Sandwiched between China and Russia, Mongolia is a promising country for entrepreneurs, though not without its challenges. Since its departure from the Soviet-style planned economy and move to a market economy and political democracy, Mongolia has stabilized and adopted many foreign investment friendly policies. Mongolia’s infrastructure is underdeveloped and subject to its harsh climate; however, over one third of the population is concentrated in the capital, Ulaanbaatar. This creates a conveniently concentrated market for business. To the south, China serves as a ready market for imports and as a destination for Mongolian exports, especially copper and coal.
Mongolians are price sensitive consumers; however, Mongolians will pay more for demonstrably superior quality or excellent post-sale service. Foreign brands are popular in Mongolia and often command premium prices (due to perception of better quality and/or status associated with the brand). Relationships are critical for doing business; Mongolians like to conduct business with family, friends, and those they trust.
Mongolia has many market opportunities; four sectors worthy of particular mention are mining, construction, tourism, and meat processing. Mongolia has a wealth of mineral resources. The construction industry is booming as the population grows, economic prosperity spreads, and both municipal and homeowner demand increase. Tourism is still a relatively untapped market for the adventure travel specialist. Lastly, Mongolia has a large supply of domestic meat, but lacks the technology and sanitation standards to fully exploit its supply. These all represent some of the present opportunities for entrepreneurs.
Some of the difficulties entrepreneurs in Mongolia face are:
- Relatively weak rule of law
- Rudimentary and underdeveloped business practices in the private sector
Despite these difficulties, Mongolia is extremely receptive to foreign investment and, in terms of emerging markets, could prove to be a diamond in the rough for budding international entrepreneurs.