Price depends on globalisation, competition and branding

At a seminar there, a representative of the Myanmar retail industry said about 90 per cent of consumer products sold in Myanmar are imported. If all the products imported from Thailand are quoted 50 per cent higher than prices in Thailand, how can Myanmar’s people afford them when their average income is more than 10 times lower than Thais’?

I guess when the country is more open and when more manufacturers are settled, competition will drive down prices. It’s the same pattern Thai consumers witnessed in past decades.

Some thirty years ago, a TV set was extraordinarily expensive; only a handful of Thais could afford even a black-and-white one. In a village in a remote area with some 50 households, there might be only one TV set – usually in a grocery store. In the evening, kids always gathered at the shop to watch the programmes. Adults took their places for big events like a boxing match. 

Competition in the industry was extremely low then, with two Thai TV makers against imports chiefly from Japan. The market is totally different now. Nearly all the Japanese TV makers operate manufacturing plants here, and the competition is fuelled by other manufacturers from China. Competition drives them to compete in terms of technology and pricing, and the battle is extended across the world. The result is at least one TV set in nearly every household in Thailand. In some households there is at least one in every room. The other result is more TV sets in many countries are made in Thailand. 

Competition and globalisation are making things more affordable for people everywhere. Now, manufacturers compete in terms of brand awareness. The more consumers value their brand, the more expensive their products can be.

It surprised me a great deal to learn that an iPhone 5 with a 32GB embedded memory can still find buyers despite the Bt26,000 price tag. The mobile phone market is flooded with a variety of models from many manufacturers, but remarkably the price does not fall even with rumours that the iPhone 6 will be released later this year.

Everywhere, there is a big fan base for the iPhone. Even among non-fans, they can’t help compare the features of other products with the iPhone; but for a cheaper price and to promote the Android market, they settle for a phone that does not offer some iPhone features.

It should not surprise anyone that Apple was the most valuable brand in the 2013 ranking by Brandirectory. Apple has maintained first spot for two consecutive years, after rising from eighth in 2011. Notably, Samsung saw its brand value, at US$58.77 billion, surge from 18th in 2011 to 6th in 2012 and 2nd in 2013. Once the world’s leader, Nokia fell from 192nd place in 2012 to the 388th, with a brand value of $3.2 billion. 

For a Thai, it is good to see Thai-manufactured products overseas. But a big question is when a Thai brand will be among the top global 500 brands. 

During a visit to The Nation last week, Michelangelo Pipan, Italy’s ambassador to Thailand, shared a valuable lesson on what made Italy home to several well-known products. In a village near a forest where rare hardwood is found, villagers made shoe soles from the wood. When demand grew, the number of households involved in the business expanded. In time, government assistance was sought for access to funding and infrastructure to support the business. 

In Thailand, there are several northeastern villages that produce fabulous silk. Yet, villagers always fear that their products made during their free time will be priced too high. Governments are too busy with national agendas that no incentives are available for nearby universities to conduct research on how to maintain production quality and boost demand. 

Today, we see made-in-Thailand snacks in Myanmar, motorcycles in other neighbouring countries, and hard-disk drives in PCs in use worldwide. Thais take pride in many local products like silk, but few have the qualities that can make them internationally known.

As brands rule the world, it may be time to think harder on this.