Showing hello: 15 ways people greet each other around the world

A tourist meets a local farmer in Chiang Mai, Thailand, offering a traditional “wai” greeting.  IMAGE: HUGH SITTON/CORBIS

Bonjour. Namaste. Ciao. Ni hao. Guten tag.

There are a number of ways to say hello around the world, and just as many ways to show them.  These traditional greetings, ranging from region to region, have developed into cultural norms — often to show respect. Take a peek at this helpful infographic made by Two Little Fleas, showing us the different ways people from all over the globe greet one another. And if you’re planning a trip anytime soon, take notes so you’re not lost in translation.READ MORE

Tiffany Sees Sparkle in Overseas Markets

CEO Michael Kowalski on Building the Jewelry Giant’s Brand in Asia

By LAURIE BURKITT, WSJ.com 

A fixture on New York’s Fifth Avenue, jewelry giant Tiffany TIF 0.00% & Co. is aiming to improve its luster overseas and particularly in Asia, where demand for gold and gems appears to be insatiable.

‘We’re renovating stores and upgrading the quality in sales professionals,’ says Tiffany CEO Michael Kowalski. Bloomberg News

U.S. shoppers have largely driven sales for the New York-based high-end jeweler, but that picture is changing. For the quarter ended Oct. 31, comparable sales in the U.S.—at stores open at least a year—rose by a modest 1%, with the bulk of sales logged at the New York flagship store, which sells mostly to tourists.

Michael Kowalski, Tiffany’s chief executive, is looking for ways to turn those tourists into regular customers when they return home. Adding to Tiffany’s Japan-based stores, which the company first opened in 1993, the jeweler plans to open in markets such as Russia and in France.

The other target is China, where the company operates 24 stores and plans to open three a year for the foreseeable future, attempting to take on rivals in a competitive market and convince Chinese consumers that Tiffany has the best cuts, designs and service.

Mr. Kowalski recently traveled to China to show off Tiffany’s yellow diamond collection and spoke to The Wall Street Journal in Beijing about plans to build its brand in Asia.

Résumé

• Education: Bachelor’s in Economics, University of Pennsylvania, 1974; M.B.A., Harvard University, 1977.
• Career: Began career at Avon Products in 1978, a year before it acquired Tiffany. Avon later sold Tiffany, but Mr. Kowalski remained at the jewelry maker, helping to take it public in 1987. He was appointed president in 1996 and CEO in 1999.
• Extracurricular: Loves nature, enjoys Chinese food and hates having his picture taken.

WSJ: What are your goals for moving beyond the U.S. in the next three years?

Mr. Kowalski: We do believe there are wonderful geographic expansion opportunities for us. We’ve tried to build a diversified geographic portfolio so that we aren’t dependent on any one region or any one country. We’ve only recently become a stronger presence in the Middle East and we’ll open our first-owned-and-operated store in Russia this spring.

We’re also optimistic about potential in China. Our companywide plan is for Tiffany sales to grow between 10% and 12% for the foreseeable future.

Right now, we have 24 stores and will probably open three to four stores here per year for the future. We certainly want to be flexible and watch how the market develops. That’s our strategic objective. Clearly if we regard China as the fastest-growing market going forward, that implies a growth rate meaningfully in excess of that 10% to 12%. We’re reasonably confident about that.

WSJ: Some luxury companies are wary of China, where an austerity campaign has hit luxury sales. What makes you confident?

Mr. Kowalski: We think the growth curve in China will be something we’ll love in terms of slope. But it’ll also be volatile. In 2011, it was a fantastic year here and 2012 wasn’t so wonderful. [But] 2013 is stronger and we just had a great quarter here.

WSJ: What is behind the volatility?

Mr. Kowalski: It’s driven largely by consumer sentiment and reaction to economic conditions perceived—real or of the moment. Consumer confidence is less volatile in Europe. China is at the higher end, [while] the U.S. is in the middle. I don’t know what drives that, but it’s a continuing challenge here.

WSJ: Consumers are becoming increasingly global, particularly the Chinese consumer. How is tourism changing your approach?

Mr. Kowalski: [The] rise of the Asian consumers and tourism has caused us to change some of our store practices. We accommodate customers who are speaking other languages. It’s a struggle to find Mandarin-speaking sales professionals. We have to work hard to find them.

WSJ: What are you doing beyond language?

Mr. Kowalski: It has caused us to increase our store presence in markets that are heavily visited by Chinese customers. We’re building a flagship store in Paris on the Champs-Élysées.

We are enhancing the store experience in the U.S. and all over the world. We’re renovating stores and upgrading the quality in sales professionals and everything you see in the store.

We’re changing the ratio of selling space to provide more seating space. More casual sit-down environment, more private areas.

