Yoma sees promise in JCB partnership

27 May 2017
Yoma sees promise in JCB partnership
Melvyn Pun, CEO Yoma Strategic Holdings.

Myanmar’s prominent Yoma Strategic Holdings Limited, rooted in real estate, consumer business and automotives and equipment, recently stepped up to engage with a business selling construction equipment of the UK-based and world-class brand JCB. 
Yoma’s wholly-owned subsidiary, Convenience Prosperity Company Limited-CPCL is now the exclusive distributor for JCB construction equipment in Myanmar.
Group CEO Melvyn Pun firmly believes that the Yoma JCB distribution business will become another main pillar of the mother company in the coming years.
In this exclusive interview with Mizzima’s chief business reporter Aung Thura, Melvyn Pun offers insight into the Yoma JCB business plan.
Mizzima: Can you tell us Yoma JCB’s overall plan in Myanmar?
Melvyn Pun: We have been in discussion with JCB for quite a while to see if we could work together in Myanamr. We are glad to be able to represent a leading construction equipment brand like JCB in Myanmar. The country needs to develop its infrastructure; not just construction of buildings, apartments, housing or condominims but also the building of  power plants, and all the infrastructures needed for railways and airports. To build quality infrastructure, you need quality equipment, and this is where the international quality of JBC can play a part.
Could you tell us about how the partnership came about between Yoma’s CPCL and JCB?
Five years ago, Yoma Strategic took on a research to review Myanmar’s entire automotive and heavy equipment sectors. We looked at each category: passenger cars, commercial vehicles, agriculture equipment as well as construction equipment. At that time, it was obvious that there was a lot of opportunity in the construction equipment space. However, we felt quite strongly that we were not ready to be in that sector as yet because we did not have the right team in place.  During that time, we had the opportunity to meet with the JCB team and learned about their products then. However, my team recognized it was not the right opportunity to work together yet.
Another opportunity came along last year when JCB approached us again to discuss ways to work together. This time, we felt we were ready. This is because over the past seven years, we were able to build a very good network in Myanmar through our agriculture equipment business. Through our wholly-owned subsidiary business, Convenience Prosperity Company Limited ”CPCL”), we were distributing New Holland tractors and we became very successful,  both in terms of covering a large part of the country as well as providing very good services to our customers. This helped us build a strong market network.
Of course, agriculture is very different from construction but our approach is similar – we are working with JCB and New Holland leverage the same branch network that we will have throughout the country and hopefully that gives us a very efficient way to introduce JCB products to the market.
How did you prepare for this partnership?
A lot of work went to the preparation. First of all, we had to understand and thoroughly research the market. Each country has different requirements but, particularly for Myanmar, the requirements are quite new. There are a lot of different types of projects and weneed to understand what equipment is suitable for Myanmar and what are the challenges. Myanmar needs a lot of construction and actually Myanmar needs very versatile equipment that are able to do different types of construction jobs. It is not efficient to have one type of equipment that is dedicated just for building roads, or for construction of buildings. Ideally, you want to build equipment that you can maintain easily but it can do many things at the same time. Luckily, JCB offers us this option.
How do you view the benefits from the JCB network?
JCB is a very prominent brand because it is one of the most prestigious brands in the U.K., with a very strong British heritage. At the same time, JCB is also very successful in India where it has a dominant position in the rural market. This shows us they are able to design their products that are not only high quality, but at the same time, it has cost-efficiency that allows JBC products to be very strong in India. We are also lucky because we are strategically close to India, which means we can utilize the very large plant in India to manufacture JCB machines at a very efficient cost. So we can get the products, the facilities, the prices.
The other thing which is equally important is the partnership. JCB has really impressed us in terms of their approach to the partnership with us but also with the customers. They fully understand us. And the business is not about selling one unit to one customer and hoping that we find another customer some other time. The approach is to help business owners and individuals grow their businesses. One person may be looking to build roads, one person may be looking to build buildings but maybe others need, for example, to build a power plant. We recognize the needs of each customer is very different and our approach is to work with our customers to provide them with a total solution which includes designing a process in terms of support services and supporting the business. That is very important.
Do you have leasing and hire-purchase options?
We will be providing a whole range of solutions, we will also be selling individual units .as well as work banks such as Yoma Bank to provide hire-purchase financing arrangements. At the same time, we will provide leasing options. We are looking at a range of different ways to provide solutions to each client’s need. It will be an ongoing dialogue. So people can phone up to ask questions or to provide support. We will also have social media such as Facebook to communicate and help our clients.
