Abstract

The Belt and Road Initiative (BRI) has received considerable attention from governments, business organizations, and individuals from different countries since its introduction by the Chinese President, Xi Jinping. With the aim for Malaysia to benefit from BRI, this study strived to explore the perceptions of local small and medium enterprises (SMEs), particularly on their perceived opportunities and threats brought by BRI, as well as their responses to embrace it. This study was qualitative in nature, whereby in-depth interviews were conducted among thirty-eight local SMEs in the manufacturing and service industries. The Malaysian SMEs found that BRI imposes numerous opportunities and challenges to the nation, industry, and individuals. Some include improved trade balance, foreign direct investment inflow, increased competitiveness, excellent life quality, and political instability. The associated opportunities and threats at international and domestic levels include internationalization, ease of doing business, market size expansion, leak of knowledge, and skills and exploitation of the local market. Their responses to these opportunities and challenges comprised strategic alliances or partnerships with Chinese investors, insourcing or being a supplier of foreign firms, and enhancing business competitiveness and capacity. Lastly, this study discussed the implications and future directions of research.