WSJ: What are some of the lessons you have learned by doing business in Asia?

Mr. Kowalski: One thing we’ve learned is the need for high standards of service and store experience. We learned that several years ago in Japan and it was critical to our success. Here, we operate in a more intense environment than back in the U.S. and we need even higher standards of service.

WSJ: What specifically have you learned in China?

Mr. Kowalski: We learned we need to be more overt about how we present our brand. A great example would be the store signage. If you were to look closely at the New York Fifth Avenue store, Tiffany & Co. is written in steel letters on both sides of the doors, perhaps two [feet] in length, six inches in height and it’s carved into the granite of the facade. And that’s the only signage there is.

When we first came to China, we were equally discreet and subtle in how we presented the brand and that created a problem. People simply didn’t see or couldn’t see the brand. They couldn’t understand what the store was about. We’ve had to be more direct and less subtle in how we communicate the brand. We need to do a better job of telling brand stories to give a deeper, richer more robust sense of brand. We’ve recognized that while there’s a broad awareness of consumers, we need to work very hard to increase the depth of that knowledge. There is limited understanding of our heritage and that diamonds are central to our business, that we cut our own diamonds. We need to work much harder to communicate that in China than in America or even in Japan.

WSJ: How are you changing your strategy based on what you’ve learned?

Mr. Kowalski: One thing we’ve started to do is use Tiffany blue far more aggressively in the stores and in the facade.

The other thing we’ve done in China is focus on diamonds. We are the world’s authority on diamonds and we’ve emphasized that more dramatically than anywhere else in the world. We’re also speaking more about the Tiffany heritage. We are 176 years old and more longer-lived than many of the luxury brands.

WSJ: You’ve had success in China recently, but what are some of the challenges?

Mr. Kowalski: Diamonds are seen as value items here, which is at the core of their attraction. But one of the challenges with them in China is the bridal tradition, the engagement ring tradition. It has developed some in the last 10 years. But that’s a core part of our business. We’d like to think our presence here is encouraging that development of the tradition.

Write to Laurie Burkitt at laurie.burkitt@wsj.com

Google’s Schmidt to Visit Myanmar

By SHIBANI MAHTANI, The Wall Street Journal

Following a highly publicized visit to North Korea, Google Executive Chairman Eric Schmidt will travel to Myanmar. The WSJ’s Shibani Mahtani tells us why the U.S. technology giant hopes to gain access to this market of 60 million.

Google Inc. GOOG -0.75% Executive Chairman Eric Schmidt heads to Myanmar next week, a sign of the Southeast Asian country’s appeal to leading U.S. technology companies as it emerges from decades of secrecy and crippling western sanctions.

The visit on March 22 will be the first by a high-level executive from a U.S. technology giant, as many American companies have been held back by U.S. regulations that restrict their access to this market of 60 million people, giving international rivals an edge.

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Mr. Schmidt’s visit follows a high-profile personal trip to North Korea, which has similarly low Internet penetration but remains far more isolated and closed off to U.S. companies than Myanmar, now widely seen as the region’s newest investment darling.

“Eric [Schmidt] is visiting several countries in Asia to connect with local partners… who are working to improve the lives of many millions of people across the region by helping them get online,” said Google spokesman Taj Meadows, confirming the visit. Mr. Meadows didn’t go into specifics of Mr. Schmidt’s agenda, but industry experts in Yangon said Mr. Schmidt plans to speak at a public event with local startups, entrepreneurs and students.

Myanmar’s information-technology sector is seen as a potential billion-dollar industry, soon to be boosted by planned advances in telecommunications. Two licenses will shortly be awarded to foreign operators, a step that is expected to improve Internet and mobile networks there.

President Thein Sein‘s nominally civilian government has pledged to open the once-sensitive sector, piquing the interest of companies world-wide. Under the previous military government, online communication was considered highly sensitive, and was heavily controlled. Even the word “Internet” was censored from all publications and cyber cafes were banned at the turn of the millennium, a time when Internet companies were booming in countries elsewhere.

The government hopes to increase mobile-phone ownership to 80% of the population by 2016, from 9% now, presenting huge opportunities for any company operating in the mobile-Internet space.

The change is getting attention by U.S. companies. The U.S. Agency for International Development (USAID) last month led a technology delegation with representatives from Google, Intel Corp., INTC -1.34% Hewlett-Packard Co., HPQ -0.68% MicrosoftCorp. MSFT -0.30% and Cisco Systems Inc. CSCO +0.51% to Myanmar to meet with government ministers and young entrepreneurs.

“Our companies are eager to partner with you and work with you,” said USAID Administrator Rajiv Shah, speaking in Yangon after the business mission.

Technology companies like Cisco have already started making small investments in the country, announcing earlier this month that they will be setting up training centers in Myanmar for locals to use their software.

