Amidst the vast and ever-changing landscape of Malaysia’s business sphere, small and medium enterprises (SMEs) now constitute a whopping 98.5% of the approximate 1 million business establishments in this country. SMEs are, without a doubt, the backbone of our nation’s economic growth and prosperity.
However, the waves remain turbulent for many businesses as Malaysia’s GDP growth slowed down in 2023. On top of that, in the aftermath of Budget 2024, SMEs now find themselves at a crucial juncture, facing new challenges and seizing prospective opportunities. One thing is for certain – Malaysian SMEs must evolve or risk lagging behind and faltering.
Competition with International Brands
Despite the large number of local businesses and growing interest by Malaysians, SMEs often struggle to compete with established international brands that have greater resources and global recognition. A 2023 survey revealed that only 20.8% of SMEs supply products and services to large firms domestically. Unfortunately, this competitive disparity can lead to reduced market share and lower customer retention rates for local SMEs.
Lag in Digital Adoption
While SMEs play a crucial role in our economy, their overall digital adoption significantly lags behind larger enterprises. The difference of infrastructure, manpower and capital may have its effects on the introduction of such technologies, there is also the innate hesitance that stems from familiarity and comfort with current systems. This hesitance to explore digital tools and platforms can lead to inefficiencies and missed opportunities. Currently, the Malaysian government is actively pushing for more digitalisation opportunities to innovate business models, products, and services.
Financial Blockages
On the other hand, economic fluctuations and a challenging financial landscape is another hindrance for SMEs to be able to invest in growth and technology. Over 70% of MSMEs project cash flow struggles in 2024. Due to difficulties in securing financing, SMEs are often limited in terms of operational and expansion capabilities. This financial constraint also hampers investment in necessary technology and innovation.
To navigate these challenges, it is time for SMEs to embrace technological advancements and use them as a catalyst for growth and innovation. Artificial intelligence (AI) has become increasingly integral in various aspects of life. The time is now ripe for us to allow AI to work its magic in the business landscape too. From automating data extraction to facilitating automated decision-making processes, AI can significantly enhance efficiency and productivity for SMEs.
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Embracing Conversational AI
At the heart of technological advancement lies conversational AI – a powerful tool which implements chatbots and virtual assistants to enhance customer service by providing 24/7 support and personalised experiences. According to Infobip, conversational AI adoption has been primarily recognised in key industries such as banking, e-commerce, telecommunications, hospitality, healthcare, and education. These sectors utilise AI-driven solutions to enhance customer service, streamline operations, and improve engagement, catering to specific needs and customer interaction volumes.
By leveraging conversational AI to handle the first level of customer service, businesses can free up human resources for more complex tasks. Moreover, brands can streamline their offerings and tailor responses and recommendations to suit each customer. AI-driven predictive analysis also enables SMEs to make data-informed decisions, forecast market trends, and optimise inventory management. It is also a cost-effective strategy – able to provide SMEs with powerful tools while enhancing team operational efficiency.
For many organisations, using pre-built solutions or collaborating with specialised AI providers may prove to be a practical approach. After all, these strategies can help SMEs to avoid high costs and unexpected technical challenges, allowing businesses to focus on their core competencies. Additionally, specialists in omnichannel and customer engagement solutions can assist in integrating AI across multiple platforms to enhance interactions and build genuine customer relationships.
Conversational AI as well as many other forms of artificial intelligence has such an abundance of potential in the business world. It is not a mere tool but a transformative force. Adopting technology is also not just about keeping up with competitors – it is about setting the stage for long-term success. As the global market becomes increasingly digital, SMEs that move into integration will find themselves better equipped to adapt to changes and capitalise on emerging trends.
The path forward for Malaysian SMEs lies in embracing innovation and technology to thrive in an ever-evolving market landscape, securing their place as vital contributors to Malaysia’s economic future. The journey may require bold decisions and a willingness to explore new frontiers, but the rewards – sustained growth, increased competitiveness, and last success – are well worth the effort.
