties over a looming war in Iraq, the ACCIM said.

Difficulty in recruiting skilled workers and obtaining loans to fund their operations were other obstacles faced by the community, it said.

Overall, the majority of respondents were more bullish o­n Malaysia's medium-term economic outlook over the next two to three years. - AFP