GROUP 2 - SECTION 4- MINI REPORT 3

SECTION IV: MARKET POTENTIAL

A. Identify basic appeal
1. Suitability of climate
Mongolia climate is cold and arid,characterized by long, harsh winters and short, cool
summers. In winter, temperatures can drop well below freezing, with average temperatures
ranging from -20°C (-4°F) to -30°C (-22°F) in the coldest months of December and January.
Some regions in northern Mongolia experience even colder temperatures. Because of those
characters, Mongolian usually suffer seasonal illnesses such as colds, flu, and respiratory
infections during the winter months. Additionally, the dry and dusty conditions in certain
areas of Mongolia, particularly during the summer, can lead to respiratory discomfort or
exacerbate existing respiratory conditions.Making our product a perfect solution for those
diseases, Cao Sao Vang is well- known for its respiratory support, inhalation of Cao Sao
Vàng can provide a refreshing sensation and may help clear nasal congestion and relieve
respiratory discomfort caused by colds, allergies, or respiratory conditions.Besides, Cao Sao
Vang is also used for various purposes and offers several benefits like headache, muscle and
joint pain relief, insects repellent , refreshing and engergizing.
2. Absolute products ban
Prohibited products include drugs/narcotics, devices and equipment for using and
manufacturing drugs/narcotics, narcotic plants, all types of spirits, and scrap metal (ferrous
and non-ferrous). In addition, Mongolia restrict importing highly toxic chemicals, organs and
donor blood for medical purposes, guns, rifles, weapons, military equipment and devices and
their spare parts, or explosives. Cao Sao Vang is safe from this category.
3. Access to financing
Since 2017, Mongolia’s international fiscal and monetary stability has improved
because of macroeconomic reforms conducted under the IMF Extended Fund Facility
program. Under the IMF’s Extended Fund Facility, the Mongolian government undertook a
significant shift in the fiscal management of the country from 2017 to 2020. The fiscal
balance was in surplus in 2018 and 2019, the public debt to-GDP ratio declined for three
consecutive years, and more than 2.5% of GDP was annually transferred to the Stabilization
and Future Heritage Funds. Despite continued policy support and higher commodity prices to
fight against Covid 19, economic growth is dragged down by protracted trade disruptions and
logistical bottlenecks amid border closures. Headline inflation rose sharply by 14.4 percent
by March 2022, weighing down real incomes and household consumption.However, this
situation is not too concerning for our product since most countries in the world, not just
Mongolia have to suffered high inflation rate due to covid 19. Moreover, Bank of Mongolia
has already implemented monetary policy to minimize inflationary pressures.
Mongolia currency is Tugrik, Since Mongolia’s transition to a market economy, its
currency has undergone continuous depreciation, even during periods of strong economic
growth . Despite the intervention of Bank of Mongolia to ease the depreciating pressure ,the
Tugrik depreciated by 5.8% against the dollar in the first half of 2020. In January 2021, the
real effective exchange rate index stood at 97.99, down from 104.11 in January 2019.And the
liquidity of the Tugrik may be relatively lower compared to major international currencies
such as the US Dollar or Euro. This could posed some serious risks if we export our products
to Mongolia market .
- Exchange rate: When the Tugrik depreciates against the Vietnamese Dong (VND),
the value of export transactions from Vietnam to Mongolia will decrease. This can
reduce the profitability of export activities.
- Competitiveness: Vietnamese goods may become more expensive when the Tugrik
depreciates. This can make Vietnamese products less competitive compared to local
products or those from other countries.
- Payment capability: In the case of Tugrik depreciation, ensuring payment from
Mongolia may become more difficult. Risks related to payment and currency
management should be carefully considered before deciding to export to Mongolia.

Therefore, before decide to export Cao Sao Vang to Mongolia, we must consult with
experts or financial and trade institutions to obtain specific and accurate information on the
economic and currency situation in Mongolia.

B. Measure market potential

1. Measure current level of import of product category
Mongolia is well known for using herbs and other traditional medicine for centuries.
Many herbal remedies and balms which are from thyme, mint, nettle, and chamomile are
widely used. However, due to the excessive demands of medicinal products, Mongolia has
imported medical products to supplement its domestic supply.

According to a report of CEIC Data, Mongolia imported pharmaceutical and medical

products with a total value of roughly $138 million USD which is equivalent to a rise by
27,772.902 USD compared to the previous year. This sector contributes about 1.59% to the
total import turnover of this nation.

Among 20 medicinal exported countries to Mongolia, top 3 exporters are India,

Vietnam and Moldova. In particular, Vietnam leads the top with 106,050 shipments. These
facts are updated till 23 March 2023, and are based on Volza's Mongolia Import data of Drug.

