One of the main challenges facing Myanmar is developing its export trade. The majority of Myanmar’s exports are extractives and raw goods. But some of Myanmar’s most lucrative potential export markets need to produce more value-added high-quality goods.
The Global New Light of Myanmar Daily Newspaper interviewed U Ngwe Tun, founder mof Aung Nay Lin Htun Company Limited and the award-winning social enterprise, Genius Shan Highlands Coffee.
Q: How do you collect raw materials for processing and roasting of Genius Coffee and what technology do you use?
We manufacture our product in Ywangan area in Shan State, where we also do our roasting, milling and processing of naturally produced coffee beans. We are putting forth concerted efforts to extend our network to get raw materials from other regions. For the time being, we collect raw materials mainly from Nawnghkio, Pyin Oo Lwin, Pindaya, Ywangan, Demawso, Ngape and Thantaunggyi areas.
We do a lot of research to successfully operate our manufacturing business within past five consecutive years, importing production machinery from India and solving technology barriers with the help of Japanese partners. I openly say that we started this kind of business from small-scale level. We later took loans from Kanbawza Bank, a private commercial bank, to extend the business, producing roughly 20 kinds of coffee related products including four kinds of organic certified products.
We are planning to manufacture new products. We make teas, cookies and soaps with the use of outer skin of coffee fruits. We are always monitoring the market and think how to differentiate between our products and other products in the market.
Our paper packaging is aimed at providing clients with eco-friendly benefits. Most of people think that as a local business, it is impossible to buy paper-based packaging products due to their high price. We have changed their minds, with packaging that offers information relating to the product including the origin of the goods and our processing methods with the aim of giving them a sense of the authenticity of our locally produced products. And our products are widely available for purchase.
Q: How do you acquire the trust of customers, that your products are organic?
We have produced organic products since 2014. Everybody said that this production will not produce a healthy profit because of higher production costs. We found that international manufacturers produce organic products on a commercial scale. At that time, farmers cannot accept the plan, raising question to me, “Are people buying organic products?” We explained the benefit of this production that will reduce costs of production as it does not need chemical fertilizers and promising them that the company will seek markets for their naturally grown products. Only 50 farmers participated in the first year planting.
After we received a certificate for our organic products, we increased the price of organic raw materials from Ks1,000 to Ks1,800 per viss (which is equivalent to 3.6 pounds), causing many growers show a keen interest in natural planting. At the present time, almost all partner growers wish to cultivate organic food. In addition, we invited our overseas customers to inspect organic products in our farms and we get good feedback from them. Actually, the taste of organic coffee is better than conventional coffee. We have international certificates for the whole manufacturing and packaging process of organic coffee and we welcome everybody to come and see it.
Q: How is your export business doing?
We export our product mainly to Hong Kong, Taiwan, Thailand and Singapore, and we’re planning to open branch offices in Canada in the future to sell specialty coffee there. We already established our business extension in Cambodia. We have further plans to act as a bridge between international traders and domestic manufacturers who mainly export agricultural goods. We’re planning to invite interested traditional food manufacturers and organic food producers to partner with us.
Q: How did you build your production business?
We first changed thinking of people who believe that coffee must be bitter. Our product mainly provides customers with a sweet taste and better aroma. This is the way we penetrate the market with a good packaging system. We have spent about Ks300 per pack equipped with zip seal. At first, the majority of domestic retailers did not want to accept our products as they thought it was too expensive. Later they accepted our brand as demand for our products have gradually been increased in the domestic market.
In the beginning, we could not do mass production as a ton of raw materials cost Ks3 million. We manufactured only one ton in the first year. The production volume has risen to three tons, then 10 tons and 50 tons in the following years. Last year, we produced 150 tons. The important thing is to build the business so that we had access to good raw materials and as well as the capacity to manufacture the best quality product to compete with international brands in order to establish trust with buyers.
Advertising the brand through events and complimentary sampling also plays a key role in increasing our customers and their trust. We gained the trust of clients who recommended us to their colleagues on social media. Finally, we have success in building trust with not only customers but also with coffee growers, setting up a good relationship with those growers, so that good raw materials are available when we need them.
Q: What feedback do you receive about Myanmar’s coffee from international buyers?
The Myanmar coffee market is seeing progress. We had a 50-50 chance of success to get international interest at the beginning. We received good reviews from new foreign customers and others started to think about this as a local brand. For the time being, we are trying to attain a strong export market predominately in regional countries, followed by the U.S and Canada. Maintaining our products’ quality is essential for achieving our export targets. We think the country’s coffee industry has a good chance. Many investors from Singapore, Japan and the U.S. are connecting with us. We are still deciding which are the most suitable potential investors.
Q: What barriers do you face in competing foreign market?
Transportation is one of the main barriers to penetrate the international market. It is difficult to transport cargo to some countries by sea. The prices of goods may increase in foreign markets due to high transportation costs. We are not afraid of market competition and are able to compete.
Q: What kinds of supports do you want from the government as an entrepreneur?
Access to finance is the big issue for the growth rate of a company. We need to maintain quality of service. We can’t run without efficient machinery and know-how. We need more financial support. We can run with the current bank interest rate but there are few opportunities to get loans from banks without collateral. Central bank policy barriers slow small and medium business growth. From my point of view, we need a concrete policy. One-stop services are also required to reduce waiting times for government approvals for loan proposals.
Q: What advice would you give new SME Entrepreneurs?
The spirit of benevolence plays a crucial role in starting a business that is the first thing I want to advise the new SME Entrepreneurs. The second step they should do is conduct market survey to know the real condition in the market. In the third phase, the entrepreneur must search for investment, planning to take loans not only from banks but from other financing sources. A business without a market, or adequate investment or benevolence evidence is likely to fail.
Source: The Global New Light of Myanmar
