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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Abstract
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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Keywords
Industries Automobile