Laos market

1. Introduction to Laos

Lao PDR is categorized as a least developed country. The country’s population in 2014 was estimated to be 6.8 million (UNDP, 2013). The population has been growing since 2007 at annual average rate of 1.1 per cent, meaning that the country is adding about one million people to its population every decade. But in the last six years, Lao PDR’s GDP has risen by nearly 8 per cent a year on average. The GDP growth rate was a relatively modest 7.3 per cent in 2014, after being measured at 7.9 per cent in 2013 (ADB, 2014). Per capita GDP was estimated to be US$1,707.3 in 2014 (World Bank, 2015). Rapid economic growth has been helping improve household income. The incidence of poverty in the country was reported to be 32 per cent in 2002/03 compared with 39 per cent in 1997/98. But at the same time, lack of infrastructure and poor connectivity limit the capacity of the rural population in the country to raise their economic performance (Oraboune, 2008). The country is predominantly rural with 66.8 per cent of the population residing in rural areas in 2010 (WHO and MOH, 2012). Rural areas in the country are characterized by underdeveloped infrastructure. With increasing prosperity, significant proportions of the poor now possess mobile phones and television sets (Table 1). Cable and satellite TV have burgeoned, with coverage extending into remote areas. Thirty-seven TV stations offer a wide mix of channels via cable and satellite connections. Compared to the private channels, official government-run media are less popular. In 2014, the Government issued a decree on the Internet in order to regulate social media. In response to the UPR, the Government noted that this decree formed a legal basis for the enjoyment of the right to information access and expression of opinions in a responsible manner, which was in line with international law, including the provisions and permissible limitations in Article 19 of the ICCPR.

2. WDIRC selling

The forecast of WDIRC selling can be shown in Table 2 during the first ten years since product launched. Here the assumptions of households, occupancy ratio, initial sale, selling price, and manufacture cost are 1,172,605, 0.0040%, 47, 250 and 200, respectively. The first year is set as the baseline for comparison with the following years, the sale volume, year penetration, revenue, cost and profit are 47 (sets), 40 (ppm), 11,726 (USD), 9,381 (USD) and 2,345 (USD), respectively. As we think, the growth rate with years will be 1, 1.34, 3.19, 3.46, 4.97, 6.52, 7.93, 9.46, 10.90 and 11 times over the first year. The year penetration of WDIRC will be from 40 ppm to 439 ppm at the end of tenth year, the totally ownership (penetration) is close to 0.238%, it still is a low penetration ratio in Lao PDR even WDIRC listed in market for ten years. However the revenue, manufacture cost and profit these three also present an ascending trend, the profit earned from Lao PDR is about $ 0.025 million at the tenth year in an exclusive market, it owns a huge market and profit in this market. Totally according to our prediction and assumption, the selling in Lao PDR will be up to 2,798 sets, even this; the penetration ratio is still lower than other consumption electric products such as TV, Refrigerator, Air conditioner, and Wash machine.

How about the annual growth rate for selling WDIRC in Laos market? Fig. 3 shows the result. Here the calculation of revenue can use this equation as “WDIRC’s Revenue = Annual growth rate * Year + Baseline”, the formula can be written in a mathematic equation in Figure. According to this regression by data simulation, the annual growth rate it take about 14.432k per year (r² =0.9846), in other words, by averaged the annual revenue is 14.432k in Laos market for selling WDIRC products during the first decade.

3. Rice selling

A ten-years forecast to WFR sale, after WDIRC launched in Laos market, is presented in Table 3. The first year since the marketing of WDIRC, online/offline deals for WFR sale are 2,812 kg, here the assumptions of population, rice consumption, sharing of WFR, online buying rate and market sharing are 6,918,367, 162.6, 0.01%, 5.00%, and 50%, respectively. How to calculate the WFR volume by online/offline sale, Eq. 1 is the equation for calculating the WFR sale volume.

Eq. 1 SaleVolume=Population x RiceConsumption x WFRratio x On/OffBuyingRatio x MSharingRatio

(eg. 2,812 = 6,918,367 x 162.6 x 0.0001 x 0.05 x 0.5)

The use rate of WFR is set as 0.00041 kg/person-year. Based on this, we can get the annual revenue is $ 1,406 (WFR priced as $0.5), and the profitability is set to 10%, so the profit that will earn $ 141. Changing with the time, the ratio of WDIRC in kitchens will increase and cause the use of WFR increasing. We assumed the series of growth rate (G.R.) by years is 1, 2.21, 3.55, 4.81, 5.12, 8.74, 10.63, 14.11, 17.14 and 17.29. G.R. it is based on the prediction of WDIRC’s growth. By this series of G.R., both revenue and profit, they will also be presented like these serials when the dealing cost of WFR through online/offline transaction is keeping constant. Whatever the cost of online/offline transactions depends on the volume of WFR’s selling, so if the volume with time is scaling up, the dealing cost will be significantly lowered, in other words, the profitability with time will increase more than our prediction. If all hypotheses are true, the profit in tenth year will approach to $ 2,431. Eq. 2 calculates the penetration of WFR which to be used in this country by people. From this indicator (URate of WFR), we can see the level of penetration of WFR, even at the tenth year, the level of WFR use rate in Laos is still underestimation, that’s meaningful for us to optimistically think, the use rate of WFR can be easy completed and it will be grew up more than our prediction.

Eq. 2 URate of WFR = SaleVolume of WFR / Population

(eg. 0.00041 = 2,812 / 6,918,367)

Regarding the revenue of WFR selling in Laos, Fig. 4 shows the result. This is a prediction by data simulation according to our assumption, the regression could be calculated as “WFR’s revenue = Annual growth rate * Year + Baseline”. The result shows the annual growth rate is 2.769k per year (r²=0.9602), in other words, the increasing of revenue of WFR selling in Laos is $2.769k dollar per year. This growth can help the company to maintain its team in the local market for servicing customers.

4. To summarize the revenue and profit

Here according to the estimations above, we summarize the incomes from sales of WDIRC and WFR in Laos. Both revenues and profits are presented in Table 4. In the first year, the products of WDIRC and WFR are unfamiliar with Laos people; namely the recognition and acceptance aren’t well to local consumers, so on the beginning (1^st year) sales would be not good and the totally revenues and profits will be $ 13,132 and $ 2,486, respectively. Both of them will increase with years when selling with good experiences and promotions. Through our forecast, at the end of tenth year, the profits of WDIRC and WFR will be up to $ 25,750 and $ 2,431, and the totally profit will be $ 28,181, this is a huge profit which be created in Cambodia market by our novel products and services.

Totally the revenue of WDIRC and WFR (2W) selling in Laos market can be shown in Figure 5. The 2W revenue in first year is $13.132k dollars, after that the growth rate of revenue is $17.201k per year, this is a simple regression by mathematic model to predict the revenue on product selling. In practice, there are other factors that need to be considered much more, it could be higher than this or lower. Whatever by this calculation let us to trust that the market it always be there.