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Myanmar Soda Fight Relevant For Doing Business In China.

Posted in China Business, Recommended Reading

I just love this article.  For so many reasons.

The article is entitled, Quenching your thirst on road to democracy: Coke, Pepsi wage war in long-isolated Myanmar, and I like it for the following reasons:

  1. It reinforces what we have been saying about Myanmar (see Myanmar Foreign Investment. Difficult And Expensive, But Opportunities Are There).  It is a great place for big companies like Coke and Pepsi, who need to go there to establish their footholds, but there is little evidence that it is ripe for small companies that need to make profits relatively quickly.
  2. It shows the importance of being first to market.
  3. It shows how local domestic companies can and do compete against the “big boys,” and of how when it comes to consumers, little is certain.
  4. I am convinced it has tremendous applicability for doing business in China as a whole and in its various regions.

Just last week, I was talking with a consumer goods company of ours and they told me that their sales were going really well in both Shanghai and Beijing, but “outside those two cities, we might as well not even exist.  In fact, we don’t really exist.”  They are at the point where they are trying to decide whether to spend a lot of money ramping up (really beginning) their operations outside those two cities.  The person with whom I spoke said that their main impetus for believing that they need to do something is not so much the profits they think they will achieve, but rather their belief that if they do not go beyond Beijing and Shanghai with their operations, their Beijing and Shanghai sales will eventually erode in the face of eventually larger and more national competitors.

What do you think?  Relevant for doing business in China?  If so, how? What China markets still present opportunities for foreign companies and what markets are already pretty much closed?

  • Robert Walsh

    Woke up several weeks ago and looked out and it was as if the Coke Army had stealthily invaded overnight, with billboards, signage, and awnings on Mom & Pop stores everywhere. The planning and logistics to carry that off has not been seen in this country, maybe ever. But I would not go so far as to call this a war. Pepsi seems to have signed up a lot of restaurants & stores that carry only their products, and Coke has to break into that. The local brands of soft drinks will hold their own for awhile.

    Myanmar has hundreds of local and regional brands with loyal followers. Some brands don’t go too far outside their own township-city-state-division, but are in fact known all over the country. If one travels to Bassein, it is the done thing to stop at the Shwe Myint Byan (Golden Flying Horse) cake shop and bring home all of the local goodies. That, and eat at the Hka Hka Gyi restaurant. Neither business have any plans to expand up to Yangon.

    National brands, with nationwide distribution and following are several 3-in-1 tea and coffee mixes (actually pretty good), Mandalay 6-elephant brand sandals. Red Ruby cigarettes. Yuzana brands of snack foods. “Myanbisco” cookies. But by and large, local markets are filled with local brands. I think part of the problem is lack of good packaging that allows for long-distance shipping…especially for foods. Thankfully, manufacturers are good enough to put a “sell-by” date on all of these.

  • theAdmiral

    Can’t speak for Myanmar, which I know to be the main point, but can I speak to the second part?

    “Just last week, I was talking with a consumer goods company of ours and they told me that their sales were going really well in both Shanghai and Beijing, but “outside those two cities, we might as well not even exist. In fact, we don’t really exist.”

    That doesn’t really baffle me, but it does wish I was still in China working as a consultant. Without regard to your business (service, widget, etc), if you’re profitable in Tier One cities like Shanghai and Beijing, you _can_ be profitable in Teir 2, 3 cities if your product has performed in those markets.

    To Dan’s earlier point, companies like Coke and Pepsi are in their to make their brand #1. At the end of the day, it’s carbonated sugar water (the product).

    If a company has existed, profitably, in Beijing/Shangai and has not extended and expanded into other cities (Tianjin, Nanjing, Wuhan, etc) they are missing an opportunity…