But the sector is also one where American companies—though widely considered global leaders in the field—remain burdened by outstanding U.S. sanctions. Sites likeeBay EBAY -1.96% still bar users from signing onto their website from Myanmar, with pop-up notifications indicating that accounts cannot be accessed from a “sanctioned country.”

The U.S. and Europe had sanctions against Myanmar when it was run by the military. But they removed almost all economic sanctions over the past year, rewarding Mr. Thein Sein’s administration for its sweeping political reforms.

But U.S. Treasury Department regulations still prohibit American companies from dealing with a list of more than 100 individuals considered cronies of the former military regime, many of whom continue to hold powerful and influential business positions under Mr. Thein Sein’s administration.

American companies that can avoid working with these individuals wouldn’t face similar restrictions, but would still be required to comply with strict reporting regulations when making investments in the country, which they complain is unnecessary red tape.

“Some of the U.S. sanctions effectively shut out 60 million people from certain services to punish 100 people,” said Thaung Su Nyein, an entrepreneur who runs his own information-technology company and seven publications in Myanmar. “Our hope is that the U.S. will do their part [in lifting the remaining regulations], and we’ll do our part in improving this field, and everyone will be happy.”

American officials say that there are some “legacy issues” that frighten U.S. companies investing in Myanmar, admitting this is partly the fault of poor communication from the U.S. government.

“I’m not sure we’ve done a good-enough job communication to our companies that they are allowed to be working here freely,” said U.S. Ambassador to Myanmar Derek Mitchell, speaking to The Wall Street Journal at the sidelines of a USAID event. “We need to do a better job.”

U.S. officials have also promised to update the list, adding new names as their ties to the former regime become apparent and removing others who they believed have improved their behavior.

Still, U.S rivals continue to dominate the market there, having been the first movers to the country of 60 million people, many of whom are growing in affluence.

According to a report from the Open Technology Fund, a research division of Radio Free Asia, Chinese company Huawei Technology Co. 002502.SZ -1.20% leads the smartphone market. The report, which doesn’t break down smartphone makers’ market share in the country, says Huawei phones there cost between US$500 and US$600. Apple Inc.’s AAPL +1.89% iPhone 4, on the other hand, retails for US$1,120 in Yangon—far more than in the U.S. because of third-party restrictions. South Korea’s Samsung Electronics Co. 005930.SE -2.63% Galaxy smartphones retail between US$115 and US$500 in Myanmar, according to the report.

Many of the country’s tech entrepreneurs have been plugging away at the sector for decades despite the hurdles. They hope to modernize their country with new innovations. But partnerships with U.S. companies, they say, remain the bigger prize and could push their government to be more open and transparent.

“You will always have the risk takers, the entrepreneurs,” said Mr. Thaung Su Nyein, noting that these aren’t always long-term players—happy to cash in on millions and move on. “But without sanctions, the U.S. will let in a whole number of companies—like Google—which will hopefully come with e-government solutions, monitoring of Internet openness and other benefits.”

Related articles

• Now Eric Schmidt Is Headed For Myanmar (gizmodo.com)
• Cisco to set up tech training centers in Myanmar (mercurynews.com)
• Google Chief to Visit Burma (irrawaddy.org)

 

The New Tao of Trade: Don’t Just Import from China. Sell There.

 

Chester Higgins Jr./The New York Times

Vision Quest Lighting’s chief executive, Larry Lieberman, started to break into the Chinese market by selling through an established local company.

By JOHN GROSSMANN, THE NEW YORK TIMES
Published: January 24, 2013

Like many American businesses fighting to keep their prices competitive, Vision Quest Lighting turned to China about six years ago. It now imports about a sixth of the two dozen to three dozen parts required to make its lighting fixtures from there. Recently, however, the Long Island company began to see China in a different light: as a sales target. The growing economy of the world’s most populous nation made it ripe for Vision Quest’s architectural lighting fixtures, many custom-made for hotel and restaurant chains like Hilton and KFC.

When one such client, a clothing retailer, ordered 1,500 lights for five stores, Vision Quest’s chief executive, Larry Lieberman, decided it made sense to start manufacturing lights in China. Other American clients, he reasoned, would no doubt begin placing similar orders as their chains sought to capitalize on the world’s fastest-growing consumer market. And with high-quality products from the West coveted in China, Mr. Lieberman also imagined his products on display in Chinese showrooms.

And yet, selling goods in China is not easy. Mr. Lieberman made the 1,500 lights only to see them gather dust in a warehouse in Guangzhou for more than four weeks because he had not yet established a local enterprise approved to process sales.

“The customer couldn’t pick up the goods because we were still trying to set up something so they could buy them correctly and pay the right tax,” he said.