Mongolia is accessed as a potential market for importing “Cao Sao Vang products”
which are cold and cough remedies. This market earns $17.78 thousand USD in 2023 and is
expected to grow to $21.92 thousand USD by 2027.

2. Measure current level of sale

Key information about Mongolia Retail Sales Growth according to CEIC plan:

● Mongolia Retail Sales dropped 49.2 % in Dec 2022, compared with a 54.0 % decrease
in the previous quarter.
● Mongolia Retail Sales Growth data is updated quarterly, available from Mar 2012 to
Dec 2022, with an average growth rate of 21.1 %.
● The data reached an all-time high of 265.4 % in Dec 2012 and a record low of -54.0
% in Sep 2022.
Key information about Mongolia Total Imports Growth according to CEIC plan:

● Mongolia Total Imports grew 13.5 % in Mar 2023, compared with an increase of 6.0
% in the previous month
● Mongolia Total Imports Growth data is updated monthly, available from Jan 1998 to
Mar 2023, with an averaged rate of 13.5 %
● The data reached an all-time high of 163.8 % in Jan 2011 and a record low of -51.3 %
in Feb 2009

Further information about Mongolia Total Imports Growth

● In the latest reports, Mongolia Total Imports recorded 741.5 USD mn in Mar 2023
● Total Exports reached 1.5 USD bn in Mar 2023, which registered an increase of 105.3
% year on year
● Mongolia Trade Balance recorded a surplus of 779.1 USD mn in Mar 2023

eCommerce in Mongolia market

Revenue in the eCommerce market is projected to reach US$438.40m in 2023.

● Revenue is expected to show an annual growth rate (CAGR 2023-2027) of 13.03%,
resulting in a projected market volume of US$715.50m by 2027.
● With a projected market volume of US$1,487.00bn in 2023, most revenue is
generated in China.
● In the eCommerce market, the number of users is expected to amount to 1.82m users
by 2027.
● User penetration will be 38.6% in 2023 and is expected to hit 50.2% by 2027.
● The average revenue per user (ARPU) is expected to amount to US$329.70
3. Calculate market potential indicator
Economic Growth: Mongolia has one of the fastest-growing economies in the world,
with an average annual growth rate of 7.2% over the past decade. This indicates a growing
market potential for businesses.
Natural Resources: Mongolia has abundant natural resources, including coal, copper,
gold, and uranium. This attracts foreign investors and creates a potential market for mining
and extraction industries.
 Urbanization: Rapid urbanization is taking place in Mongolia, with the capital city
Ulaanbaatar accounting for more than half of the country's population. This creates a market
potential for real estate, construction, and infrastructure development.
Tourism: Mongolia has a rich cultural heritage and natural beauty, which attracts
tourists from around the world. This creates a potential market for the hospitality and tourism
industries.
Demographics: Mongolia has a young population, with around 70% of the population
under the age of 35. This creates a potential market for consumer goods and services targeted
at the youth demographic.
Government Initiatives: The Mongolian government has introduced several initiatives
to promote foreign investment, including tax breaks and the establishment of special
economic zones. This creates a potential market for businesses

4. Quality of infrastructure
Mongolia has made significant progress in developing its infrastructure in recent
years, with a focus on improving transportation, energy, and telecommunications networks.
However, there are still some challenges that need to be addressed.
Transportation:The transportation network in Mongolia includes roads, railways, and
airports. While some major highways are paved, many secondary roads are unpaved and can
be difficult to navigate, particularly during the winter months. The railway system is limited,
with only one major line connecting the capital city of Ulaanbaatar to Russia and China. The
country has several international airports, but many regional airports are in need of
renovation and modernization.
Energy:Mongolia has abundant natural resources, particularly coal and minerals, and
has been working to develop its energy sector. However, the country still relies heavily on
traditional fossil fuels, particularly coal, for electricity generation. There are ongoing efforts
to develop renewable energy sources, such as wind and solar power, but these initiatives are
still in their early stages.
Telecommunications:Mongolia's telecommunications network has improved
significantly in recent years, with widespread access to mobile phones and the internet.
However, internet speeds can be slow and connectivity can be unreliable in some areas,
particularly in rural areas.

C. Select the market site

 1. Field trip

Local pharmacies and health food stores: Visiting local pharmacies and health food
stores can provide an opportunity to learn about the various health supplements available in
Mongolia.

Traditional medicine practitioners: Traditional Mongolian medicine has a long

history of using natural remedies and herbs to treat various health conditions. Visiting
traditional medicine practitioners can provide insight into the use of natural remedies and
traditional healing practices.

Local markets and shops: Mongolia is known for its unique dairy products, meat, and
herbs, which are believed to have health benefits. Visiting local markets and shops that sell
these products can provide an opportunity to learn about traditional Mongolian ingredients
and how they are used to promote health and wellness.

