Introduction
Wiper blades are one of the fastest-growing commodities being sold internationally. Because of the increase in demand for vehicles, the wiper blades industry is becoming one of the most lucrative industries. The wiper blades industry in Malaysia had developed into large operations whose products are used all over the world.
Aim
The purpose of this report is to present the feasibility of a company manufacturing wiper blades to start doing business in the Asian country of Malaysia. The study is to examine the Malaysian market and examine whether or not put up such a company in Malaysia is profitable.
Scope of the study
The study will be focused on Malaysia. The local market demand of the product and the trend will be looked up. The brand features of the different wiper blades in the market will be checked. The pricing of the products that are currently being offered in the market will be found out. All suppliers of wiper blades in Malaysia will be included in the study. The pricing of the suppliers, distributors and retailers and the internet will be evaluated. The study will examine the OEM market and find out whether it is possible for a new firm to venture into the market. The after-market of the wiper blades will also be considered.
Background of the study
Malaysia
Malaysia is a country in Asia with a population of more than 27 million people. The country covers about 329847sq kilometers and has its capital in Kuala Lumpur. Malaysia had an economic boom in the 1980s which resulted in a very high economic growth. The most important industry in the country is the manufacturing industry. Majority of the people in Malaysia are Muslims as Islam is the official religion of the country. However, there are a few who practice Hinduism, Christianity, and Buddhism and Chinese religions. Malaysia has very good infrastructure which makes it a good place for foreign business activities. There is an extensive road system which connects the main cities. The country also uses trains. Airports are in many parts of the country thus importing goods that are made in other countries is possible. (Davies 2002)
The wiper blade industry relies heavily on the motor vehicle industry. There is a very good market for vehicles in Malaysia. According to the Association of South East Asia nations, the annual vehicles sales are about 1.5 million units. This means that there is large potential for the wiper blade industry. The current national statistics show that the number of registered vehicles in Malaysia is 12,012,939. This is a relatively high number and thus there is a lot of potential in this market. (Elm international 2009).
There are good opportunities for a wiper blade company in Malaysia. The government policies for foreign companies are very conducive. The economy of Malaysia is very strong and conducive to a new business venture. The currency controls in Malaysia have been removed. They put them in place so as to protect themselves from any devastation by the global economy.
Trends
The market for the wiper blades in Malaysia has been very steady. Many major companies that manufacture wiper blades have gone into manufacturing the metal that is used with the blade. There has been increased venturing into supplying to the OEM. These companies give the wiper blade manufacturers specific measurements and characteristics that must be used in the production process. There are diversified kinds of wiper blades that are manufactured to suit the customers. (Industrial Studies and Surveys Division 1975)
Competitors
The main local manufacturers of wiper blades in Malaysia are Automako Sdn Bhd, Nippon Wiper Blade and Pengeluaran Getah Bando. The local market is facing very stiff competition from China. The price of a wiper blade from china is much lower than one that is manufactured locally. The price of a Malaysian-made wiper blade is 20% more than the ones made in China. Chinese products are very cheap and they can attract many people because of the low price. Yac auto manufacturers in Malaysia produce a wiper blade that is made of 100% natural rubber and carbon compound. The main manufacturers of wiper blades globally are Trico, Nippon wipers and Valeu which supply in many countries around the world. (International Rubber Products Exhibition Centre 2002). The main players in the industry have the advantage of being in the industry for a long time. This means that they are able to benefit from economies of scale and have already acquired the customer’s loyalty. The customers have already tried the blades and they have either been satisfied or dissatisfied with them.
