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Enter Myanmar with care, says Thai businessman
Publication Date : 17-09-2013
Foreigners doing businesses in Myanmar should not believe everything they hear, especially if it sounds too good to be true, said Piya Sosothikul, executive director of Seacon Group, manufacturer of Nangyang footwear and Thai Churos monosodium glutamate (MSG).
Some industries do not need to be the first movers, but can just wait and observe, Piya said.
Piya, who has been doing business in Myanmar for more than 40 years, said risk management should be one of the top priorities of foreign business players, as they will confront many risks when dealing with business practices in that country. These risks include living standards, the cost of living faced by foreigners, food, social unrest, political instability and religious conflict. There is not even a trademark law yet.
"There will always be loopholes such as non-tariff barriers, even if there are written national agreements. Foreign businesspeople then need to ask themselves what they are bringing to the deal, and to what advantage. Why does the market or partner need them, and why are they better than competitors?"
Piya's Nanyang and Sin Kyal footwear brands are well established in the country. The shoe market in Myanmar is worth about US$150 million per year. Myanmar consumers own 2.6 pairs of shoes on average, of which 70 per cent are flip-flops. Made from 100 per cent natural rubber, Nanyang and Sin Kyal (Star Elephant) flip-flops rank as the market leaders. The retail price is 3,000 kyat ($3) compared with 1,500 kyat offered by competitors.
The company's Thai Churos brands, Nandaw and Sonk Osk, also hold a top share of the MSG market in Myanmar.
He said people in that country consumed 800 grams of MSG per year on average. Ajinomoto of Japan and the Thai Churos are among the top brands. Thai Churos has been exporting MSG to Myanmar for nearly 30 years and has initiated many creative marketing campaigns.
"Foreign business players need to spend a certain period gaining understanding of the market practices. They should do their homework thoroughly by visiting the country, speaking to local people with experience, and conducting consumer market research," Piya said.
Crucially, they should also find trustworthy local partners, as well as avoid dealing directly with the government for unofficial matters.
Piya said Myanmar held a lot of promise for consumer-product businesses. It has a population of more than 60 million with average income per capita of $85 per month. About 64 per cent of them are under 35 years old, compared with Thailand, where 49 per cent are under 35. More than 95 per cent can read. About 67 per cent of them live in rural areas.
About 36 per cent of Myanmar people work in the agricultural and fishery sector and another 36 per cent are labourers or work in retail or micro-businesses. About 51 per cent travel via bicycle, 37 per cent by motorcycle, and only 2 per cent by car. Half of the population has television, while 60 per cent has radio, and 2 per cent has air-conditioning. About 4 per cent have mobile phones and 0.6 per cent use the Internet.
Most people shop at wet markets a couple of times a day for food, consumer products, and household items. People keep their money at home as they do not trust the banking system.
Piya said the consumer market in Myanmar was changing rapidly.
Most consumer products, such as soap, shampoo, drinks, snacks and cooking oil, are international brands, with 90 per cent imported from Thailand.
Almost 95 per cent of sales of consumer goods are through traditional trade or small shops in wet markets that are spread throughout urban and rural areas. Convenience stores, department stores and supermarkets have started to appear, but still in small numbers.