Myanmar market

1. Introduction to Myanmar

The economy of Myanmar has been witnessing strong growth in recent years (since 2014) following the country’s liberalization, leading to rapid adoption and penetration of modern technology in many households. Latest study commissioned by GFK Asia in the country’s Mandalay and Yangon regions reflected consecutive monthly growth in adoption of flat screen TVs, washing machines and air-conditioners in the first three months of 2016. The January to March period reported nearly 152,000 units of TVs being snapped up in Yangon and Mandalay, generating sales totaling over USD 36 million. While nearly half of the total (49%) market demand was skewed towards 32 inch LED TV models in the first quarter, a rising take-up was seen in the latter months, where share of the 40-43 inch segment grew from 12 percent in January to reach 20 percent of the total monthly sales volume in March. A similar trend was also reflected for the for the full-HD and UHD segments—in a market which is largely made up of HD-ready-only models (55%). “The Burmese new year—the most celebration event in the country—takes place around mid-April and the months leading up to this day tend to witness robust purchasing activities by locals in preparation for the festivities,” highlighted Stanley Kee, Managing Director for Southeast Asia at GfK. “This is also an important period for local retailers as aggressive efforts to drive sales are in full force to stimulate consumer spending.” While nearly two in every five (38%) TV units sold fell in the USD 200-300 price range, GfK findings showed consecutive monthly incremental demand for the USD400 and above range of TVs—where its volume share nearly tripled from 5 percent in January to 15 percent in March. In value terms, the segment accounted for over a third (36%) of the entire TV pie in that month alone. Overall, Smart TVs made up less than one in ten (7%) TV sets sold in the country. Two major home appliances which also witnessed successive monthly growths in February and March were refrigerators and washing machines. In the refrigerator market, the quantity sold in March itself was more than the combined total sales in January and February, achieving USD 6.9 million within a single month. One in three (34%) was a two-door-freezer-top model while one-door remained the dominant type, accounting for 65 percent of sales volume in Yangon and Mandalay. Consumers spent USD 21.5 million on nearly 116,000 units of refrigerators in the first quarter of the year. Meanwhile, households in the two regions also snapped up over 59,000 washing machines valued at nearly USD 10.5 million in the first three months of the year. Single tub washers dominated the market at 70 percent volume share while the rest was largely contributed by sales of double tub models. GFK findings showed an apparent month-on-month increase in demand for single tub models—the fully automatic, and more expensive type of washers—in February and March. The past economic development is shown in Table 1 which we can refer; overall, the short-term economic outlook was not encouraging due to Myanmar’s real GDP growth rates in 2008-09 and 2009-10 being estimated at 1.1 per cent and 1 per cent respectively. Most probably, the economy was expected to grow up to 3.1 per cent in 2010-11. On the other hand, IMF’s real GDPs were estimated at 4 per cent in 2008-09, 4.2 percent in 2009-10 and 5 percent in 2010-11. The market in Myanmar in the past is a weak growth on economic development. However as we think in the future, this market will grow up fast via the affections of nearby countries such China and ASEAN countries.

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 10,889,348, 0.0040%, 436, 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 436 (sets), 40 (ppm), 108,893 (USD), 87,115 (USD) and 21,779 (USD), respectively. As we think, the growth rate with years will be 1, 4.96, 5.92, 9.23, 12.02, 15.54, 16.03, 18.65, 20.27 and 22 times over the first year. The year penetration of WDIRC will be from 40 ppm to 880 ppm at the end of tenth year, the totally ownership (penetration) is close to 0.502%, it still is a low penetration ratio in Myanmar 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 Myanmar is about $ 0.479 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 Myanmar will be up to 54,713 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 Myanmar 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 253.25k per year (r² =0.9841), in other words, by averaged the annual revenue is 253.25k in Myanmar market for selling WDIRC product.

3. Rice selling

A ten-years forecast to WFR sale, after WDIRC launched in Myanmar market, is presented in Table 3. The first year since the marketing of WDIRC, online/offline deals for WFR sale are 30,946 kg, here the assumptions of population, rice consumption, sharing of WFR, online buying rate and market sharing are 54,363,426, 227.70, 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. 30,946 = 54,363,426 x 227.70 x 0.0001 x 0.05 x 0.5)

The use rate of WFR is set as 0.00057 kg/person-year. Based on this, we can get the annual revenue is $ 15,473 (WFR priced as $0.5), and the profitability is set to 10%, so the profit that will earn $ 1,547. 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, 1.14, 1.76, 5.54, 8.89, 12.69, 16.19, 17.10, 20.61 and 24.30. 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 $ 37,596. 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 Myanmar 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. 0.00057 = 30,946 / 54,363,426)

Regarding the revenue of WFR selling in Myanmar, 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 42.987k per year (r²=0.9753), in other words, the increasing of revenue of WFR selling in Myanmar is $42.987k 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 Myanmar. Both revenues and profits are presented in Table 4. In the first year, the products of WDIRC and WFR are unfamiliar with Myanmar 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 $ 124,366 and $ 23,326, 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 $ 479,100 and $ 37,596, and the totally profit will be $ 516,696, this is a huge profit which be created in Myanmar market by our novel products and services.

Totally the revenue of WDIRC and WFR (2W) selling in Myanmar market can be shown in Figure 5 The 2W revenue in first year is $124.266k dollars, after that the growth rate of revenue is $296.237k 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.