The demand
The demand for the wiper blades in Malaysia can be established by analyzing the population, the motor vehicle production and the replacement rate of wiper blades. A survey done by the industrial studies and surveys division shows that the replacement rate of wipers is between 1 and 4 years. (Industrial Studies and Surveys Division 1975)
However this depends on the weather, accidents and how often they are used. There is a difference between replacement rate of the commercial cars and that of the industrial vehicles because of the kind of work they are exposed to. It can be concluded that there is a large demand for wiper blades in the country because of the high population and the number of people with vehicles in Malaysia. (Industrial Studies and Surveys Division 1975)
Product
The market for wiper blades demands a product of high quality. The consumers want a wiper blade that is strong which means it should have tensile modulus, tensile strength and tear properties. For the product to be of good quality, it should have a low compression, high resilience and hardness. A wiper that is made of rubber should have good creep properties so as to prevent it from flipping. (International Rubber Products Exhibition Centre 2002). The wiper blades being sold in the Malaysian market are of high quality. There are three levels of quality in the market but there is very low demand for the low-quality products. China brings in the low-quality cheap products but they are not as popular as the local high-quality products. This means that a new manufacturer of wiper blades has to manufacturer products with exceptional quality. To satisfy the customer and remain in business, the company has to be able to give the customers what they like. The most popular type of wiper blade is the silicon although the natural rubber ones are also bought. The silicon wiper blade is cheap to manufacture so the cost for the consumer is low. The rubber ones are more expensive and are mainly bought by the rich people in the upper class. (Davies 2002)
Pricing
The pricing of the wiper blades is done according to the quality and features. There is a wide range of prices. The cheapest cost is RM55 and it is the plain wiper blade without many features. Other manufacturers sell the product at RM 60. The local manufactures have more or less the same price due to competition in the market. Their prices are RM 60, RM 65, RM 80 and RM 120. The prices that the retailers buy at are 5% less than the selling price to the customers. The wholesaler’s price is 7% of the price that they purchased them at.
Political stability
The political situation in Malaysia has been very volatile for many years. However, in the recent past, there has been marked improvement. The country has a federal constitutional monarchy. There has been good governance in the country and the economic and social conditions in the country have improved because of the political stability. There are many foreign manufacturers there who are comfortable with the government and the policies that it passes. (Davies 2002)
Foreign operations
Foreigners are usually welcome to do business in Malaysia thus putting up company there will not be a very difficult endeavor. However, it has not always been this way. The government had very strict rules and regulations on letting foreigners work or do business in Malaysia. There was a lot of criticism of foreigners especially foreigners from the government. This brought about mistrust by the local people toward the westerners. (Davies 2002)
Consumer analysis
There are many wealthy Malaysians who are in the middle class. The country has been involved in poverty eradication and it is expected that the number of people who can afford wiper blades will increase. It should be noted that there has been a reduction in the demand for the products made in western countries. This has been due to the initiative by the government of Malaysia to encourage its people to buy products from Malaysia so as to improve its economy.
Malaysians have a unique culture and preference and it is important for foreign manufacturers to take this into consideration. They are conscious of prestige and associate the quality of a product with the brand. They often buy goods and services based on what they have been told by their family and friends. If they are told that a product is good or a particular company manufacturer’s high quality good, they are likely to buy from the company. The most successful market campaigns in Malaysia are usually promotions which include giving free rewards and discounts. (Davies 2002)
Target market
The target group in the Malaysian market for the wiper blades is the car owners. It is estimated that there are more than twelve million vehicles in Malaysia. This target group is the working middle class individual who can afford the product.
Business systems
According to Davies (2002) it is important for a company to know how business works in Malaysia so as to have a successful business. Partners and close business relationships are very important in Malaysia. Good relations with the suppliers and customers is fundamental.
There is a lot of corruption in Malaysia and it is often necessary to pay government officials a bribe so as to get the necessary documentation. One can also give a bribe so that the time taken for an application to be processed is reduced. The documents that may have to be applied for include work permits, customs clearance, permits to do business and building approvals. Malaysians like the foreign companies to work within the system although the system is very slow and stressful. (Davies 2002)
Dealing with government offices is very difficult as the people are lax about their work compared to employees in other countries. They value protocol in their day to day business and are offended if a person does not respect their class or title. Malaysia is a good place to start business because the production costs and other costs of doing business are much lower than in the neighboring countries. (Davies 2002)
The OEM market
The OEM refers to companies that use products that have been manufactured by other companies in their own products. The company may also sell the product it has purchased under its brand. An OEM in the car manufacturing industry refers to companies that are licensed and are required to guarantee their products thus they are legally bound to perform certain undertakings. (Malaysian Industrial Development Authority 2007)
The OEM market for wiper blades in Malaysia is quite active. There are many companies that are involved in this business. The target group of the OEM market is the car manufacturers. The main target companies are General Motors, Toyota, Hyundai, Honda, Mitsubishi and Ford among others. (Malaysian Industrial Development Authority 2007)
It may be difficult for a new company in Malaysia to go into supplying the OEM market. The companies that have been manufacturing wiper blades in Malaysia for a long time have already ventured into the market and it is difficult to find space in the already overcrowded sector. The main supplier of OEM is Nippon wiper blade. The company is well established in the market and it supplies its products to car manufacturers like Toyota, Honda, Daihatsu and Nissan and DaimlerChrysler. Therefore there is no possibility of being able to begin selling wiper blades to OEMs. (Malaysian Industrial Development Authority 2007)
Features
There is a wide selection of wiper blades on the internet and the price depends on the features it has. The Rain-X 5070647X is a wiper blade that is coated with graphite. It is sold for RM76. WB18GRA wiper blade is RM60 and it is made of metal and rubber. It has a special vented bridge which makes it match faster and easier to install. It is size 18 and includes an adapter. Anco Wiper blade is 22 inches and costs RM80 it also has the vented bridge and is made of metal.
