Open for business
It is a blazing hot Saturday afternoon and the exhibition yard outside Yangon showing industrial products from Guangxi is deserted. The monsoon rain has yet to break and the heat is shimmering off the trucks, tractors and cement mixers.
'It's far too hot for anyone to come out here today,' said Leo Pann Lin, a regional sales manager for a subsidiary of the Hong Kong-listed Chinese company Sinotruk, as he rests in the shade.
'But we are not worried. There will be very good business in Myanmar for us - of course it will be more and more competitive, but we will be well placed to compete,' said Pann, whose sales region covers the markets of Indonesia, Vietnam and Cambodia as well as Myanmar.
'We already have a network in place and that will be important as big international firms come in. Most of all we are medium quality, but very price competitive - and price will be very important in this developing market.'
Sinotruk's subsidiary is already selling more than 1,000 dump trucks and cement mixers a year as Myanmar's infrastructure programmes and mining operations gather pace. Over time, Pann says, he is confident that Myanmar could be a better market for his products than the more advanced sectors in Indonesia or Vietnam.
Large Chinese excavator and bulldozer manufacturer LiuGong Machinery was also showing products. Regional sales manager Andy Zhong Wen expresses similar confidence as he anticipates increased competition from Japanese, South Korean and US heavy industry firms. Improving quality coupled with price competitiveness and an after-sales network already on the ground are natural advantages for Chinese companies, particularly when it comes to big government tenders.
'Competition will be a test for us ... but more business can only be good for everybody,' Zhong said.
The views of Pann and Zhong are widely echoed in Yangon and beyond as the vanguard of Chinese enterprises in Myanmar - one of the region's last untapped markets - confront reforms and brace for potential competition once Western countries start easing economic sanctions.
China, together with Thailand and India, were the country's dominant investors and trading partners during Myanmar's long years of isolation under military rule. Figures from Myanmar's central statistical office show that cumulative foreign investment approvals more than doubled in 2010 - with investment from China, including Hong Kong, topping US$15 billion.
Thailand comes next with more than US$10 billion, mostly in gas-related projects. (Statistics in Myanmar usually tend to be rubbery, and precise figures for actual disbursements are not available, with officials clinging to cumulative approvals as the yardstick.)
Over time, however, competition will challenge that dominance.
A new private study by regional corporate consultancy Vriens & Partners outlined extensive Chinese operations in hydropower, mining, oil and gas as well as a developing presence in agriculture and construction. Citic, for example, is building a special economic zone on the Bay of Bengal at Kyaukphyu, while the Yunnan United Power Development Co and China Power Investment Corporation are active in hydroelectricity.
The survey predicts, however, that intense competition lies ahead in other sectors as telecommunications, banking and financial services, tourism, manufacturing and real estate all start to open up. Huawei and ZTE, it notes, are both active in the fledgling telecoms sector.
Some Chinese businessmen talk of the current situation as a double-edged sword where both reforms and an end to the sanctions improve a hidebound and poorly structured domestic business environment yet attract major regional and international competitors.
'We have to hope our long established networks and knowledge will count once things start hotting up,' said one Chinese oil industry executive. 'Certainly it will be a tough market for any new player, so there will be an advantage for being here first.'
After years under a junta widely seen as inept and brutal, Myanmar has been left resource-rich but capacity-poor - a place where per capita incomes are just US$800 a year and basics such as computer access and mobile phones are beyond the reach of most its 60 million people. Once one of the richest nations in Southeast Asia, Myanmar has slumped below Laos and Bangladesh in poverty rankings.
Its nominally civilian government is hoping to change that - with broad foreign help.
The US, European Union and Australia are already preparing to drop a range of sanctions after parliamentary by-elections earlier this month swept Nobel laureate Aung San Suu Kyi and her National League for Democracy into mainstream politics after years of repression.
That is expected to further fuel international business interest, making it easier for the country's leaders to tap desperately needed advice and support from outside groups such as the International Monetary Fund and United Nations Development Programme, along with foreign governments.
