David Blecken
Jun 13, 2014

Yangonites primed for broader consumption of durables: Hakuhodo

YANGON - Unstable infrastructure is potentially holding back the uptake of consumer electronics and durables among mid- to high-income earners in Yangon, but also represents promising business opportunities for those that can offer solutions, according to research from Hakuhodo.

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While the vast majority of mid- to high-income earners in Yangon own the so-called ‘three essentials’ of a TV, fridge and washing machine, there is still significant room for the development of many household product groups, the findings indicate.

The ‘Global Habit’ study canvassed 275 people with a monthly income of the equivalent of US$515 or more, defined as ‘wealthy and semi-wealthy’. It found that 90 per cent of respondents owned the three basic durables. It also found that more than 50 per cent owned cars. The majority of these were purchased used, but intent to buy is high at nearly 62 per cent.

Smartphone ownership was also found to be widespread at more than 70 per cent, with the majority of models costing between $100 and $199. Myanmar’s government aims to make mobile communication available to 80 per cent of the population by 2016. This suggests ample room for the growth of more premium mobile devices.

Kazuko Takatsuki, R&D director of Hakuhodo’s research and development division, said that while many people already owned the “essential” durables, “ownership ratios of less than 30 per cent for many other product groups point to the likelihood that the purchase of such products will increase rapidly in the years ahead”.

Intent to purchase an LCD/LED TV was relatively strong at above 30 per cent. Other items that stood out as desirable included wall-mounted air-conditioners and water filters. The study noted high ownership of voltage regulators and private power generators due to intermittent electricity flow.

“The unstable electricity supply and the underdevelopment of water service and road networks mean that the development of living infrastructure is urgently needed to allow the use of various products without inconvenience,” Takatsuki said.

Seventeen per cent of respondents said they experience power outages at home “nearly every day”.

But Takatsuki added that “products with functions to compensate for the underdevelopment of infrastructure are likely to create significant business opportunities”.

Product perception

Given that many of Hakuhodo’s clients are Japanese, the study also assessed the perception of Japanese products against their American and Korean counterparts. Many respondents (above 50 per cent) saw both Japanese and American products as having ‘excellent quality’, ‘established reputation’ and as being ‘safe and secure’. Korean products fared relatively poorly in this regard, with less than 30 per cent crediting them with excellence or safety.

American products ranked marginally higher than those from Japan and Korea in terms of being ‘smart and fashionable’. However, Korean products trumped those from Japan and America as being ‘interesting and enjoyable’. Close to 50 per cent said they were, compared to around 27 per cent for Japanese products and less than 20 per cent for American products.

Cars stood out as the most desirable Japanese product for Yangonites, with nearly 87 per cent saying they would like to buy a Japanese car made in Japan, and 60 per cent saying they would like to buy a Japanese car regardless of production location. Household appliances and audio-visual products and digital products also scored highly.

“The key issue for Japanese car makers in particular lies in how to sell themselves to the wealthy as manufacturers of ‘authentic products’ against used cars or parallel imports, given that most of the cars sold in Yangon are second-hand vehicles,” said Hiromitsu Numata, director and project manager of Hakuhodo Consulting Asia-Pacific.

“I would propose the development of broad product line-ups and point-of-sale offering brand experience from the long-term brand building perspective. The development of after-sales services including repair for second-hand goods or parallel imports would be a key issue [from] a medium-term business perspective.”

Media consumption

The study shows TV to be the most popular medium among the target group, with nearly 98 watching it regularly. TV is seen as being the most enjoyable medium and the source of the most reliable information. Journals, weekly newspapers mostly published independently, rank second above newspapers. Newspapers are seen as more reliable than journals, however. Online media consumption is relatively widespread, with 39 per cent accessing it from a smartphone and 35 per cent from a desktop computer.

Takatsuki noted the influence of Thai and Korean culture, largely through TV dramas, on Yangon consumers, although this was not assessed in the research.

“You can find products made in Thailand on every corner of the city, while cosmetic products from Korea have a lion’s share of the sales floor in shopping malls,” she said, adding that “people’s ideas and lifestyles are evolving in every aspect”.

“Amid these changes, the wealthy/semi-wealthy or the young will be the first to embrace new products and services," she added. "Thus it will become even more crucial to propose lifestyles that are new and suited to the needs of such early adopters.”

 

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