Professional Documents
Culture Documents
Going International Analysis Project
Going International Analysis Project
1
TABLE OF CONTENTS
A. Factual data………………………………………………………………………………………………………………………4
B. Back ground……………………………………………………………………………………………………………………..4
A. Political Ideology………………………………………………………………………………………………………………5
B. Political Risk……………………………………………………………………………………………………………………. 6
C. Legal System…………………………………………………………………………………………………………………….8
A. Economic System………………………………………………………………..……………………………………………8
B. Economic Development……………………………………………………………………………………………………9
C. Economic Transition……………………………………………………………………………………………………….11
D. Financial Markets……………………………………………………………………………………………………………11
E. Infrastructural Forces……………………………………………………………………………………………………..12
2
PART ONE: EXECUTIVE SUMMARY
The Minh Long High-Class Ceramics and Porcelain Company was founded in 1970 in Binh
Duong Province, Vietnam. Our main export product lines are porcelain tableware and figurine.
What we aim to do is producing high-quality products with artistic design; therefore, the cultural
beauties, images loaded with cultural traditions of Vietnam’s and other nations’ are engraved in
each of our products so that typical cultural features are reproduced in a up-to-date manner. Our
sales sky rockets and out export markets include Japan, USA and European countries such as
Germany, France, the Czech Republic, Netherlands, Slovakia… The company’s export revenue in
2010 was 28 billion VND. In April 2008 we proudly became one of the first thirty Vietnamese
companies entitled to bear the “National Brand” label. In 2010, the company received the Viet
Nam’s Golden Quality Award and the Asia-Pacific Award in November 2011. We are now having
more than 2000 employees, 20 distributors and 6 showrooms in Vietnam (Ho Chi Minh City, Ha
Noi, Vung Tau, Binh Duong,…), 10 overseas agents in Asia and Europe (Malaysia, Cambodia,
Taiwan, Germany, Belgium, Canada, Netherlands,…)
As we intend to continuously expand our market, we choose Myanmar as our new target
market. It is located in the South East Asia with total area of 676,578 km2 and population of
51,419,420 in 2014. Myanmar is a developing country with the military government having the
majority stakeholder position in all major industrial corporations of the country. After studying
several factors including political and legal analysis, economic analysis and market potential, our
decision is not to go international (that is, not to export now). We have gone through every
factor and realized that the disadvantages outweighed the advantages. Therefore, exporting our
products now to Myanmar would be a risky decision and we intend to further investigate this
market in the future before deciding to take the next step.
Our detailed analyses will be presented in part II: Factors for analysis.
3
PART TWO: FACTORS FOR ANALYSIS
B. Background
1. Historical development
The ethnic origins of modern Myanmar (known historically as Burma) are a mixture
of Indo-Aryans, who began pushing into the area around 700 B.C., and the Mongolian invaders
under Kublai Khan who penetrated the region in the 13th century. Anawrahta (1044–1077) was
the first great unifier of Myanmar.
In 1612, the British East India Company sent agents to Burma, but the Burmese
doggedly resisted efforts of British, Dutch, and Portuguese traders to establish posts along the
Bay of Bengal. Through the Anglo-Burmese War in 1824–1826 and two subsequent wars, the
British East India Company expanded to the whole of Burma. By 1886, Burma was annexed to
India, then became a separate colony in 1937.
2. Histories of key industries
The major agricultural produce is rice which covers about 60% of the country's total
cultivated land area. In 2011, Myanmar's total milled rice production accounted for 10.26 million
tons, an increase from the 1.8 per cent back in 2010.
Myanma Oil and Gas Enterprise (MOGE) is a national oil and gas company of Burma.
The company is a sole operator of oil and gas exploration and production, as well as domestic
gas transmission through a 1,900-kilometre (1,200 mi) onshore pipeline grid.
4
The Union of Myanmar's rulers depend on sales of precious stones such as sapphires,
pearls and jade to fund their regime. Rubies are the biggest earner; 90% of the world's
rubies come from the country, whose red stones are prized for their purity and hue.
A. Political ideology
1. Wide vs. narrow participation
Myanmar’s citizens do not have many choices in voicing their opinions, voting and
showing general approval or disapproval of the political system. Election can be considered as a
specific example of the narrow participation in this country. The vote took place amid tight
security and a ban on foreign reporters and election monitors. Narrow participation may lead to
restrictions in free trade which are disadvantages for Minh Long’s operation.
