Promise of Mongolia Mining Boom Lures Consumer Brands

Burger King has opened its first store in landlocked and sparsely populated Mongolia, joining companies from Pizza Hut to Porsche in anticipating an economic boom from the Oyu Tolgoi copper and gold mine.
Sandwiched between China and Russia, Mongolia has long been dependent on mining and animal herding and still has no McDonald's or Starbucks. But it has begun to see an influx of foreign fast food and other brands. KFC came in 2013, then Pizza Hut last year, and now the world's second-largest burger chain.
The interest in the country of 3 million people comes despite a deep deceleration in growth rates to about 3 percent in the first half of this year from 17.5 percent earlier in the decade. However, after years of deadlock over taxes and royalties, a deal reached in May between the government and mining giant Rio Tinto over the $5.4 billion Oyu Tolgoi mine could help spur renewed growth.
"Now is a good time to be coming in," said Jim Dwyer, executive director of the Business Council of Mongolia.
On the edge of Chinggis Square in the capital Ulaanbaatar, luxury brands Louis Vuitton and Ermenegildo Zegna already have set up boutiques. While these stores are largely empty now, they and others are banking that better times will come.
International car brands that have trickled into Mongolia include Volkswagen and BMW. Porsche opened a showroom in Ulaanbaatar in February with models ranging in price from $70,000 to $300,000.
Jason Broome, in charge of Porsche's Mongolia business, said the local franchise now serves 30 customers.
Burger King has partnered with Mongolian franchisee, Max Group, one of the country's largest conglomerates, engaged in mining, food and beverage, agriculture and real estate. Meal prices range from about $2.5 to $5.5, less than 1 percent of the average monthly salary of $734.
Media company worker Banzragch brought his son to the launch of the Burger King store because he remembered sampling the chain's food overseas and being happy with both the taste and the price.
"Even during harder economic times like now, the price is reasonable," Banzragch, who gave only one name, said at the outlet that opened earlier this month in a busy commercial district of Ulaanbaatar.
Max Group President Ganbaatar Dagvadorj said it plans to open 10 Burger Burge stores in Ulaanbaatar and then expand elsewhere in the country.
"By bringing Burger King here, we are providing jobs for hundreds of people and looking to expand it to employ thousands," Ganbaatar said.
Also at the launch was student Nyamdavaa, who said she first went to a Burger King while studying in France. "It tastes as good here as it did there," she said.
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ULAANBAATAR, Mongolia — Oct 26, 2015, 2:23 AM ET
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