Can you tell us the specific strategies?
First of all, we want to provide a total service. The key is our ability to listen to the customers and provide equipment solutions for their business. After-sale service is also very important, and will not disappear after selling the products (units). Of equal importance is the affordability of the products as well as to provide financing when there is a need.
We will provide leasing options as well as work with banks to provide financing options.  We understand that sometimes these equipment are quite expensive, but it does help the businesses to be more efficient, and allow businesses to accomplish projects. We will work with clients to find solutions that enables the linking of payment periods to the business. On the customer service front, Yoma JCB has an advanced telematics technology in Myanmar, called LiveLink, to control and track their construction equipment machines 24/7.
How do you view the potential for construction in Myanmar?
I have no doubt that there will be a lot of projects coming up both from local investors as well as international investors. According to my day-to-day discussions with business partners as well as prospective new partners, we know that there are many investors who are very interested to make long- term investments in Myanmar, whether it’s railways, buildings or the upgrading of existing infrastructure.
We would look at how much the telecom-infrastructure has improved in the last four years. I think you will have a similar level of growth in all the others infrastructure bases. I think that is very positive and the new MIC (Myanmar Investment Commission) and the law has come out, the procedures are coming out. These all are aimed to reduce bureaucracy and really target investors to make investments in an easier way. You may say that things are have not really changed yet. My personal opinion is we are very much in the right direction. I have already seen some of those changes that will lead to investments in the very near term.
What are you looking to invest in Yoma JCB?
For the Yoma JCB business, our aim is initially to leverage our existing branch network to grow market share. So the initial capital requirement is not very high as we are using existing branches. We will have 14 branches by the end of this year and are looking to use these branches to sell JCB equipments.
Most of the investments will be working capital to ensure  we have the inventory in place and to also train our new staff. There will be a lot of training and we will also provide training to our customers so that they can use the equipment efficiently. Initially, it will not be a very large investment amount. Over the coming years, we will slowly increase, and we anticipate the investment to be around US$5 million over the next few years.
What about job opportunities with Yoma JCB?
Over the next three to five years, I think the whole organization will have more than one hundred staff. It will not be just a matter of our own staff; our customers and partners will also create jobs as well. So you will see a lot of our customers provide training and providing support to see how they can work more efficiently.
How is the government helping construction?
Of course, the government has a lot of projects that they need to look at. I don’t think there is a need for the government to help the construction industry, other than to provide a condusive  platform for investments to come in and be channeled to specific infrastructure areas where we see the most needs.
What are the challenges in building infrastructure in Myanmar?
There are many, many projects. Of course, every company needs to find its own way to operate efficiently. We have started the construction of our Yoma Central project, and have spoken to many international contractors. Many of them are already in Myanmar with ongoing construction work. Our main construction partners will be international companies as well. So you will see them coming in.
Yoma and FMI are focused on three main pillars: healthcare, real estate and the financial sector. How does Yoma JCB now fit in with Yoma’s overall plan for Myanmar?
The three pillars you outlined are the three pillars for First Myanmar Investment, which is an affiliate company of Yoma Strategic Holdings Company Limited, and these are the areas that they will continue to focus on. The three pillars for Yoma Strategic Holdings are real estate, consumer as well as the automation and heavy equipment sector. Yoma JCB, is part of the heavy equipment business and this business is growing very fast.  The heavy equipment and automotive business include passenger vehicles, commercial vehicles like trucks; it will also include agricultural equipment such as New Holland tractors as well as the JCB business. These are the products that we mainly sell and then on top of that we will do leasing. In time, Yoma’s three pillars between real estate, the automotive and heavy equipment and the consumer business should be around the same sizes as each other. So, each of them will have its own role to play.
Is there anything you would like to add?
Heavy equipments have very flexible use. I mean you will see the same equipment that you can have on the road, digging the soil up, and same equipment can be deployed flood areas, and you can see the same equipment in a logistic centre moving goods from various places. So these are very versatile pieces of equipment that have many different uses.
This is very exciting. If you look at the fastest growing business that we have now, it is the New Holland tractor business. And I firmly believe JCB will become another main pillar for us for the coming year. The most important thing for us is to ensure that we introduce the products in the right way, really educate our customers on what is the best use for our products whether it’s for a  logistics company or a construction company. We would like them to think of the brand JCB when they need to buy a heavy equipment machine.