The Situation

After US economic sanctions were largely suspended in 2013, even the world’s largest companies evaluated entering the Myanmar market with caution as significant political, social, economic, regulatory and reputational risks remained.

  • Myanmar was one of the world’s last frontier markets closed to most Western investment by a complex combination of sanctions and regulations initiated by the US and many other OECD countries over several decades to effect political change.
  • When these sanctions were largely suspended by the US and lifted by most other countries in 2013, Myanmar became the focus of the world’s investors almost overnight. Fortune 500 companies sought to enter Myanmar quickly to capture first-mover advantages, learn about the market and build a book of business.
  • The complex political, social, economic and regulatory environment made local operations difficult without qualified on-the-ground staff. Limited availability of office space and a business environment widely rated as being one of the world’s most difficult places to do business made companies think twice about entering the market. The market entry decision was further complicated by a lack of reliable commercial information with most companies satisfied to look, listen, learn and leave.
  • Tractus’ Business Inc.ubator® service provided these firms with a way to quickly establish a commercial presence, retain competent local representatives and secure office space, administrative support and managerial oversight without the need to establish a legal presence in the country.

The Project

Use Tractus’ Business Inc.ubator® as a low risk cost effective market entry platform

  • Tractus developed the Business Inc.ubator® model specifically to serve the needs of small and medium-sized companies who needed a low cost and low risk way to enter new markets in Asia. But, it has proved equally popular with Fortune 500 companies in high risk markets like Myanmar.
  • Tractus’ Business Inc.ubator® allows companies to establish a commercial presence in a new market without having to establish a legal entity by using Tractus’ registered companies throughout the region.
  • We collaborated with our clients to recruit qualified staff in-market, across Asia and globally through our own efforts and those of local and regional recruiting firms, on-line recruiting services and our client’s own network of global recruiting resources.
  • Once qualified candidates were identified, we interviewed and short-listed them for final client selection as well as undertook reference checking. Finalists were hired by the Tractus Myanmar legal entity. Our administrative staff prepared employment contracts incorporating provisions as required by our clients and collaborated with client in-house and third-party legal counsel to review agreements. Tractus manages monthly payroll and expense reimbursements through our own on-line expense reimbursement system.
  • Business Inc.ubator® staff are hired with the clear understanding they are working solely on behalf of our clients and the expectation that once a suitable volume of profitable business has been developed, a new wholly-owned client legal entity will be established and their employment status transferred to the new company.
  • Business Inc.ubator® staff are provided with their own cubicles or closed offices depending on need. Fully redundant utilities are included in the monthly fixed facilities charge i.e. electricity, 24×7 back-up power, fully redundant fiber optic Internet and telephone access, gated premises, conference room facilities with LCD projector and conference phones, integrated color printer, copier, scanner and fax equipment, storage space, furniture, breakroom facilities, and more.
  • Full administrative services including a receptionist, out-of-pocket expense administration, domestic and international travel arrangements, assistance with purchases of assets and special services and other light administrative support are included in a fixed administrative services fee.
  • Most importantly, Tractus provides managerial support to client staff. While they reported directly to our client’s designated supervisor, a Tractus Director or Senior Manager is responsible for oversight working in close collaboration with their supervisor ensuring they are never “out-of-sight and out-of-mind”. We also provided valuable insights into how best to manage local staff to achieve their commercial objectives.
  • Tractus’ Business Inc.ubator® afforded our clients the ability to quickly establish a market presence, hire staff and provide them with a fully-functioning office at a competitive cost while minimizing the risks and costs of market entry by not having to establish a fully functioning office and legal presence in a frontier market that has yet to be fully validated.

The Solution

Tractus’ Business Inc.ubator® paved the way for several Fortune 100 companies to mitigate the risks of quickly establishing an effective commercial presence in Myanmar’s frontier economy

  • A global financial services company used the Inc.ubator® to hire a local representative to monitor the Myanmar insurance market and regulatory framework in anticipation of planned liberalization.
  • A global industrial conglomerate has established a three-person business development team to identify and position itself for opportunities in several of its key industrial segments.
  • A global multi-product chemicals firm hired a local representative to assist to identify opportunities across its chemicals, coatings and agricultural chemicals product segments and coordinate with regional specialist sales teams to qualify new potential business opportunities.
  • Tractus’ Business Inc.ubator® solution has afforded our clients the ability to mitigate multiple commercial risks and avoid making significant investments before they felt the market was ready.
  • Tractus’ management oversight and in-market guidance has postponed the need for growing the local team until the market conditions and business can support them independently.