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- 🤯 How a 40% Tariff Killed a Profitable Factory in Myanmar
🤯 How a 40% Tariff Killed a Profitable Factory in Myanmar
The rise and fall of Twinkle, a Tier-1 supplier to global brands, undone by U.S. tariffs, a military coup, and market concentration risk.
Admond Lee
January 25, 2026
Hey Founders,
Welcome to The Runway Ventures — a weekly newsletter where I deep dive into failed startup stories to help you become the top 1% founder by learning from their mistakes with actionable insights.
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Today’s story is about a Myanmar success story that collapsed overnight when geopolitics, broken trust, and a single tariff pulled the plug. Let’s get to it! 🚀
Today at a Glance:
☠️ 1 Failed Startup → Twinkle
⚠️ 2 Mistakes → Over-dependence on the US market (single point of failure)
🧠 3 Lessons Learned → Cost arbitrage is not a moat (it’s a timer)
🔗 The Runway Insights → YC: Biggest mistakes first-time founders make
💰 Southeast Asia Funding Radar → Toku, a SG-based AI-powered customer experience platform, raises $12M in IPO on SGX Catalist
Congrats! 🎉🥳
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☠️ 1 Failed Startup: Twinkle
🚀 The Rise of Twinkle
🇲🇲 Twinkle was founded in late 2019 by a group of Chinese entrepreneurs with a simple vision – to make Myanmar a new hub for manufacturing travel bags and apparel.
🕺🏻 Founders’ Story
These founders were not starting from scratch. They came from Twinkle Leatherware, a Hong Kong-based luggage maker established back in 1984.
🏭 With huge factories already running in Shenzhen and Ho Chi Minh City (over 4,000 workers combined), the team saw an opportunity in Myanmar’s low labor costs and growing garment industry.
In other words, they wanted to solve a problem for global brands → finding a cheaper yet reliable place to produce their goods.
The Problem — 🌎 Global brands making bags and travel gear were getting squeezed from all sides.
China became too expensive — wages and compliance costs kept rising.
Bangladesh was cheap, but better suited for simple garments, not complex products like golf bags or suitcases.
Vietnam worked, but factories were getting full and costs were creeping up.
The Solution — 🏭 Twinkle bridged Western demand with Myanmar’s low-cost workforce by":
importing high-grade components (zippers, wheels, fabrics) from China and Vietnam.
assembling complex bags and apparel in Myanmar, where labor was far cheaper.
operating as a Tier-1 supplier, meeting Western audit, quality, and compliance standards.
Finally… finished goods were exported directly to the US and Europe, giving brands a 20–30% COGS saving.
🤝🏻 In short, Twinkle was the bridge between rising global costs and frontier-market labor — assembling high-complexity travel bags in Myanmar so Western brands could protect margins without sacrificing quality.
 | By early 2020, Twinkle was thriving. Over 200 full-time workers, possibly hundreds more on rotation during rush seasons. And they weren’t just making samples — they were a Tier 1 supplier, meaning they dealt directly with brands like:
|
Even in 2022, with Myanmar’s economy in freefall, Twinkle still exported $4.4 million+ worth of goods to the U.S. . Their gear ended up in stores across the U.S., Canada, Russia, India, and more.
🇲🇲🇲🇲🇲🇲 They’d passed rigorous supplier audits — no child labor, fire safety protocols, QC checks — the works. And the “Made in Myanmar” label gave Western brands a sweet tariff break at the time. Everyone in the supply chain was making money.
This wasn’t just a factory. Twinkle became a symbol of what Myanmar could be — a reliable export base in the new global order.
📉 The Fall of Twinkle
But Twinkle didn’t fail because demand disappeared.
Orders were still coming in. Machines were still running.
👊 It collapsed because politics, people, and policy stacked up all at once:
a military coup on the ground
trust breaking inside the factory
one sudden trade decision thousands of miles away made the business mathematically impossible overnight.
📉 And once that domino fell, everything else followed.
📌 Here’s what happened to Twinkle:
🇲🇲 Made in Myanmar
Nov 2019 — 🇲🇲 Twinkle (Myanmar) began operations after being established in Yangon by Chinese owners as a factory for travel bags and apparel.
The parent company brought experience from China and Vietnam to leverage Myanmar’s low costs.
2019–2020 — 🏔️ Peak operations as Twinkle became Tier 1 supplier to Samsonite, Callaway, Matalan with massive exports.
🪖 The US tariff + military coup
1 Feb 2021 — 🪖🪖🪖 Myanmar’s fragile democracy was overthrown in a military coup.
Overnight, protests erupted nationwide.
Mar 2021 — Following Myanmar’s coup, over 100 Twinkle workers were fired for failing to return to work amid the security chaos and nationwide protests.
This sparked a labor dispute and drew criticism of the company’s handling of the crisis.
Jul 2021 — 🤝🏻 Twinkle’s management and the workers’ union reached an agreement after negotiations, resolving the dispute over the March firings (some workers were reportedly reinstated or compensated).
2022 — International scrutiny grew. Several European and UK brands that sourced from Twinkle (such as Carrefour and Primark) reevaluated their relationships.
🙅🏻♂️ Carrefour confirmed it stopped sourcing from Twinkle due to the worker rights controversy, reflecting the reputational damage.
1 Aug 2025 — 🇺🇸💵 The U.S. imposed a steep 40% tariff on imports from Myanmar on goods like bags and apparel (up from ~20%), causing a sharp drop in orders for Myanmar’s garment factories.
That bag Twinkle sold to Samsonite for $50?
📈 It now costs $70 after tariffs. The margin evaporated. Suddenly, factories in Vietnam and Indonesia were cheaper — again.