2. Democracy vs. totalitarianism
It can be easily seen from the narrow participation that democracy in Myanmar is at the
low level. The totalitarianism ideology of the Bumese military regimes is reflected that all sectors
of public and provide must be under one man and a single political party. All other political parties
system is resolutely abolished. This authoritarian regime brings on many disadvantages for
economy such as corruption, oppressive policies, vague law, etc.
3. Pace of progress if nation is undergoing political transition
Since 2011, Myanmar has been undergoing a political transition that has been hailed by
many previously critical countries as the start of a process of democratization. Myanmar has
become a substantially more liberal country, and in particular its economy has been increasingly
liberalized, away from the tight restrictions of the past. However, Myanmar's economic
liberalization primarily benefits its entrenched and usually military-dominated or linked elites,
while its political liberalization may be just enough to satisfy an appearance of democratization
without the army giving up real power. Moreover, this positive transition is already at the first
step, so we should not be able to make sure if it will bring to foreign companies’ advantage.
B. Political risk
1. Level of political risk
Myanmar’s overall political risk rating as of October 2013 is 63, then up to 66 in April
2014. They are at the moderate level. This change also is not significant.
5
2. Sources of political risk (corruption, ethnic conflict, etc.)
According to table 3B and 3C, Corruption is the main source of political risk in Myanmar.
So far this year, there have been several reports and related allegations of corruption in the judicial
sector. Additionally, Transparency International's updated corruption index continues to portray
Myanmar as one of the world's most corrupt countries. Corruption can take many forms that can
include graft, bribery, embezzlement and extortion. Its existence reduces business credibility and
profits when professionals misuse their positions for personal gain.
3. How to adapt to the political risk
The most common form of corruption met directly by business is financial corruption in
the form of demands for special payments and bribes connected with import and export licenses,
exchange controls, tax assessments, police protection, or loans. Such corruption can make it
difficult to conduct business effectively, and in some cases will force the withdrawal or
withholding of an investment. And in this situation, avoidance would be the best resolve for now,
and we would take into more consideration about exporting our products in the future.
C. Legal system
6
As a recently opened market with a great potential, Myanmar is attracting many foreign
investors who yet carefully consider the old (or even outdated) and limited legal framework.
Myanmar is currently revising its Intellectual Property system and drafting specific Intellectual
Property laws, notably the Trademark Law which is expected to be enacted within 2014. These
advances will bring many advantages for porcelain which needs to be protected as intellectual
property (IP).
On March 14, 2014, Burma's Union Parliament passed a Law on Consumer Protection. It
has provisions on the rights and responsibilities of both manufacturers and consumers. Those who
distribute products that are not safe may be subject to up to three years of imprisonment and up to
5 million kyat (about US$5,000) in fines. Therefore, Minh Long porcelain might have to invest
more in safety production line which costs a huge amount of capital and effort.
Businesses in Myanmar are subject to corporate income, personal income, commercial, and
property taxes. A 25 percent corporate tax rate per annum is applied to all companies incorporated
in Myanmar under the Myanmar Companies Act and Foreign Investment Law. A branch of a
foreign company is taxed at a rate of 35 percent per annum because they are considered
nonresident by Myanmar tax laws, while other types of companies are generally considered
resident. For capital gains, there is a 10 percent capital gains tax for resident companies and 40
percent for nonresident companies. Foreign companies incorporated under the Foreign Investment
Law have tax exemptions for the production of goods and services and for reinvested profits. They
also enjoy the option to accelerate depreciation, and there is also a 50 percent tax relief on export
profits.
7
Tariff rate for foreign companies in Myanmar is quite high in comparison with other
nations. Additionally, we should look out for further regulatory developments during the life of
the business activity as well as at the end of the business life cycle.
D. International relations
More recently, Myanmar has concentrated on building up good relations with its neighbors
- notably China, India and Thailand, but also Singapore, Indonesia and Japan. In July 1997
Myanmar, along with Laos, became a full member of ASEAN. ASEAN has a policy of
constructive engagement with Myanmar but its members are becoming increasingly worried about
the prospective damage to ASEAN's reputation if there remains little progress in Myanmar.
Vietnam and Myanmar hope to increase two-way trade value to 1 billion USD by 2015 and
2.5 billion USD by 2020 and have been promoting sister city relations between their localities to
boost their economic cooperation. Annual trade fairs have been held to attract investors to each
other’s market.
Myanmar until now has no multilateral agreements with other nations. This might has
disadvantage for Minh Long’s export.
