Promising market Malaysia becomes strategic alternative to China for German machine tool manufacturers

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Verein Deutscher Werkzeug- maschinenfabriken e. V. (VDW)

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In response to the challenges posed by the coronavirus pandemic, the German machine tool industry is seeking to broaden its global market presence. The German Machine Tool Builders' Association is aiding this effort with a symposium held on 10 July 2024 in Kuala Lumpur, Malaysia.

Following the experiences of the coronavirus pandemic with delivery difficulties, market lockdowns and logistics bottlenecks, the German machine tool industry is intensively discussing how it can position itself more broadly on the global market. With the symposium Innovations in Production Technology — Machine Tools from Germany on 10 July 2024 in Kuala Lumpur, the VDW (German Machine Tool Builders' Association) is supporting its members in gaining a better foothold in new growth markets. The Malaysian machine tool market has a potential of more than 700 million euros. So far, Germany has a share of around 8 percent of imports. There is still a lot of room for improvement,” says Klaus-Peter Kuhnmünch, who is responsible for organising the foreign symposia at the VDW (German Machine Tool Builders’ Association).

Malaysia is the most important sales market for German production technology in the Asean region. Following the example of China, the government wants to create more added value at home and create high-quality jobs. Increasing investment is expected in the aerospace, electronics and electrical engineering sectors as well as in medical technology and suppliers in these areas. Eight German high-tech companies used the VDW symposium to sound out their opportunities in the Southeast Asian market in front of a total of 110 Malaysian trade visitors. These were DMG Mori, Chiron, Grob, Hermle, Index, Open Mind Technologies, Schütte and United Grinding, who also took part in 48 B2B meetings parallel to the presentations.

In addition to their presence in China, they all want to establish new footholds in Asia. Malaysia benefits from this. The country is politically stable and the economy is growing. It offers a high degree of legal certainty and has a very good infrastructure. Carl Martin Welcker, Managing Partner of Alfred H. Schütte Werkzeugmaschinenfabrik, Cologne, says: “We see the potential in Asia and need to make Malaysia an excellent location in order to diversify. The market is highly competitive from the Asian side.” Tara Meite, Deputy Managing Director of the German-Malaysian Chamber of Industry and Commerce in Kuala Lumpur, is in favour of getting involved in the country: “Malaysian industry has well-trained skilled workers. They can be quickly retrained and deployed to meet the needs of German companies.”

In 2023, machinery worth 42 million euros was exported from Germany to Malaysia. Machines for extensive and specialised applications that are not available from any other supplier are particularly in demand. “This applies to the automotive and aviation industries, for example,” reports Oliver Prpic, Managing Director, Hermle SEA, Thailand. Roland Merz, Sales Manager Asia, Chiron Group SE, Tuttlingen, also knows: “Malaysian customers appreciate the high precision, reliability and customised solutions of German machine tools. The higher price compared to Asian suppliers is by no means an obstacle to this.”

The VDW expects demand for machine tools in Malaysia to continue to rise. Kevin Chue, Business Development Manager, GPI Geopile Engineering SDN BHD, Kuala Lumpur, agrees. “I value German machine tools because they are very precise and flexible to use. The focus is not on the price, but on the technology. As we have a lot of experience with German machines, we know that our production suffers when we use cheap and simple machines.”

“When it comes to modernising, expanding capacity and increasing efficiency in Malaysian industrial production, the latest production technology plays a decisive role. German manufacturers not only supply machines, but also offer advice, financing, service, maintenance and training,” says Kuhnmünch. Finally, they are also characterised by the fact that they work with their Malaysian customers on a long-term basis in a creative process, pass on their experience and want to play an active role in the modernisation of the Malaysian industry. “We like to train our trainees on German machine tools. This enables them to operate almost all machines, especially the German machines,” says Fahrul Rizan Bin A. Halim, Deputy Managing Director, GMI — German-Malaysian Institute, Selangor, Malaysia), concludes.

Source: German-Malaysian Chamber of Industry and Commerce

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