With help from an experienced consultant, Mr. Lieberman finessed the impasse by selling through an established local company, and he remains bullish on cracking the Chinese market – as do many other small-business owners. After all, China, according to a 2012 McKinsey & Company report, From Mass to Mainstream, will be the world’s largest growth market for many years.

This small-business guide offers tips for getting started based on the experiences of entrepreneurs and small businesses that have already tried.

BILINGUAL IS NOT BICULTURAL Lou Hoffman is founder and chief executive of the Hoffman Agency in San Jose, Calif., a communications consulting company that generates more than 50 percent of its revenue in Asia. Mr. Hoffman planted his flag in China in 1999. “I thought I was in not just another country but another universe,” he said. “It starts with the language, but goes much deeper. We couldn’t do business on the phone or by fax. Placing our first classified ad took 14 hours. We had to do everything in person, and considering the traffic in Beijing, you could kill three hours so someone could see your face.”

Instead of dispatching a trusted lieutenant from his California headquarters to open a satellite office in Beijing, Mr. Hoffman delayed that expansion for nearly a year. Instead, he hired a Chinese national and embedded her in his San Jose office for 10 months so she could learn his agency’s culture, then carry it home with her. “We wanted someone able to interview people in their native tongue and able to bridge the cultures, which she was able to do,” Mr. Hoffman said.

SET UP SHOP AS A WFOE Although it is possible to scout opportunities with a so-called rep office and to do business in China by selling through distributors or by licensing products to a Chinese company, most American businesses that are serious about selling in China invest the time and money to establish themselves as a wholly foreign-owned enterprise, or what is known as a WFOE (pronounced WOOF-ee). “We do probably 100 WFOEs for every rep office,” said Dan Harris,  a lawyer with the Seattle firm Harris & Moure who writes a blog about Chinese law and business. “Legal fees for company formation, trademark and employee contracts and manuals typically run around $30,000 to $45,000.” But the upfront investment does not stop there. Depending on the location and the type of business, the Chinese government has minimum capital requirements – money deposited in a Chinese bank account – that can range “from $15,000 to millions of dollars,” he said

And think months, not weeks, to get all of the paperwork approved. “In China, you can’t do anything last minute,” said Savio S. Chan, president and chief executive of U.S. China Partners, which is based in Great Neck, N.Y, and which helped Vision Quest move its light fixtures out of regulatory limbo. “It can easily take up to six months to set up a WFOE.”

LET OTHERS NUDGE THE DOOR OPEN Cabot Hosiery Mills, which makes high-end recreational socks in Northfield, Vt., has edged into the Chinese market. Sought out by a Chinese distributor at an American trade show, the company has traded a bit of profit potential to test the demand for its made-in-America goods without wrangling a WFOE or staffing a sales operation. “Right now, it’s very straightforward and still small, less than 1 percent of our volume,” said Ric Cabot, chief executive of the company, which owns the Darn Tough Vermont brand. “But if it gets to the point where we see we’re leaving too much money on the table, we might consider doing something different.”

DON’T GET KNOCKED OFF Product infringement and knockoffs are risks in China. As a result, Earl Kluft, owner of E.S. Kluft & Company in Rancho Cucamonga, Calif., a maker of luxury mattresses priced from $3,500 to $70,000, watched his first attempt to tap into the Chinese hunger for premium Western brands fall apart. “A huge manufacturer of recliners and small mattresses came to us, and we started a program under their name,” Mr. Kluft said, explaining that the arrangement started with six mattress products named for American cities. But on successive trips to China, he started to see fewer of his products on display – and more of other brands that looked very much like his. “Even after we stopped selling to them, they still had my picture up,” he said. Networking through a friend, Mr. Kluft has since signed a deal with a Chinese division of an Indonesian company that cautiously re-established a sales channel with minimal upfront investment. “The idea is to get this up and running,” he said. “We charge them a royalty, so much a year for use of our name in their stores, and they buy the product at a special discount.”

Mr. Harris, the lawyer, advises getting started by finding reliable partners on the ground. “Find them through people you know, and then pay for whatever due diligence is necessary to make sure that you have made the right choice,” he said. “And do all of this before you start doing business with them.” LOOK LOCALLY BEFORE YOU LEAP For some entrepreneurs, help may be surprisingly close at hand. Many states – including Georgia, Pennsylvania, Mississippi and Tennessee – have international trade programs that offer counsel.

“We think it’s hard for a small company who’s never been to China to figure this out all by themselves,” said Samir Ali, assistant commissioner of international affairs in Tennessee. “We’ll help them see if there’s a need for their product in China and to think it through: Do they need to set up a WFOE? Do they need to have a presence or not? Should they go the e-commerce route? And tell them how much they should budget going forward.” The assistance includes the use of Tennessee’s China offices for meetings with potential partners and help with business-to-business matchmaking through companies the international trade program has vetted in the 10 largest Chinese cities.