There would be no disadvantage to those in circle of a multilateral free trade agreement, as
the matter of fact it would be all pure source of prosper. However, such an event shall be another
and a big disadvantage of closed and protected circles of trades. So called free trade agreements
then may turn to and become a closed circle of trade protected by the members due to enforcing
sanctions and embargo to induce boycott. So the term "FREE" still remains undefined.
A. Economic system
1. Type of system
Burma now has a mixed economy with a private, state, and a joint private-state sector.
Agriculture, light industries, and other businesses are in the private sector while heavy industries
8
that require huge capital investment are in the state sector. The economic reforms of the last
decade sought to promote joint ventures between private Burmese and foreign firms. Therefore,
foreign investment like our company was once again encouraged with modest success.
President Thein Sein on July 12 signed into law a bill granting the Central Bank of
Myanmar autonomy from the Ministry of Finance and Revenue. The decision is significant for
several reasons. Autonomy will allow the central bank to independently adjust interest rates, and
conduct currency and exchange operations. Equally important, the move bolsters the credibility of
Myanmar’s commitment to financial liberalization. Like the liberalization of foreign exchange
policy in April 2012, this new law will bolster foreign investors’ confidence in the kyat.
The central bank set the new official exchange rate at 818 kyat to the U.S. dollar and
decided in the future its value would be determined at currency auctions on a daily basis. For
decades, Burma had operated with the wildly unrealistic official exchange rate of 6.2 kyat to the
dollar — one of the starkest features of all that was wrong with the economy of one of the world’s
poorest and least developed countries.
B. Economic development
1. GDP and GDP per capita (2013)
GDP: $113.0 billion
GDP per capita: $1,740
Based on this statistics, Myanmar is considered as one of the poorest countries in the Asia.
And in order to enter such market, our company must try our best to satisfy the needs of people
who lives at the bottom of the pyramid with the least purchasing power. Therefore, we should
take into consideration about exporting our products into this low potential market.
9
3. Level of human development
According to the Human Development Report 2014, released globally today by the United
Nations Development Program (UNDP), Myanmar is in the low human development category and
positioned 150 out of 187 countries (HDI value for 2013 is 0.524). It is also in the list of 10
countries with lowest HDI in Asia. That means Myanmar has very low standard of living which
leads to low demands for our products. Only by improving the quality of life (healthcare and
friendly to human products) and environment safety (environment friendly producing process) can
Minh Long Tableware Porcelain be the potential products that serve the needs of Burma’s
population.
4. Country classification
This shows low potential for our company to launch the new products in this market. In
addition, low demands for the products would be the biggest concern for our company when going
international in Burma’s market.
5. Macro-economic indicators
According to the World Bank, the inflation rate of Myanmar was reported an average of
2.8% in 2013 and sharply rising to 5.8% in 2013-2014 fiscal year. They also have urged the
10
government to take steps to avoid runaway inflation as the rate has already double in the past year
and has a disproportionate effect on the poor.
C. Economic transition
Burma now has to face the lack of investment capital, managerial expertise or the lack of
high technologies. The analysts criticize that the government has to pay too much attention to
investment capital but not focus enough on raising the personal income in rural sectors, and the
country must upgrade its infrastructure and improve the quality of human capital to achieve
sustainable economic growth. This causes many difficulties in recruiting employment in order to
be well-organized and operated. Moreover, lack of investment capital can be unbeneficial for us
to attract both domestic and foreign investments.
2. Cultural issues.
In order to be successful, our company also need to pay attention to Myanmar’s culture.
One main thing to remember is Buddhism is at the heart of any Burmese. However, Burmese can
be very sensitive and have a different hour of working (normally earlier in the mornings and
nights). All those aspects of culture can directly effect to the consumption of the product so we
ought to pay attention to.
3. Environmental degradation
Burma is one of several countries in Southeast Asia at risk of serious environmental crises
devastating their economies and with “the greatest proportion of their economic output exposed to
natural hazards”.
Environment degradation happens can affect badly to the quality of products as well as the
health of workers, our Minh Long Porcelain Company would take into further consideration about
exporting tableware porcelain in the future.
11
D. Financial market
On 2 April 2012, the Central Bank of Myanmar announced that the value of the kyat
against the US dollar would float, setting an initial rate of K 818 per US dollar. Floating currency
policy would be beneficial for our company finance.
The Burmese government has introduced a range of industry reforms to revitalize the
banking sector and support an influx of investment, one of which allows foreign banks to establish
joint ventures with local partners. This creates more opportunities for Minh Long to seek for
capital investments from other investors or to cooperate with other strong competitors in local
market.
