Right local partner key for Thai SMEs looking to Myanmar
April 23, 2014 00:00
By Sucheera Pinijparakarn
Thai small and medium-sized enterprises looking to establish a footprint in Myanmar should find the right local distribution partners, and their products should not be dependent on the country's currently underdeveloped infrastructure, according to exper
Speaking at the second session of the “Thailand-Myanmar Trade Investment Relations in the Age of AEC” seminar, Michael Lim, chairman of Today Group Myanmar – a leading marketing communications and media business network – said enterprises should understand Myanmar people’s behaviour before selling their products in the market.
In his view, Myanmar citizens are loyal to brands, and especially to products from Thailand, therefore Thai SMEs need to build up brand efficiency before penetrating the market.
He suggested to SME members of the audience that they should find reliable local partners for distribution, rather than relying on border traders or cronies close to those with influence among the military, as proper distributors in Myanmar can access more consumers, which helps generate healthy revenue for Thai businesses.
Apart from brands and strong distribution partners, Thai producers should maintain prices and quality in order to ensure sustainability in Myanmar, he added.
Lim also recommended that SMEs wanting to do business in Myanmar should have good logistics and good public relations, and should understand what kind of media best access Myanmar consumers. Social media has become increasignly powerful in communicating with local consumers, he said.
Manop Sangiambut, executive vice president and head of International Banking Business at Siam Commercial Bank, said that although Myanmar was a potential market for Thai operators, there were risks involved in doing business there, too. Enterprises should, therefore, have strategies in place to achieve their business goals, while at the same developing tactics to defend against inherent risk.
SCB, which has a representative office in Myanmar, sees consumer products and hotels as the first two opportunity businesses for Thai operators in the country, he said.
Consumer products are a basic business with good prospects because they do not rely on infrastructure problems in Myanmar, which still faces power-supply issues.
At the onset of doing business there, firms’ financial costs should not be too high and they should have not to rely heavily on transportation, the executive said, adding that Thai operators should also consider the joint-venture model in order to reduce costs involved in renting office buildings.
Manop said that Thai enterprises not yet considering Myanmar, should start thinking of penetrating the market because gross domestic product is set to grow by 7-8 per cent per year, while monthly per capita income will climb to US$200 (Bt6,470) in the near future, which will boost consumption and the need for more Thai goods.
Siriporn Nurugsa, executive vice president of Thai Overseas Investment Promotion Division of the Board of Investment (BoI), told the event that that the agency had to broaden its role from inbound foreign direct investment to include outbound FDI, in order to deal with the trend of overseas investment by Thai companies.
The BoI needs to prepare investment privileges and provide information to serve the trend of Thai companies in the manufacturing sector that are planning to set up plants abroad, especially in Myanmar, she said.
“Thai firms in the manufacturing sector have to go outside [the Kingdom] to find lower-cost resources and labour, and Myanmar is one such presence for them,” she added.
Thailand’s western neighbour will be changing its status from that of an agricultural country to that of an industrial country in the next 20-30 years, and its government has announced the creation of 1 million jobs by the end of this year, she pointed out.
The move by the Myanmar authorities – via the foreign investment law and the Myanmar Investment Commission – in opening up the country to more foreign companies presents a good opportunity for Thai businesses, said Siriporn.