Though bullish on the opportunities, Ms. Ali finds herself repeating mantras like: “Don’t go in too fast. Don’t go in blind. And don’t leave your common sense at home.”

For more information on how to successfully expand your business abroad, visit  http://tiny.cc/oimha

 

The Myanmar Gold Rush. Terrific opportunities, but don’t ignore the risks!

As is eloquently described in the Wall Street Journal article below, newly opened for business Myanmar, offers fantastic opportunities for investors and exporters seeking new markets.  As I was reading the article, I could not help but remember a very similar feeling couple decades ago that was permeating international business community, as the Russian market was opening up.  There was excitement in the air, fast deals, terrific opportunities and promises of great riches.

Yet as in any gold rush market, risks abound and should not be overlooked.  It is vital to remember that along with business opportunities, all frontier and emerging markets carry with them such attributes as corruption, political cronyism, crime, lax or nonexistent rule of law,  extremely fluid markets and bare knuckle competition from multiple international and local players.  Thus, while it is definitely worthwhile to seriously explore and pursue opportunities in markets like Myanmar,  it is very important not to be blinded by the gold rush itself and be mindful of the risks.

Below is a partial reprint from my book Fluent In Foreign Business that deals with certain risk management principles that will guide you well, whether your company wishes to enter Myanmar, or any other emerging market around the world.

So you see opportunities, but do you know the risks?‎ 

Many foreign markets in emerging and transitioning countries offer tremendous opportunities for profit, market positioning, and growth. But the risks of doing business in those countries sometimes far outweigh the rewards. Risk factors run the gamut from reputational and financial to health and life. It is crucial to develop a sober risk assessment and consider it carefully side-by-side with the opportunities.

Always evaluate the upside versus the downside. I’ve told this to my sons for as long as they can remember. But if you do business abroad, this maxim could one day save your life.

You should always be conscience of protecting your 4 most valuable assets™ — your life, health, reputation and property. Understanding the downside of every action and transaction is vital. Things are not the same abroad, as they are back home. In the U.S. you can go to court to get satisfaction or call the appropriate authorities. In many foreign countries, especially emerging markets, you are more likely to be confronted by hoodlums (we have them back home, but they are not as prominently featured), crooked cops, reporters or inspectors who will try to shake you down, bend you to their will, and if all fails, make you a victim of a shooting or a beating. Be careful.

Always try to ascertain what the worst outcome of a particular deal could be to you to your 4. As the example above demonstrates, it may not always be possible to assess every risk, but an in-depth analysis is required in each and every case.

When structuring a transaction – any transaction – you must plain and simply understand who all the players are, who stands to lose how much, and what you are prepared to do if someone threatens you. Will you run, retreat, proceed, or attack? This is a serious issue that requires a sober and realistic assessment of your capabilities, your reputation and/or brand name, the potential damage to your 4 most valuable assets™, your financial condition, and your desire to enter and stay in a market.

Pursuing the most lucrative opportunity isn’t always the best way to go. The opportunities with the highest upside must be evaluated together with any threats of harm. Probably the worst kind of opportunity is the one where the upside is very high and the downside is not very clear in the beginning, but becomes more apparent and real as the opportunity develops. Could you could get caught in political crossfire and become a target for the battling forces and be splattered in the process? What happens if the ruling party changes midstream? What about a change in leadership at your perspective customers, borrowers, and other interested parties?

To minimize your risks, you will want to keep your business, your person, and your information secure. That means taking precautions. It also means that you have to be ready to absolutely abandon your entire business in the foreign country at a moment’s notice. In the movie Heat, Robert DeNiro, playing the part of Neil McCauley, defined his survival strategy:  “Don’t let yourself get attached to anything you are not willing to walk out on in 30 seconds flat if you feel the heat around the corner.” A similar strategy should be employed when doing business abroad. Competitors and political enemies may be spying on you and plotting against the success of your business. It happens much more that you probably think.

Reading this you may be asking, “Why would anyone spy on me, or have reason to harm me? I’m just a simple businessperson and my company sells basic consumer products.” You may be right, but you also may be severely underestimating what’s really going on. For example, picture the local oligarch who dominates the niche and enjoys a solid and consistent cash flow as your competitor. This person would not take kindly to intrusion into his market and would have the resources to conduct commercial espionage to gain a competitive advantage. He may also choose to engage in discreditation tactics in the press, or undertake even more sinister activities.

An effective survival strategy must always include contingency plans. These could include getting out of a country in a hurry, implementing a crisis management plan, medical evacuation insurance, or knowing where you can borrow a few hundred bucks in case your wallet is stolen.