E. Infrastructural forces
1. Transportation (logistics)
Myanmar has more than 5,000 miles (8,000 kilometers) of inland waterways, about 17,000
miles (27,000 kilometers) of roads and about 2,500 miles (4,000 kilometers) of railroad track.
However, the poor ports infrastructure, paucity of railways, limited good quality roads and
declining air traffic pose significant risks to incoming businesses and significantly expand import
and export lead times.
2. Communication
12
Further risks stem from the lack of internet and telecommunications capacity in many
areas. Since transportation and communication play very important roles in exporting, Myanmar
has many disadvantages in transportations, technologies or information sources.
Myanmar is in the list of countries that imports fewest amount of porcelain tableware in
the world. According to this table, the import value of this product category is very small and has
decreased steadily over the years from 2008 – 2011 and risen up to $2.22 million in 2012; which
means that the market for our company is not very potential.
1
http://atlas.media.mit.edu/
13
Year 2009 2010 2011 2012 2013
Population (million) 51.5 51.9 52.4 52.8 53.3
Rural population (%
69 69 68 68 67
of total population)
Myanmar population from 2009 - 20132
The population of Myanmar is considered as medium-low in comparison with other
Asian countries. In 2015, it is estimated that the population growth is 0.842%. As can be seen in
the table, the number of people living in rural areas is quite steady and continuously accounts for
large proportion of Myanmar total population. Furthermore, urbanization calculated in 2013 is
only 36.7%, ranks 136th out of 164 countries listed. In conclusion, Myanmar’s market size is small
with more than half people living in rural areas. Since porcelain tableware is not basic necessity of
daily life, Myanmar is not a potential market for our product.
- Market Growth:
Year 2010 2012 2014
GDP (million USD) 41.518 59.444 269.996
GDP growth rate (%) 10.2 6.3 6.8
According to a list of countries by GDP in 2014 published by the International Monetary
Fund (IMF), Myanmar ranks 56th out of 188 countries with the GDP of $269.996 million.
However, in terms of GDP per capital (2013 - $1,040), Myanmar ranks 36th out of 37 Asian
countries and ranks 161st worldwide. In the list of estimates of real gross domestic product growth
rate (not rebased GDP) the latest years recorded in the CIA World Factbook, Myanmar ranks 28th
out of 219 countries (6.80%). These figures show that the standard of living in this country is not
high and if we decide to export our product now, we will take a high risk.
b. Evaluation:
The Market Potential Index (MPI) – 2014 released by Global Edge reports that
Myanmar’s MPI ranks 86th out of 87 countries in the list, with the overall score of 8/100. (All
indicators are evaluated on the scale of 0-100). On the whole, Myanmar has a very low MPI,
which means that its demand potential for our product is poor.
Market size 2 Commercial infrastructure 1
Market intensity 0 Market receptivity 1
Market growth rate 89 Economic freedom 23
Market consumption capacity 31 Country risk 7
Overall Score: 8/100
2
http://wikipedia.com
14
Market Potential Index (MPI) – 20143
C. Competitor analysis:
1. Competitors:
The porcelain industry in Myanmar does not develop, which causes the domestic porcelain
only accounts for less than 10% of the product consumption, meanwhile imported products
become the main supply for Burmese market.
Year
Main suppliers
2008 2009 2010 2011 2012
China 70.63 93.79 45.63 79.40 62.25
Thailand 0.26 3.89 9.08 7.54 5.82
Singapore 28.14 1.79 2.01 6.84 30.36
3
http://globaledge.msu.edu/mpi/data/2014
4
http://atlas.media.mit.edu
15
we decide not to export porcelain tableware to Myanmar now, but to further assess this market in
the future before making any decision.
In addition to the competitive pressures from other businesses (especially those from
China), we also have to take threat from substitute products under consideration, as the prices of
porcelain products are often higher than substitute ones such as glass and plastic.
As mentioned before, most Burmese citizens have low income and low standard of living.
People tend to buy goods of medium quality at medium – low prices. Therefore they can easily
switch from using porcelain products to glass/plastic ones if these products can meet their
demands. Therefore, exporting to Myanmar now is considered to be quite risky now.
Conclusion
Although Myanmar has become a mixed economic system and the government is trying to enforce
many product safety and liability laws, property rights protection laws and fiscal and monetary
policies, this market is still a highly risk market with too many disadvantages:
- Unstable economy
- Strong competition
Therefore, our final decision is not to export now to Myanmar, considering all factors including
political and legal, economic and market factors. We intend to do further research into this market
as well as have more field trip to gain real experience about Myanmar before deciding to go
international.
