Small and Medium Industries (SMis) and Their Linkages with Large Firms in Malaysian Automobile Industries

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Date
2006
Authors
Khalid, Hassan Naziri
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This study is concerning the linkages of automobile parts and components small and medium sized producing firms with their main customers. Their main customers are divided into two types of firms. The first type is the firms that supply raw materials necessary for the production of automobile parts and components. The second type is their anchor companies that are the car manufacturing firms that purchase automobile parts and components they produced. The emergence of automobile production together with increasing number of car assembling activities in Malaysia led to the growth of numerous automobile parts and components producing firms to cater the needs of those industries. Those activities also lead to the growth of industries producing raw materials supplying to the needs of automobile parts and components producing firms. All these firms with related activities are interacting with each other forming linkages or net working among themselves. The linkages are in terms of normal business relationships, in terms of subcontracting ties, vendor-anchor relationships and other contractual commitments. As in any business related activities, there appear some very beneficial outcomes such as widening one's market coverage, improve production capacities with financial and technological assistances. However, inevitably there are some unwelcome setbacks such as late payment of orders, slow delivery and low quality of products. As a consequence of good business linkages among the related firms, all those setbacks were easily resolved. In terms of growth of those automobile parts and components producing firms shows that there is more room for further growth. The firms mostly concentrate on local markets and very little for export and very high import contents. Following the surveys on those firms, found that more efforts are needed for improvement especially in technology know-how, latest technology and skilled labours. The existing government support programmes need to strengthened. The firms need to be supported in terms of research on improving existing and innovation on new products and less dependent on imports.
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Industries Automobile
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