If your company has physical assets, you should buy political risk insurance, which can cover war, expropriation, nationalization, terrorist acts, currency inconvertibility, and a host of other risks. Insurance may also be available to project developers and contractors for other politically charged commercial risks in connection with bids on certain contracts, financing from local banks or bonding customs shipments. Such insurance may be available from OPIC, MIGA, or private insurance companies.  For more information on political risk insurance contact info@princetoncouncil.org

You should also always assess the potential rewards as they relate to any additional risk you take on. Selling your goods or services at a modest mark-up, the same way you might back home, may not be enough if the risks are significantly higher. Even though your product or service offering should be competitively priced, you should NOT be involved in doing business abroad if you can’t price your offerings to compensate yourself for all the risks. If you can’t evaluate these risks on your own, hire professional advisors. Whatever it takes, make sure your upside is always much greater than the downside.

Final Frontier: Firms Flock to Newly Opened Myanmar

By PATRICK BARTA, The Wall Street Journal

For decades an isolated military dictatorship, Myanmar’s political reforms have heralded new opportunities for international businesses seeking emerging markets in which to expand. WSJ’s Patrick Barta reports. Photo: Christopher Davy for WSJ.

YANGON, Myanmar—For Tim Love, a vice chairman of advertising giant Omnicom Group, OMC +0.02% it was an opportunity too good to pass up: an entire country, off the map for most Western investors for decades, embracing foreign investment in a place with untapped energy resources and 60 million people.

Here was Myanmar, also known as Burma, with the wagons “going full speed,” says Mr. Love, and clients clamoring to get a foothold.

But doing business here is something of a challenge. As a former military state, Myanmar has minimal infrastructure for conducting international business. Most foreign cellphone plans don’t work there, and newcomers must carry a lot of cash because it is hard to get money. Mr. Love himself met with a local advertising firm whose website credits its founder with “the actual creation of Myanmar’s advertising industry.” How did he find the company? He typed “advertising in Myanmar” into the Internet.

From global multinationals to one-man entrepreneurs, businesses are abuzz over what may be one of the world’s last great—but hardly stable—business frontiers. Starting last year, a new, nominally civilian government took power in Myanmar and embarked on a broad set of political and financial reforms that has convinced U.S. and European powers to drop most economic sanctions.

The Myanmar Gold Rush

Christopher Davy for The Wall Street JournalWorkers arrived at the Rose Garden Hotel building site in Yangon, the country’s largest city, on Oct. 20. The project was restarted last year, after a new, nominally civilian government took power.

The result has been one of the biggest emerging market gold rushes since Vietnam and Russia opened up to more investment in the 1990s. For some companies, only Cuba and North Korea remain.

That attention may only intensify, now that President Barack Obama plans to take early next week the first-ever trip to Myanmar by a U.S. president, as part of a wider Asian tour.

The trip would have been unthinkable 18 months ago, when Myanmar was still considered a pariah state by most U.S. leaders. It is expected to further spotlight the country’s dramatic opening to Western business interests, while also giving Washington a chance to press for further social and economic reforms.

Business leaders say the magnitude of the Myanmar opportunity is hard to describe. The population is larger than South Korea and South Africa, and almost triple that of Australia. Those people need factories to churn out products, power to keep those factories running and exploration technology to find natural resources for that power.

 Indeed, many investors and companies are eyeing openings in everything from oil and gas exploration to new infrastructure in a country that barely has any in some regions. And while poverty is high in the country, a small but growing urban elite is quickly developing Western tastes for everything from cars to soft drinks. Only last August did a major U.S. studio release its first film here in decades—”Titanic 3-D.”

“If I was 25 years old and single, I’d just go there,” says David Grayson, managing director at New York-based stockbrokerage Auerbach Grayson & Co., who has made two trips to the country so far this year. “It’s just ready for takeoff.”

Already, more than a dozen Fortune 500 companies have jumped into the fray:MasterCard Inc. MA +1.15% and VisaInc. V +0.22% are working to roll out credit cards; General Electric Co.GE -0.52% is hoping to land big electric power contracts; and Coca-Cola Co.KO -0.58% is negotiating to open at least one factory in an investment that could total as much as $200 million over three years, according to people with knowledge of the company’s plans.

In a recent visit to the country, Coca-Cola chief executive Muhtar Kent presented Myanmar President Thein Sein with photos of Coke’s operations here from the 1920s and 1930s, just before Coke last pulled out, and made a case for letting the drinks juggernaut enter in full force again.

Japanese, Thai and other Asian companies are trying to move even faster, with Mitsubishi Corp.,8058.TO -0.35% Mitsui 8031.TO -0.56%& Co. and Sumitomo Corp.8053.TO -0.10% each expanding their presences in Yangon, the country’s largest city. Thai construction and petrochemicals companies are trying to kick-start a $50 billion industrial zone and port called Dawei.