16
SectionV. Footnotes and Bibliography
Myanmar today news, 2011, Burmese military regime as totalitarianism, MTNs, viewed March
24th 2015, http://www.myanmartodaynews.com/2011/05/02/burmese-military-regimes-as-a-
totalitarianism/
The guardian, 2010, Burma election turnout remains low, TG, viewed March 26th 2015,
http://www.theguardian.com/world/2010/nov/07/burma-election-turnout-low
Damien Kingsbury, 2014, ‘Asian Politics and Policy’, in Wiley Online library (EDS), Political
transition in Myanmar: Prospects and Problems, viewed March 25th 2015,
http://onlinelibrary.wiley.com/doi/10.1111/aspp.12115/abstract
Constance Johnson, 2013, ‘Myanmar Business’, in Library of Congress (EDS), Burma: consumer
protection law adopted, viewed March 26th 2015, http://www.loc.gov/lawweb/servlet/lloc_news?
disp3_l205403904_text
New Zealand ministry of foreign affairs and trade, 2015, Myanmar foreign relations, New
Zealand, viewed March 19th 2015, http://www.asean.fta.govt.nz/myanmar-foreign-relations
National encyclopaedia, Burma overview of economy, BOE, N.d, viewed March 24th 2015,
http://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/Burma-Myanmar-
OVERVIEW-OF-ECONOMY.html#ixzz3RAAIoWXB
Amy Killian, 2013, ‘Myanmar development, economics, governance, IMF, World Bank’, in
Central for strategic and international studies (ed), Myanmar Central Bank freedom reinforces
economics fundamentals, viewed March 25th 2015, http://cogitasia.com/myanmar-central-bank-
freedom-reinforces-economic-fundamentals/
Robert Horn, 2012, ‘World Time’, Burma first an election, now an exchange rate that makes
sense, viewed March 25th 2015, http://world.time.com/2012/04/08/burma-first-an-election-now-
an-exchange-rate-that-makes-sense/
The heritage foundation, 2015 Index of economic freedom, IEF, viewed March 25th 2015,
http://www.heritage.org/index/country/burma
17
UNDP, 2014, Human development report launched in Myanmar, HDRLM, viewed March
25th2015,
http://www.mm.undp.org/content/myanmar/en/home/presscenter/pressreleases/2014/07/2014-
human-development-report-launched-in-myanmar.html
Peter Kohl, 2014, Nasdaq, Myanmar developing southeast Asian nation on a tear, viewed March
15th 2015,http://www.nasdaq.com/article/myanmar-developing-southeast-asian-nation-on-a-tear-
cm340543
Trading economics, 2015, Myanmar unemployment rate, chart, viewed March 20th 2015,
http://www.tradingeconomics.com/myanmar/unemployment-rate
Zaw Heike, 2014, Myanmar Times, Inflation a growing problem says World Bank, viewed March
20th 2015, http://www.mmtimes.com/index.php/business/10185-government-needs-to-address-
rising-inflation-rate-world-bank-economists.html
Gabriel Dominguez, 2014, DW, human capital and infrastructure key to Myanmar growth,
viewed March 20th 2015, http://www.dw.de/adb-human-capital-and-infrastructure-key-to-
myanmars-growth/a-17924035
Myanmar custom department, n.d, import prohibition restriction, viewed 25th 2015,
http://www.myanmarcustoms.gov.mm/importprohibitionsrestrictions.aspx
Observatory of economic complexities, 2012, les pays qui important porcelain vaisselle, map,
viewed March 29th 2015,
http://atlas.media.mit.edu/explore/tree_map/hs/import/show/all/6911/2012/
Global edge, 2014, Market potential index, MPI, viewed March 26th 2015,
http://globaledge.msu.edu/mpi
International Trade Central, n.d, sector trade performance , viewed March 26th 2015,
http://www.intracen.org/layouts/CountryTemplate.aspx?pageid=47244645034&id=47244645350
Global sources, n.d, porcelain dinnerware set, viewed March 27th 2015,
http://www.globalsources.com/gsol/I/Provides/Porcelain-
dinnerware/x/s/Directory/Suppliers/Myanmar/StarRank/2000000003844/3000000152535/17961.h
tm
18
Go4 world business, n.d, glass and ceramic manufacturers and exporters, viewed March 26th
2015, http://myanmar.go4worldbusiness.com/suppliers/Glass-And-Ceramics-Manufacturers-And-
Exporters.asp?cid=1112276992&objtype=ED
19