'At this point it is all about capacity building,' said one foreign business consultant now trying to match expectations with the realities on the ground. 'Whether it's new foreign investment laws, the banking system or access to land - right now nothing is ready to absorb the kind of money some outsiders are getting ready to pour in.'
In the longer term, competition from American, South Korean and Japanese companies is expected to be intense. Already diplomats are speculating that Washington will secure good access for US companies as America rolls back sanctions.
Japan, too, has cleared the path for aid flows and is expected to use any such influx to support Japanese companies.
The banking sector is not due to be opened up until 2015,but telecommunications licences for foreign firms are expected to be issued before that.
New investment regulations are expected to streamline land, staffing and tax issues, while making it easier for foreign firms to repatriate profits.
Chinese businesses face more than mounting competition, however. Some regional analysts have noted for several years that Myanmar's military and civilian leaders have grown deeply troubled by the country's increasing economic and strategic dependence on its giant neighbour.
'The story of Myanmar's relationship with China has been one of deepening dependence, despite the junta's discomfort with that dependence,' wrote Singapore-based scholar Dr Ian Storey in a recent book on how Southeast Asia was adjusting to the rise of China.
Those background tensions were highlighted last October when Thein Sein's government abruptly halted work on the giant Myitsone dam for the rest of his term. The Chinese-built project would have flooded an area of the upper Irrawaddy to provide power mostly to Yunnan .
The move reflected widespread social and environmental concerns - and served as a wake-up call for foreign governments that Thein Sein was committed to change.
Significant flows of relatively wealthy migrants from Yunnan to the central city of Mandalay - some with illegally obtained nationality papers - has further added to frictions, along with local concerns about cross-border smuggling and vice.
Myanmar's envoys, meanwhile, have been making clear to their Chinese counterparts that China remains welcome and they expect it to continue to be a vital player in the years ahead, even as they seek broader international and commercial relations.
'I think Beijing and the big companies have been getting the message that things are changing in Myanmar and if they are going to be a part of that change, then social and environmental issues must be considered,' one senior government official said. 'We are serious about reform and we like to think that China understands that. If projects are truly win-win, everyone will be OK.'
While the dam remains indefinitely postponed, the even more strategic US$2.54 billion pipeline that will carry Middle Eastern oil and Myanmese gas from the Bay of Bengal to Yunnan is on track for completion in 2013, according to Chinese and Myanmese officials.
It is being built by a joint venture between state-owned enterprises China National Petroleum Corporation (CNPC) and the Myanmar Oil and Gas Enterprise; both sides are increasingly sensitive to activists' reports of illegal land clearances and other abuses along its route, which includes Rakhine state, one of Myanmar's poorest.
CNPC officials said they spent more than US$4.07 million last year to build schools and medical clinics in Rakhine - a fact recently noted favourably by Vice-President Tin Aung Myint Oo. Speaking privately, CNPC officials said they had nothing to fear from political or economic reform inside the country, saying it can only help stability and, therefore, industry in the long term.
Peking University scholar Professor Zha Daojiong said that while international perceptions might suggest China faced fresh and difficult competition, Chinese firms could only benefit from a more regulated commercial environment. No longer would they find themselves left to do the 'dirty work' of an unpopular regime through land clearances, for example.
He also wrote recently that a more regulated and international investment climate in Myanmar could help 'weed out Chinese business practices that anger local populations. That will be a win-win situation for all.'
Lawlessness along the countries' porous border needed to be addressed, as well.
'The one area where China has failed, strategically speaking, is to have more orderly cross-border interactions,' Zha said. 'As is true of similar situations in many other parts of the world, lawlessness can become the rule of the game on the ground.
'When Chinese traders and businessmen display their wealth by opening gambling parlours across the border, they lose the goodwill needed on the part of the local [Myanmese] population for protecting their lives and property. Bodyguards further thicken the atmosphere of distrust.'
China's striking commercial role in Myanmar is not about to end any time soon, it seems, but it may well start to change.