“You can smell the change on the streets, in the hotels, in the airports—it’s everywhere,” said Ramesh Tainwala, president of the Asia Pacific division of Samsonite International SA,1910.HK -0.92% which now has five shops in the country and plans to add 15 more over the next three-to-five years.

But the jury is out on whether Myanmar will prove to be a bonanza or a quagmire. When other countries such as Vietnam and Russia opened to the global economy, many of the first movers lost money. Lucrative assets wound up in the hands of politically connected locals or state-owned vehicles. Periods of euphoria were followed by market crashes. Many investors fear the same is about to happen in Myanmar.

What is more, the country presents its own peculiar set of risks that are off the charts even by emerging-market standards. Though not a major issue for investors yet, the new government is struggling to control outbreaks of intercommunal violence; the most recent, in which Buddhist and Muslim residents clashed in parts of western Myanmar, led to more than 80 deaths and thousands of homes torched. (The country was also hit with an earthquake in the northern region over the weekend, killing at least a half dozen people.)

Overall, analysts say, the economy is largely a wreck, with spotty electrical power, few ways to move money in and out and a court system stacked with friends of the former regime. Corruption is worse than Zimbabwe or Sudan, according to Transparency International, a Berlin-based graft-fighting group.

Complicating matters is the fact that U.S. foreign investors still have to be careful about talking business with Specially Designated Nationals, individuals the U.S. has sanctions against for alleged ties to the former military regime. Many of them are still powerful in the local economy—and pop up at trade conferences.

For now, even ATMs here are rare, as are places that accept credit cards. During one visit, Ernie Bower, of Fairfax, Va.-based BowerGroupAsia, says he remembers being surrounded by wide-eyed staff members at a Yangon hotel who said he was the first guest able to use a card there in a long time. At least he had a hotel: With only about 1,850 rooms with business-travel amenities in Yangon, hotels that used to be 20% full much of the year are now often fully booked.

None of this has gone unnoticed by the new government, of course, whose supporters acknowledge the country’s drawbacks, but also say Myanmar has some funding for change. The government, for example, has pocketed huge sums of money selling natural resources such as natural gas, which netted $3 billion in export revenues in the year ended March. 31.

“Of course, we lacked everything in the past, but now we are trying to change,” says Nay Zin Latt, who is serving as an adviser to Myanmar President Thein Sein. “Reform is everywhere.”

That is exactly how many newcomers see it. Dave Peck, an American-born chief executive of Singapore-based Arrow Technologies, says his company never got an order from Myanmar until a few months ago, when three separate traders there called wanting to source a highly specialized, $75,000 machine that analyzes surface roughness.

It seemed fishy at first, he says, but after some investigating he learned they were supplying the machine to a university in Mandalay that had funding to upgrade its physics labs—a precursor, Mr. Peck says, to training more engineers to run factories.

Now, he is hoping to set up distribution relationships with two of the traders to sell more. One of them has also asked for his aid to help order technical papers for the university, which it can’t do online due to the lack of credit cards. It all reminds him of the opening of Vietnam, he says.

“I’m looking at Myanmar being the new frontier for us,” he said, recalling a recent rural trip he took there that reminded him of Myanmar’s once world-leading role in rice-exporting. Noticing not a single tractor, he says, “I thought to myself…what an opportunity for the John Deeres of the world.”

Denis O’Brien, an Irish entrepreneur whose Digicel Group mobile-phone company offers services in 31 countries, is also wide-eyed about Myanmar. He is looking to snag one of several communications licenses the country is expected to offer. He says he has been “mesmerized” by the country since his youth, when his godfather recounted tales of working on the famed Burma Railway as a World War II prisoner of war—and that it could be Digicel’s biggest market if the reforms keep on trucking. “People can hang around waiting for all the t’s to be crossed, but now is the time to invest,” he says.

The new dawn in Myanmar has caught even its most avid followers by surprise. Formerly a British colony, it played a major role in World War II before a military junta took over in 1962, plunging the country into decades of isolation that culminated in Western sanctions over the past 20 years.

The junta was notorious for weird and disastrous economic policies: In the 1980s under former dictator Ne Win, for instance, new money was printed with odd denominations such as 45 kyat and 90 kyat notes, reflecting the general’s numerological preferences.

Chinese and other Asian companies continued to invest in the country’s natural gas fields, hydroelectric dams and other projects. But the military kept a tight grip on most ventures while leaving Myanmar one of the world’s poorest nations, with per capita gross domestic product equivalent to about $1,300—on par with Haiti.

Fewer than 20 out of every 1,000 residents have vehicles, compared with more than 800 in the U.S. Only about 26% of the population had access to reliable electricity last year, according to the Asian Development Bank.