Herbal medicine farms: There are a number of herbal medicine farms in Mongolia
that cultivate and produce natural health supplements. Visiting these farms can provide an
opportunity to learn about the production process and the ingredients used in making natural
health supplements.

Health and wellness tourism: Mongolia has a growing health and wellness tourism
industry, with spas, hot springs, and yoga retreats that offer natural and holistic treatments.

Research institutions: There are several research institutions in Mongolia that focus
on the study of natural remedies and health supplements. Visiting these institutions can
provide an opportunity to learn about the latest research and studies in the field of natural
medicine.

2. Competitor analysis
a. Number of competitors

There are several competitors for Cao Sao Vang in the Mongolian market.
Tiger Balm: Tiger Balm is a famous liniment brand known for its analgesic
properties. It is commonly used to relieve muscle and joint pain.
 White Flower Oil: White Flower Oil is a well-known liniment brand that contains a
blend of essential oils. It often relieves headaches, muscle aches, and cold symptoms.
Salonpas: Salonpas is a liniment brand offering topical pain relief products like
patches and gels. It is commonly used for relieving muscle and joint pain.
Counterpain: Counterpain is a liniment brand that provides analgesic and anti-
inflammatory properties. It is often used for relieving muscle soreness, sprains, and strains.
Yoko Yoko: Yoko Yoko is a liniment brand known for its heat-generating properties.
It is commonly used for muscle and joint pain relief.
b. Market share of competitors
There are no specific statistics on the competitor’s market share in Mongolia.
However, Salonpas must be the most famous brand. According to Statista, Salonpas is one of
the U.S.'s leading external analgesic rubs brands, with a market share of up to 121.3 million
U.S. dollars. Salonpas was recognized as the brand with the world’s No.1 market share in the
category of OTC topical analgesic patches for the third consecutive year since 2016 by
Euromonitor, a global market research firm. It could be said that Salonpas is the biggest
competitor for Cao Sao Vang in Mongolia.
c. Appeal of competitors to segments or mass market
The market for health supplements in Mongolia is relatively small but growing, with a
rising demand for natural and organic health supplements. Mongolia is a country with a
growing interest in health and wellness, and consumers are increasingly seeking out natural
and organic health supplements as an alternative to conventional medicines.The major factors
driving the growth of the health supplement market in Mongolia include the increasing
awareness of the importance of a healthy lifestyle, rising disposable incomes, and the
growing availability of health and wellness products. Additionally, the popularity of
traditional Mongolian medicine, which emphasizes the use of natural remedies and herbs, has
also contributed to the growth of the health supplement market.The major players in the
health supplement market in Mongolia include both local and international companies.
International companies such as GNC, Amway, and Herbalife have a significant presence in
the market, while local companies such as Natural Mongolia and Mongolian Nature
Pharmaceuticals offer unique and locally-sourced products.
d. Custumer Loyalty

Tiger Balm has built a strong customer loyalty base over the years. Many customers have
reported positive experiences and relief from various aches and pains after using Tiger Balm. The
product's perceived effectiveness in providing temporary pain relief has contributed to its loyal
customer base.
Customer loyalty to Salonpas may stem from the perceived effectiveness of the
products in providing relief from muscle aches, joint pain, and other discomforts. Positive
experiences and consistent pain relief can build trust and encourage customers to remain
loyal to the brand.
Customer loyalty to White Flower Oil may arise from its perceived effectiveness in
providing relief from headaches, muscle aches, and congestion. Positive experiences and
consistent results can build trust and encourage customers to remain loyal to the brand.
Yoko Yoko and Couter Pain is also a popular brand of topical analgesic products, particularly known
for its roll-on applicators.

e. Threat from the subtitute products

Cao Sao Vang is not only pain-relieving product in Mogolia market. It is also not the
only form of pain relief medicine that is available in the market, as there are different
types of products which also aids to relief joint and muscle pain, pain-relieving patch.
Although creams and gels can last much longer but pain relieving patch like Tiger Balm
can be more convenience and focus more on divided are. Not only that, there are also
pain relieving sprays available which provides fast application on the go. Hence this may
affect consumers who are looking for pain-relief medications as these substitutes may
have a stronger appeal to them. There may be also some people who choose not to purchase
pain-relieving medication for them, but instead use various home remedies with everyday
ingredients or western medication like painkillers. This may in turn pull away potential
consumers for Cao Sang Vang, leading to a decrease in the consumer market.

REFERENCES
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https://www.ceicdata.com/en/indicator/mongolia/retail-sales-growth

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https://www.ceicdata.com/en/indicator/mongolia/total-imports-growth

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https://www.statista.com/outlook/dmo/ecommerce/mongolia

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