The West returns to reclaim its brands from Burma's pirates
Copycat rip-offs have dominated the market for years. But after sanctions were eased, the multinationals are back
Wednesday 05 September 2012
When PepsiCo decided to leave Burma in 1996, the company's local partner, Myanmar Golden Star (MGS), hit the jackpot. Forced out due to pressure by campaign groups, the US soft drinks giant left a factory on the outskirts of Rangoon. MGS then bought out Pepsi's stake, started producing "Star Cola" and proceeded to dominate the country's fizzy drinks market.
Now, after the West started to ease sanctions in response to recent democratic reforms by the purportedly civilian regime headed by President Thein Sein, Pepsi is back in Burma with a different local partner.
"It doesn't really matter to us," said Oo Tun, managing director of MGS and the son of the company's founder, Thein Tun. Star Cola is not in a unique position. Copycat brands, fakes and grey imports are everywhere in Burma and as globalisation suddenly confronts the nation, a large question mark hangs over the fate of many of these local products. In the years past, where McDonald's and KFC were barred by US sanctions, Mac Burger – with its red arches on a golden background – and Tokyo Fried Chicken for many years filled the fast-food vacuum in Rangoon.
But their more illustrious American rivals could soon be offering stiff competition. Following the visit of a sizeable delegation of US firms to Rangoon over the summer, the first in decades, a spokesman for the US regional business council said American fast-food chains were keen to enter Burma.
But as they eye new opportunities, Western brands must contend with the challenges posed by fakes. On the country's periphery, piracy is the key problem facing foreign firms. Fake Marlboro Lights packed with rough-cut Burmese tobacco, for example, sell for about £1 a pack in Tachilek on Burma's border with Thailand.
Pirated goods flood across the Chinese frontier further north, which in turn has made Burma a transit country for counterfeits bound for India, South-east Asia and beyond. Following recent Chinese crackdowns on pirated CDs and DVDs, many producers relocated to Burma's porous border areas like Mong La, a fiefdom in the "Golden Triangle" run by a former drug lord, according to the UN Office of Drugs and Crime.
Further south, in the cities of Mandalay and Rangoon, getting hold of a genuine copy of the latest album or film release remains almost impossible amid the flood of pirated discs. But the end of sanctions has prompted Western multinationals to fight back and reclaim their brands.
When 20th Century Fox officially released the 2012 3D edition of James Cameron's 1997 blockbuster Titanic in Rangoon last month – the first legal screening of a Hollywood hit in a generation – a company executive reportedly cited "protecting our intellectual property" as a key reason to return.
Despite recent reforms, the prevailing trademark and copyright norms date back to the days when Burma was part of the British empire, said Khine Khine Oo, the owner of a legal practice in Rangoon which specialises in intellectual property rights. "The law is very, very old – we need a new law," she said. Burma's new parliament is tipped to pass new intellectual property legislation by the middle of next year, she added.
In the meantime, companies continue to issue a flurry of trademark cautions in the local press, the only way they can protect their brands in Burma. Recently, lawyers working on behalf of Marriott Hotels, healthcare products firm Johnson & Johnson and American cable broadcaster HBO have all issued such notices in the state-run daily New Light of Myanmar.
Although the intellectual property legislation is expected to protect international brands, there are rising fears that a new foreign investment law may restrict foreign firms, said Sean Turnell, a researcher on the Burmese economy based at Sydney's Macquarie University.
Originally scheduled to pass in April, the draft law has been held up half a dozen times for revisions in the past few months after Burma's private sector complained that foreign firms were getting too good a deal. Tax breaks for overseas companies are expected to extend up to five years, according to the latest draft. "Certainly the momentum of late has been in the direction of increasing protectionism," said Mr Turnell, who has been tracking revisions to the foreign investment bill.
This is especially true of the retail and food processing industries, he added. "What's a bit worrying is that some of the sectors would seem to include those within which foreign investment could deliver the most benefit, especially with respect to expanded choices for consumers."
Burma brands: Dominating the market
The brainchild of tycoon Thein Tun, Burma's leading cola brand was born when the American soft drinks giant Pepsi exited the military-run nation under pressure from campaign groups in the 1990s.
Featuring hot pink and bright orange signage familiar to fans of the better-known American equivalent Dunkin' Donuts, this chain has seen impressive expansion under the ownership of the son of former junta strongman Than Shwe.
Attractive red-and-white packaging and a low price of about 50p a pack has made these Burmese cigarettes a money-spinner for the army-run holdings company, which holds a stake in the brand.
McVeggies for indian holy sites
It's an obvious problem – selling hamburgers in a place where cows are sacred. But now even pilgrims to two holy sites in India can indulge their bad habits with a McDonald's meal after the fast food chain said it plans to open vegetarian outlets in the religious centres. Ever keen to tap growing markets, it plans to open restaurants in Katra, the town closest to the Hindu mountain shrine of Vaishno Devi, and in Amritsar, where Sikhs flock to their holiest site, the Golden Temple. The McVeggie – a patty of carrots, peas and potato – is the chain's top-selling product in India.
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