BURMA: Home to 50 million forgotten consumers

http://www.nationmultimedia.com/2009/01/08/opinion/opinion_30092673.php

By ERIC ROSENKRANZ
SPECIAL TO THE NATION
Published on January 8, 2009


I was having dinner with an old friend recently. As we were going through our usual casual conversation about everything in general and nothing in particular, he asked me, "Eric, what is the largest untapped market for consumer goods in the world?"


I scratched my head, mentally browsing all the continents and made a few (wrong) guesses.


My friend told me: Burma.


With an estimated population of 50 million, squeezed between the two fastest-growing economies in the world (China and India) and kept artificially poor by 50 years of debilitating government policies, Burma's consumer goods market is ready to explode.



As we read news about Burma we always hear the same sad but true story: a fairy tale democratic icon set in deadlock with a horrible dictatorship ... and with no solution in sight.


Here is some other news about Burma: this is a country where live not only 200 generals and one Lady, but also 50 million ordinary people, 50 million consumers who have developed very similar consumption habits to their neighbours in Thailand.


A quick visit to Mingalar Zay, the main wholesaler's market in Rangoon, will make you wonder whether you are in Burma or in Thailand. Many brands - local as well as international - familiar to Thai consumers are part of the Burmese people's everyday life.


My friend, who started the Burma operation of a UK-based multinational company in 1993, witnessed firsthand the positive impact of an investment by a large company: creation of quality jobs, improving the life of local people, and setting up of new standards that in turn positively influenced the government's behaviour.


"Our employees," he remembers, "were all paid in the top quartile, had performance bonuses, medical insurance, extensive training, and career development opportunities including overseas secondment and financial support to study for further qualifications."


When, under the pressure of pro-sanction campaigners, this company pulled out of Burma in 2003, "life changed again for my local colleagues, but this time not for the better".


It is not the intention of this article to engage in a debate of the effectiveness of sanctions, nor is it appropriate to suggest that anyone act against the laws of any country. However, for a business inclined to consider a new marketplace, there are plenty of opportunities for regional and international companies to develop or strengthen their business in Burma.


Who are these consumers?


There are about 10 million households in Burma and this number is increasing fast as the number of persons per household (currently slightly above 5) is decreasing rapidly as lifestyles modernise.


Thirty per cent of the population is urban and 50 per cent of the non-rural population lives in Rangoon and Mandalay.


The population of Burma is very young, with 45 per cent below the age of 19.


The average disposable income per household in Rangoon and Mandalay is between US$150 (Bt5,230) and $200 per month.


A recent ranking on brand awareness shows that only two foreign brands made it into the top 20.


Modern trade is emerging and growing fast: Rangoon and Mandalay count no less than 30 well supplied supermarkets.


"The conclusion is simple," says Luc de Waegh, founder of West Indochina (WIC), a consultancy dedicated to increasing the consumer-goods businesses in Thailand and Burma.


"There is enormous potential for growth. It is still affordable to build up brands and establish a position for the long run in this market, which is bound to catch up with its Thai neighbour. Total media spend is estimated at less than US$20 million per year (less than 1 per cent of media spend in Thailand)."


Depending on product categories, current consumption per person is 10 to 30 times lower than Thailand today.


"Year on year growth rates of 25 - 40 per cent are common," adds de Waegh.


What is a company to do, if it is interested in expanding into Burma but wants to do so by following legally and ethically appropriate standards? Here are some tips from WIC:


1. Identify the right partner. Stories of partnerships that went horribly wrong are legion but there are outstanding exceptions. A low profile is a key to success in Burma and the best partners are not always the loudest


2. Choose the most appropriate legal structure. It is possible to operate a business to international standards - you just need to know how.


3. Select the best manufacturing option. The less you import, the better off you are - Burma is rich in local resources.


4. Hire an efficient distributor. A stable supply chain is a key to success; some distributors have established reliable logistics systems, some are even investing in good-standard trade marketing/merchandising.


5. Get the best advice regarding your communication campaign. The cheapest option is not always the best - but the best option is still very cheap.


Doing business in Burma is certainly not plain sailing but in these difficult economic times, what company can afford to ignore the potential of 50 million untapped consumers?


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Eric Rosenkranz is the CEO of e.three, a Singapore-based consulting firm. For more information about doing business in Burma, visit www.westindochina.com.