A Bachelor’s Life is Not a Happy One

At the luncheon following the Annual General Meeting in the Chamber’s 160th Anniversary year in 1987, the then President, Jan Elzinga of the Algemene Bank Nederland N.V. (which also celebrated its 100th Anniversary in the country that year), stated amongst other things “the spirit of joint venture shines as strongly in the corporate sector in Malaysia as anywhere else in the world”. So, what then is this “joint venture”? If you consult your Concise Oxford Dictionary, you will learn that a “venture” is a “risky undertakings” or “commercial speculation”, and that a “joint” is “an illicit opium den or drinking institution”, or a “marijuana cigarette”. MICCI members will no doubt be quick to deny that they are speculatively involved in such areas of activity.

In simple terms, a Malaysian joint venture normally indicates a situation where a foreign corporate organization and a Malaysian corporate organization get together to form a limited company to carry out some legitimate commercial activity in the country. Clearly, there are many pitfalls in the area of joint venturing. Certainly, some would say “if a project is worthwhile, do it on your own”. To others, the whole concept of joint consultation, let alone “joint venturing” is anathema. A well known Chairman of an international group once said, “A Board of Directors should always comprise an odd number of people, and preferably less than three.” Many liken a joint venture to a marriage. In a successful joint venture, the parties must co-exist harmoniously and productively for the long term. Merchant bankers specializing in joint ventures when describing the status of their clients frequently resort to such expression as “getting into bed” and “tying the nuptial knot”, and occasionally to less tasteful allegories; and certainly like marriages joint ventures have their problems and their pleasures. It would be probably be true to say that the vast majority of foreign organizations that have invested in Malaysia prefer to do so on a joint venture basis, and probably only those manufacturers who export 100% of their product, and those perhaps whose technology is exceptionally sensitive, prefer not to have a Malaysian partner.

Idid Wanchik, the Company Secretary of Nestle (Malaysia) Bhd has a lot to say on the subject. “There should not be any compromise on business professionalism. Nestle believes that there should be no problems between partners provided the business is run professionally and profitably. In our experience, we have found that the managerial and technical expertise provided by the foreign party has been effectively absorbed by the local management.” J & P Coats (Mfg) Sdn Bhd is part of Coats Viyella plc, the world’s largest marketer of sewing threads and handknitting yarns. The organization has joint ventures in many countries, and their Managing Director, Ken Anderson, stresses two ways the local organizations benefit from the joint venture concept, namely “the technical input from the overseas partner and the development of local management.”

The Managing Director of Leo Burnett Sdn Bhd, Peter Beaumont, is categoric in his praise for the joint venture concept. His joint venture organization has been particularly successful, one of the reasons being the good offices and important contacts of his Malaysian partners which right from the start have been invaluable to the business. Peter Beaumont likes the joint venture concept “as it brings together local expertise and contacts and the advanced technical knowledge of the foreign partners. Such accommodation is beneficial to the Malaysian economy, and of course in addition creates new jobs for Malaysians.” Tony Strange, the General Manager of Commercial Union Assurance (Malaysia) Sdn Bhd is another supporter of the joint venture concept. “As a foreign organization, we thus become more clearly identified with Malaysia, and our joint venture underlines our confidence in the long term future of the country.”

What then is the secret of a successful joint venture? Again, it seems that the rules for a successful marriage are relevant. A number of MICCI members have said that the most likely reason for a failed joint venture is the “hasty selection of a partner”, or “failure to check that the financial strength of the local partner is consonant with that of the foreign investor” (Beauty is skin deep, and the dowry is not unimportant). However, the vast majority of Malaysian joint venture are enjoying “long and happy marriages”; divorces have been few, and the indication is clear that Malaysian make good commercial marriage partners. There are a number of “unmarried foreign commercial organizations operating in Malaysia, no doubt they will soon take heed of the Malay proverb “Hidup Berumahtangga adalah lebih baik daripada membujang” – which can be easily be translated as “A bachelor’s life is not a happy one.”

Extract Article : 26 Ways Understanding Malaysia’s Business Environment published by the Malaysian International Chamber of Commerce and Industry, October 1991.

Footnote : The Malaysian International Chamber of Commerce and Industry or the MICCI as it is widely known, is the oldest private organization in Malaysia, tracing back its history to the formation of its earliest ancestor, the Penang Chamber of Commerce and Agriculture in 1873. The MICCI endeavours to serve, especially, the businesses which have international interests, whether they have local or foreign origins. Practically every type of business is represented among its membership, ranging from manufacturing, trading and finance and banking to petroleum and real estate services.