Anco 2011 wiper blade is specifically made for Jeep CJ7, 5.0L 304 and JEEP CJ5, 3.7L 3687. IT is cheaper than others and costs only RM42. The rain –X winter windshield wiper blade is 24 inches. It has synthetic boot which gives better resistance to tearing in the winter. It also prevents the snow and ice from clogging. This wiper blade has a thick edge which makes it ideal for winter conditions. It costs RM65.5. Trico Neoform wiper blade with Teflon is 24 inches and it costs RM69. The Approved Vendor 13324GRA is 24 inches and costs RM85. It is good for heavy-duty work. Bosch wiper blade of 24 inches is of high quality and it can last 20% longer than the ordinary wiper blades. These wiper blades are found on websites like Amazon and eBay
The Aftermarket
Aftermarket in the automotive industry refers to any additions that are non-factory parts. They also include upgrades to the vehicle and accessories. In Malaysia, the aftermarket has been seen to favor the silicon wiper blades as opposed to the natural rubber. The price for the after-market product is higher than that of the OEM. This could be because the OME companies buy the goods in bulk. The main target group is the individuals who want to enhance their cars.
Conclusion and recommendation
The market for wiper blades in Malaysia is very attractive. I would recommend a new company specializing in the manufacturing of brand new wiper blades on large scale. This is because the company will automatically leap good profits if they sell their products at a substantially low price or at the same price as their competitors due to the advantages of economies of scale. The wiper blades manufactured should be of high standard so as to meet the needs of the consumers. The retail price must also be competitive, the product should be sold at RM 60 which is the lowest price offered by the competitors. This price will enable the company to compete fairly with its competitors. The target group or market for the wiper blades in Malaysia is the working middle-class individual who can afford cars. Due to continued growth of the Malaysian economy, most of the population is in the middle-class income earning group, and hence there is a large demand for wiper blades in the country because of the high population and the number of people with vehicles in Malaysia. A new manufacturer of wiper blades will have to manufacture products with exceptional quality. To satisfy the customer and remain in business, the company will have to manufacture wiper blades made of silicon since they are of the highest quality and the preferred choice in the Malaysian market. The silicon wiper blades are cheap to manufacture and hence the cost for the consumer is low.
Due to the high population in Malaysia, various types of car models are in demand. The manufacturer needs to come up with various models of wiper blades to suit the various car models being designed in the market. The wiper blade manufacturer must put into consideration the various models of cars in the market and manufacture a wiper blade that suits them. More so the manufacturer should design a model of wiper blades that is compatible with various car models that are in the market. This will ensure constant market for the product. Going into supplying the OEM companies may not be possible or even profitable because they are already many companies that have gone into the industry. It is better to concentrate on the mainstream market which has very high potential for growth and sustainability. Certainly, there is a large market for wiper blades considering the number of vehicles in the country and the ones that are being purchased daily. There is a large international market that can also be ventured into (Malaysian Industrial Development Authority 2007).
References
International Rubber Products exhibition Centre 2002, products: Wiper blades, Web.
Industrial Studies and Surveys Division 1975, Wiper Blades, Web.
Davies, R 2002, Malaysia capsule, Web.
Elm international 2009, Malaysia, Web.
Malaysian Industrial Development Authority 2007, Malaysia, Web.