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U.S., Japan Want a Piece of China's Myanmar Action

Stocks in this article: KO PCRFY FRCOY LNVGY YUM BX

TAIPEI ( TheStreet) -- The irony is irrepressible. We have two authoritarian Asian neighbors with a historically cozy anti-Western relationship. One is investing all over the world, from acquisitions in the United States to resource exploration in Africa. The other has cracked open its fertile economy to foreign investors over the past year.

But China is not emerging as the most favored investor in Myanmar, according to an unusually critical report in the venerable online newspaper. Its July 30 commentary says Chinese investors are offering excessively "traditional industries" such as mining, infrastructure construction and telecom projects. Those missions would give China access to the Indian Ocean while locking in natural resources for its still fast-growing economy.

But the Burmese are less interested in horse-trading for ports and minerals than in helping bottle American soft drinks, eating American fried chicken and buying Japanese electronics. Myanmar's market today lacks the scale to lift the shares of those foreign investors, but early arrivals in the once-closed nation of about 55 million people should see eventual rewards.

China won't be competing unless it gives up the traditional client-provider investment approach.

"In contrast to the enthusiasm of the United States, Japan and many other countries, Chinese enterprises, which used to enjoy great advantages in Myanmar, seem to have become onlookers in Myanmar's new investment boom," laments.

China should know it can't keep taking the default view that because the countries to its south are smaller or poorer than China that they're just waiting to be spoon-fed.

Vietnam still beats its chest today about routing China in their war of 1979. Resentment against the Chinese merchant class lingers in Indonesia even 15 years after sometimes brutal forced assimilation under ex-president Suharto. Continental Southeast Asia has pushed back against China for building dams on the upper Mekong River, diverting flows to the delta.

"Bottom line: Were Chinese companies to become more involved in services outside the extractive industries, perceptions would likely shift. In the present environment, any attention paid to a project's environmental and social impacts -- in any industry -- would also help," says Ryker Labbee, Myanmar country director with the research firm Cascade Asia Advisors.

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