Support for Locally-Made Products Needed Amid Influx of Chinese Goods

Almost daily, trucks piled full of China-made goods ply the Muse-Mandalay highway, bound for markets located across the Mandalay Region. They include a dizzying array of products, including food, clothes, tools, vehicles and machinery.

Because Chinese goods are cheaper compared to goods manufactured locally, demand from consumers in Mandalay has been on the rise. On the flipside, many domestic small and medium enterprises (SMEs) are finding it increasingly hard to compete with their rivals across the border.

“The goods imported from China are mostly consumer goods which are staples for local consumers. These products are arriving in Myanmar almost every day, so it’s no surprise that Chinese imports are having a negative impact on local SMEs,” said one official from the 105-Mile Trading Zone at the Muse border gate, who asked to remain unnamed.

Now, even pasos, traditional bottom wear or longyis worn by Myanmar men, are being imported from China by Chinese businesses based in Mandalay.

Local resistance

That has angered and raised concerns among local paso makers. “If local consumers accept China-made pasos, many of the local makers will have no choice but to stop production. If the local paso market ends up being dominated by the Chinese, many local people will also be made jobless,” said U Pyi Thein, owner of Mya Thone Lone Weaving Workshop in Wundwin, Mandalay.

Wundwin accounts for nearly 70 percent of Myanmar’s paso market. Nearly 100,000 weavers work for some 3,000 weaving businesses and workshops the township. One workshop can produce 10 pasos a day. On average, Wundwin produces about 300,000 pasos a day.

So far though, Chinese-made pasos have not been able to widely penetrate the local market. That’s because wholesalers and retailers at some markets, such as Zay Cho market, Mandalay’s largest market, are still refusing to accept China-made pasos.

“We’re worried that these pasos may hurt the local paso makers, so that is why we haven’t accepted them. So far, no shops at Zay Cho sell China-made pasos yet,” said U Than Tun, owner of Shwe Mann May textile shop at Zay Cho market.

Rising struggle

Businesses in other sectors haven’t been as fortunate though. In fact, many have already bowed to competition from China and stopped production. These include medium-scale furniture workshops and some industrial zone factories in Mandalay.

Among the challenges local SMEs face are high raw material prices, obsolete technology and lack of expansion capital. Take U Win Htay for example. After cheaper and lighter cupboards made of aluminum and plastic entered the Mandalay market from China, the furniture maker was forced to close down his business.

“SMEs like us don’t have much money. For us, cash flows are generated only when we sell our goods. This cash is then recycled into making more goods. The other factor is technology. We do not have the capital to invest in new designs and better technology,” said U Win Htay, an owner of a furniture business from Mandalay.

Industrial businesses have also taken a hit due to the lack of good technology and skilled labour.  “We are still relying on manual labour to make iron plates. Meanwhile, China has already been making them with machines. As a result, for every one plate we make, China has already made 100. How can we compete?” said U Min Naing, who runs an iron shovel making business in Mandalay Industrial Zone.

Daw Hote Lyan, who is among those importing Chinese merchandise for sale in the local market, said business is booming and the risks are low. “Even if a Chinese product is damaged in transit, I just need to sell an extra product in the market to cover the cost of the broken item. In comparison, local products are expensive and take longer to sell. Plus, they require more care to avoid damage,” she said.

Government support

The local business community has called upon the government to support their plight. “Local SMEs simply cannot compete with the Chinese.  No matter how high quality our products are, many consumers prefer to buy low priced ones from China. At this rate, more local SMEs will disappear in the long run. The government should protect the local SMEs and give us technological support or only the large companies will survive,” said U Min Naing.

Allowing other countries to dominate and monopolise local industries could have a negative impact on the nation, a Mandalay resident Dr. Moe Myint said. “Despite the hard work, if they cannot catch up with other nations in technology, many local SMEs will collapse. The repercussions are enormous. When the workers in those SMEs lose their jobs, they will be unable to support their families, leading to social unrest. Both the government and businesses must work together to avoid this,” Dr. Moe Myint said.

While aid from the government has been insufficient thus far, officials said plans are in progress to provide necessary support to local SMEs. “The government is implementing a long-term project for SME development. They also have a plan to form committees,” said U Zarni Aung, Regional Minister for Electricity, Energy and Construction.

 

Source: Myanmar Times

 

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