Impressions of Mongolia

Author: Jamie Willis

“Dear Sir, we are a company in Mongolia and we would like to co-operate with you on an upcoming project.” This was the start of an email sent to me a few months ago by a well-established and well-organised Mongolian firm who have now become our partners for the said project.

It is likely that quite a few people in my position would not have responded to the unsolicited email as enthusiastically as I did – and that would have been to their loss. While many in the UK business community still struggle to conceptualise the Mongolian market and how it might be  relevant for them, I was already firmly persuaded of the attractiveness of this market for entrepreneurial business and corporates alike seeking first mover advantage in what is set to become a success story on a regional or even global scale. This is not a sign of any great insight on my part, but rather a product of the enlightening and revealing UK Trade Mission to Ulaanbaatar in which I was fortunate enough to participate earlier this year. Under the auspices of the Mongolian British Chamber of Commerce, led by the indefatigable John Grogan, and CASCA, headed by experienced Asia specialist Michael Thomas, the Trade Mission took its varied mix of participants to meet a wide range of Mongolian government departments and industry organisations including the Stock Exchange, the Ministry of Roads and Transport, and the Mongolian Bankers’ Association.

Throughout the Trade Mission and a subsequent private return visit to Mongolia, a number of themes consistently emerged. First, it is clear that Mongolia is endowed with natural resources of an extraordinary range and scale, including valuable and strategically important exotics such as rare earths. Second, with such mineral wealth, a relatively small population, and a vibrant democracy, Mongolia is keen to exploit these riches in a manner that benefits the whole population at home and abroad – witness the recent grant of mining shares to all citizens, administered both nationally and through Mongolian embassies overseas. Third, the energy-intensive and labour-intensive nature of extractive industries, coupled with this small population, means Mongolians have to engage with outside partners for the investment, skilled labour and technical expertise they require in order to access these underground resources. In this third area comes the catch : the traditionally self-reliant and self-sufficient Mongolian society is having to learn at breakneck speed how to deal with outside suppliers to the national advantage; how to sort the wheat from the chaff technically, and how to recognise commercially those who are coming in for the quick buck and those who are genuinely willing to settle into a long-term partnership. Overseas companies, for their part, have had to work out quickly how to connect with a market about whose commercial structures and business processes relatively little has been written as compared to the endless books about how to do business in nearby China, Russia, and Japan.

As always, one of the fastest ways to learn is to find a friendly local advisor with experience of the market who can impart some tips and advice, and then to go forth and make a few mistakes of one’s own and learn by experience. This is how I have gone about it; the mistakes have already been quite a few and quite big, but it turns out that none of them have so far been irretrievable. The outcome has been a very positive partnership, an early order for goods, and a lot of development work that has relevance not only to the Mongolian market but also to the marketing of our products elsewhere. The problem is that this approach of sailing into a rapidly-changing market with slender information, learning on the hoof and working through quickly to a good position is as likely to appeal to a risk-averse, procedure-driven organisation as is an email beginning, “Dear Sir, we are a company in Mongolia and we would like to co-operate with you…” If you work for such a company, you will likely face an uphill struggle persuading your manager to allocate time and resource to this market – until a few years from now, when the same firms may be falling over each other to enter a market that by then will be much talked-about. On the other hand, if you are reading this, maybe you and your company are more optimistic and adventurous – in which case the Mongolian market is very much open for business for you, and the Mongolian British Chamber of Commerce represents an ideal way in.

November 21, 2011