Experts who follow Myanmar say they still aren’t sure why the former regime, which was accused of widespread human-rights violations, decided to dismantle itself. The new government, led largely by former military officers, which took power last year after strongman Than Shwe retired and dropped out of sight, has said it wants to bring reconciliation to the country and catch up economically with Myanmar’s neighbors.

Many Westerners don’t doubt the sincerity, but no one really knows what will happen when the country holds its next national vote in 2015. Impatient youth groups have organized street protests recently, and analysts say they could become more restive if reforms don’t keep coming quickly.

What is more, the country’s reformers have faced push-back from local business leaders and tycoons who are worried about foreigners getting their hands on too many of the country’s key businesses. Many of the tycoons snagged banking licenses and other important concessions without public scrutiny in the waning months of the former regime, and have pressured the government to ensure foreigners can’t fully enter some sectors.

One wealthy Myanmar businessman, Zaw Zaw, says it is important to learn the potential of its people before handing over 100% ownership of some sectors to foreigners. “Otherwise foreigners take over, and then you lose the country,” says Mr. Zaw Zaw, who is among the “Specially Designated Nationals” still targeted by U.S. sanctions.

He denies involvement in any inappropriate activities. His interests include construction, hotels, toll roads and one of the country’s largest banks, which he is working to expand before foreign players can get in, with 20 new branches planned for the coming year.

But even gung-ho investors say the country has plenty of business sectors that would be hard to dominate, at least initially. Companies like Coca-Cola and PepsiCo Inc. PEP -0.35% have to compete with well-established—and cheaper—local brands that were able to lock up the market in the years when Western competitors weren’t present.

In the cola business, those brands include products such as Blue Mountain Cola and Fantasy Orange, some of which sell for as little as 29 U.S. cents a bottle versus 53 cents in some stores for a can of Coke or Pepsi. To build the brand, Coke and Pepsi have plastered Yangon with advertisements, including giant billboards greeting visitors as they walk out of the international airport.

“There has been some frustration,” says Peter Fuller, a managing director for Southeast Asia at Covidien, COV 0.00% an Ireland-based, U.S.-listed medical equipment supplier. His firm is angling to supply Myanmar’s dilapidated hospitals, but he says his staff was told during one visit that outsiders weren’t allowed to visit government hospitals. Under the old regime, such sites were often considered sensitive locations.

A thriving black market presents its own source of competition. Several American companies that visited on a trade mission in July found large stocks of their products on Myanmar shelves—even though they never authorized anyone to sell them, according to people familiar with the visit. Western candy bars, snacks and tech gadgets flowed into the country during the years of military rule, smuggled in by distributors who picked them up in Thailand or elsewhere.

Aung Naing Oo, an official at the government’s ministry of planning and economic development, says Myanmar is cracking down on the black market and has launched special task forces to tackle smuggling.

Other reforms are moving along as well, including plans or pledges to bring in private companies to increase the number of cellphone users and to create multiple new “hotel zones” for all the new visitors coming in. The government has also announced tenders for airport expansions and has promised to offer oil and gas blocks, attracting declarations of interest from Chevron Corp. CVX +0.09% and others.

Still, skeptics say that if Myanmar’s boom is to continue, the country will need to be able to offer both foreign and local business leaders one fairly basic item: an office. Already, the commercial capital of Yangon is showing signs of a bubble. Rents in the few available office towers—Yangon only has about 680,000 square feet of space, or the equivalent of a midsize office tower in New York—have more than doubled since last year to as much as $84 per square foot. That is higher than the single-most expensive building in neighboring Thailand, whose economy is seven times as large as Myanmar’s. It is costlier even than some towers in central Tokyo, where office space averages between $67 and $72 per square foot.

“People refuse to pay, and then they walk away and come back two weeks later, and it’s $10 a square meter higher,” says Tony Picon, a local representative for Colliers International, a real-estate firm. Land prices are also going beyond rational levels. “No one knows what things are worth anymore,” he says.

Still, hope springs eternal in the country. Despite some clients struggling to find out how to pay for ads there, Mr. Love at Omnicom says he holds high hopes for the future. “This is one of the coolest things I’ve ever done,” he says. Mr. Grayson at Auerbach Grayson in New York is optimistic too. The boom “will happen quickly,” he says. “And then we will move on to North Korea.”

—Celine Fernandez contributed to this article.Write to Patrick Barta at patrick.barta@wsj.com

A version of this article appeared November 12, 2012, on page A1 in the U.S. edition of The Wall Street Journal, with the headline: Final Frontier: Firms Flock To Newly Opened Myanmar.

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• Myanmar: Bonanza or quagmire? (todayonline.com)
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