From cars to cola, U.S. firms cross into Burma

RANGOON, Burma - Maroon robes for Buddhist monks had long drawn customers to the shop in downtown Rangoon. Then a new tenant hoisted a distinctive red logo with Colonel Sanders.

"I've never eaten KFC but relatives who've been abroad love it," says Minmin Koko, a waiter at an adjacent roasted chicken restaurant. "I want to try it, too, but not next door. It would be a major rival."

For three weeks in February, word of what appeared to be Burma's first-ever U.S. fast-food franchise attracted crowds of onlookers, says Minmin, 25.

The buzz also brought KFC's owner who closed the unlicensed wannabe before it opened, so diners "experience only our original products and services," Anhul Chauhan, a Yum Brands spokesman in Singapore said in an e-mail.

The episode highlights the business challenge in Burma, where counterfeits are common, but the real Colonel Sanders, and a host of other American icons, are finally coming to town as the army-ruled nation known officially as Myanmar ends five decades of isolation.

Long a pariah state under sanctions by the West, Burma has undergone dramatic political change in the past two and half years. Elections have been held and most political prisoners released, including democracy icon Aung San Suu Kyi, now an elected member of parliament and leader of the opposition.

In response, the U.S. and other governments have lifted many economic sanctions, unleashing a posse of U.S. companies hungry to enter one of the world's last untapped markets of a significant size.

Besides finger-lickin' food, residents of Rangoon, Burma's commercial capital, will soon be able to drink, drive and sleep American. Coca-Cola is now made here, Ford cars are coming by sea and Hilton has signed to manage a five-star hotel.

Burmese President Thein Sein visits the White House on Monday, the first Burmese leader to do so since dictator Ne Win in 1966. The trip appears to be Washington's reward for his role in overseeing the military regime's moves toward democracy. President Obama's visit to Burma in November 2012 was the first by a sitting U.S. president.

Home to more than 60 million people, Burma hosts the World Economic Forum next month, an offshoot of the annual Davos talkfest that was unthinkable here just two years ago. Yet investors face rampant fakes, human resource problems and weak infrastructure plagued by power outages.

Political challenges remain considerable as well. Ethnic conflicts continue in major parts of the country, while Muslim communities suffer increasing violence and ostracism from Burma's Buddhist majority.

Despite a U.S. blacklist of about 100 Burmese individuals and companies, U.S. firms can easily end up in bed with a "crony," the Burmese term for businessmen whose prosperity is tied to the military regime.

Growing numbers of U.S. firms call on the U.S. Embassy in Rangoon, says spokesman Michael Quinlan.

"U.S. policy now is focused on encouraging informed and responsible investment in Burma, bringing the best of American quality and values to the country, and creating hope and opportunity for a broad cross section of the people here," he says.

Yum executives visited Rangoon last week to evaluate KFC locations, continue recruiting work and hold a tasting at an up-market hotel. The "fairly unsaturated" restaurant business here means opportunity for KFC and local talent development, Anhul said. A key contribution will be "entry level training â?¦ that teaches basic business processes and inculcates discipline and professionalism," he said.

At Burma's first international auto franchise, a Ford dealership, workers lay bricks and shovel cement to get the showroom and workshop ready for launch July 1. Inside, Martyn Dawson, a dealer, patiently explains the specs of Ford Ranger trucks to sales staff.

Sanctions have made Burma "a unique, sheltered place ... a business black hole, so we take them through pretty fundamental steps of business training," he says.

Ford is being sold as "the iconic brand from America, and built tough, that's the story to tell," says Dawson, since its cars must suit "the very demanding surfaces" of Burmese roads. Many clients will fix a rear frame to turn a Ranger into a people-packed taxi, he says.

A new Rangoon landmark, en route by ship from America, will become the city's tallest advertising pylon, supporting a giant Ford logo.

"It's bigger than Texas," jokes Dawson, a New Zealand native. Thai-made Ford Rangers will go for $24,000, says Dawson, who hopes to sell 200 vehicles, including the U.S.-made Explorer and Taurus, from July to December.

Another prominent U.S. brand already stalks street corners. Despite a 60-year official absence, cans of Coca-Cola had sneaked across Burma's porous borders for years, but the beverage giant has shaken up the market in recent months with locally made plastic bottles selling for just 30 cents. Starbucks, too, may enter the fray within two years, CEO Howard Schultz said while in Thailand last week.

Tourist arrivals will leap 50% in 2013 over last year's 1 million, the Ministry of Hotels and Tourism predicts, but some may struggle to find rooms. The Hilton Hotel, opening downtown next year, will be the first international five-star hotel in the country says Richard Mayhew, an executive with the owner, LP Holding Co.

"It's a huge, untouched market," he says, and one that leaves many other foreign firms circling.

U.S. companies may do well to remember how deep tradition runs here, amid remarkable change.

On the outskirts of town, under an age-old banyan tree, Tommy Tun's new Honda Fit is splashed with holy water and affixed with flowers. Like many other drivers over the years, he seeks the blessing of the resident nat, or spirit being.

"This will bring good luck for me and my car," says Tun, 48, a bicycle importer, as he drives it in and out under the tree three times to replicate bowing. "Myanmar is changing a lot, but I believe these traditions will survive."

Contributing: Htoo Lwin Myo

Copyright 2013
USATODAY.com

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