24 October 2014edge review

A box of KFC chicken. (Marufish/Flickr).

KFC has become the latest in a line of foreign chains looking to tap into Myanmar’s growing consumer class 

When Myanmar’s first international fast-food restaurant opened in April last year, at Yangon’s tiny, western-style Junction Square shopping mall, it was an instant hit with the city’s increasingly visible cohort of young, conspicuous consumers.

The outlet is a franchise of Lotteria, a Japanese-Korean chain wildly popular in its home countries. The company reportedly plans 25 in Myanmar by 2016.

In Myanmar, as across much of developing Asia, fast food is a luxury. With a meal at Lotteria costing US$2.50 to US$5, it is out of reach for most in Myanmar, where the average daily wage is less than US$3.

But the considerable buying power of Myanmar’s growing middle and upper classes hasn’t gone unnoticed by foreign fast food chains, which – despite a lack of robust trademark protections – have steadily begun setting up shop in Myanmar over the past 18 months.

Lotteria has been joined by Malaysia’s Marrybrown, Thailand’s Pizza Company and Charoen Pokphand and Singapore’s Ya Kun and Chewy Junior. Japanese chain Freshness Burger opened an outlet earlier this year at Myanmar Culture Valley, a new, high-end mall beside the shimmering spire of Yangon’s Shwedagon Pagoda.

It has been almost all Asian chains moving into Myanmar’s burgeoning fast-food space. Now, however, western franchises look set to join them. Last week, KFC – owned by American franchising giant Yum! Brands – and its partner in Myanmar, Singapore-listed Yoma Strategic Holdings, announced their intention to bring Colonel Sanders’ secret recipes to Myanmar by next year.

“Myanmar offers significant macro potential for an international quick-service franchise with a growing consumer class that is forecast to grow from 2.5 million today to 19 million in 2030,” said Yoma chairman Serge Pun.

KFC has a history of beating its American competitors such as to the punch in emerging markets, although the likes of McDonalds and Burger King are seldom far behind it. In 1987, it was the first western fast food chain to establish a foothold in China, where it has remained the country’s most popular foreign fast-food franchise and grown into KFC’s most profitable market.

Meanwhile, the KFC venture is the latest example of how the easing of western sanctions has already generated a windfall for Pun, who has garnered a reputation for clean business practices amid the well-connected “crony” tycoons that dominate Myanmar’s economy. His companies, among the country’s largest, are highly diversified, with interests in transportation, real estate, banking, healthcare and agriculture.

While foreign fast food chains are only now making their presence felt in Myanmar, imitations have been available for years, often in the form of blatant rip-offs of famous brands, among them MacBurger, Burger Queen and ICFC (the logo of which, with its mashed-together “I” and “C” and red-and-white colours, might generously be called an homage to a certain American chicken chain).

Myanmar lacks a robust trademark registration and enforcement regime, and international trademarks are not recognised. A new trademark law, devised in conjunction with foreign governments and intellectual property associations, is in its eleventh draft. Despite the delays, it will finally be introduced soon, claims Alan Adcock, a Bangkok-based intellectual property lawyer who helped with its formulation. “Like in any country, it’s going to take a long time to get a major piece of legislation off the ground,” he said.

Currently, trademarks in Myanmar are governed by a miscellany of laws and customs, many dating back to the colonial era. Would-be trademark holders must register a “declaration of ownership” and then publish a newspaper notice informing the public of its claim. Over the past two years, Myanmar’s two English-language papers have done good business selling ad space as western brands seek to assert their trademark rights ahead of entering the Myanmar market.

Under this system, however, “bad-faith” local interlopers can register an internationally recognised trademark and use it to establish incumbency and complicate market entry for international brands. Even so, Adcock believes they should have little to fear.

“[Most] would have already staked out their claim to their trademarks many years ago, so a third-party bad-faith latecomer would not be able to declare its own property rights over that trademark,” he said.

Even where foreign brands fail to declare ownership, Adcock believes a Myanmar court would be unlikely to rule in favour of a local usurper over a foreign company with a proven international profile. “It’s not as scary as people might think,” he said. “Just because there’s no trademark registration regime, it doesn’t mean that there’s no recognition of trademark rights.”

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