Twinkle, heavily reliant on U.S. orders for bags and golf gear, was hit hard and cannot sustain operations.
16 Aug 2025 — 🚢 Twinkle shipped out its final batch of goods, routing the shipment via Singapore, and effectively ceased operations there.
This final order marked the end of Twinkle’s run as one of Myanmar’s top exporters.
Aug 2025 — 👋🏻 Twinkle (Myanmar) permanently closed its Yangon factory, making it one of the first casualties of the new tariff regime.
Over 200 employees lost their jobs and they were given only 1 month’s pay as compensation.
The shutdown was confirmed by staff on social media, though the company issued no formal public statement.
Twinkle leveraged Myanmar’s cheap labor to solve a manufacturing cost problem for global brands – and for a while, it worked brilliantly.
🇲🇲🏭 Twinkle grew to become a leading exporter, proving that a Yangon-based factory could deliver for famous international clients. However, factors beyond the founders’ control ultimately brought the company down.
Political chaos
Tone-deaf leadership
Reputational damage
And one fatal blow from global geopolitics
⚠️ No matter what business you’re running, always be paranoid because even a promising business can fail due to external crises and environment risks.
Want to learn more about Twinkle’s downfall?
⚠️ 2 Mistakes
Mistake 1: Over-dependence on the US market (single point of failure)
🇺🇸🤝🏻 Twinkle built its business with heavy reliance on US buyers, with a large share of volume tied to American brands and US-bound exports.
This concentration made sense because the US offered the largest demand, predictable order sizes, and strong purchasing power, which helped keep the factory utilised and cash flowing.
The underlying assumption was that access to the US market was stable and politically durable, and that trade policy would remain a manageable variable. When the US imposed a sudden 40% tariff on Myanmar-made goods in 2025, the economics collapsed overnight, and buyers immediately pulled orders.
Because Twinkle lacked meaningful market diversification, the tariff shock translated directly into revenue collapse, leaving no alternative demand to absorb the impact.
Mistake 2: Punishing workers for not showing up during violent unrest
🪓 After the 2021 coup and violence in Hlaing Tharyar, Twinkle fired over 100 workers who could not safely commute and later attempted to rehire some as “new employees,” resetting their seniority.
At the time, this decision made sense because the factory was under pressure to meet export deadlines, preserve operational control, and signal reliability to global buyers despite thin margins.
😡 The underlying assumption was that enforcing discipline would stabilise production faster than accommodating uncertainty. Instead, the decision:
fractured worker trust
escalated labor conflict
drew reputational scrutiny
… which compounded operational fragility. Early warning signs were visible in widespread commuting danger, explicit worker fear, and rising international sensitivity to labor treatment post-coup.
🧠 3 Lessons Learned
Lesson 1: Single-market dependence turns policy into an existential risk
Twinkle didn’t die because demand collapsed.
🚨 It died because the U.S. changed ONE number.
By relying heavily on U.S. buyers, Twinkle unknowingly made American trade policy its single point of failure. When the 40% tariff hit in 2025, the business became mathematically impossible overnight — no time to adapt, renegotiate, or pivot.
🌮 Key Takeaways:
Revenue concentration hides quietly — until it kills fast.
If one regulator can destroy your unit economics, you don’t control your business.
Market diversification isn’t about growth — it’s about survival.
🛠️ Operator Playbook:
🧐 Calculate Revenue Fragility
Ask:
What % of revenue disappears if one country shuts tomorrow?
If the answer is >40%, you’re running a systemic risk.
📍 Build “second-best” markets early
Even lower-margin or smaller markets (Japan, Middle East, intra-ASEAN) create option value.
You don’t need scale — you need existence.
‼️ Add tariff sensitivity to pricing
For export-heavy businesses:
Maintain pricing models that simulate +10%, +20%, +40% duty scenarios.
If no scenario survives, the model is brittle.
Lesson 2: Your real asset is operational trust
Twinkle thought its advantage was cheap labor. But the moment the 2021 coup hit, it became clear that cost advantages evaporate instantly in a crisis. What actually determines survival is whether your workforce trusts you enough to stay when things get scary.
When workers couldn’t commute safely and were fired anyway, Twinkle didn’t just lose labor — it lost operational trust. And in manufacturing, once trust breaks, productivity, quality, and stability quietly collapse long before revenue does.
🌮 Key Takeaways:
In manufacturing, labor is not a variable cost in a crisis — it’s a system dependency.
Trust determines whether people show up, flag problems, protect equipment, and hold the line under stress.
You can’t “out-discipline” a security or political shock.
🛠️ Operator Playbook:
📜 Design a “Crisis Labor Protocol” before you need it
Define in advance:
What qualifies as excused absence (violence, transport shutdowns, curfews).
Temporary pay guarantees vs unpaid leave vs partial shifts.
Write this into SOPs so decisions don’t get improvised under panic.
🙏🏻 Track a Trust KPI (yes, really)
Add one simple internal metric:
% of workforce returning voluntarily after disruption.
Falling trust shows up here before output drops.
🧪 Stress-test decisions with a 30-day lens
Ask: “If we do this today, will people still work hard for us next month?”
In factories, second-order morale effects often cost more than short-term output losses.
Lesson 3: Cost arbitrage is not a moat (it’s a timer)
🇲🇲 Twinkle’s entire model was built on one thing: Myanmar is cheaper.
And that worked — until it didn’t.
Low-cost manufacturing is not a competitive advantage; it’s a temporary window. Political risk, FX controls, energy shortages, or trade policy can flip the math overnight. Twinkle wasn’t wrong — it was just early and exposed.
🌮 Key Takeaways:
Cost arbitrage is a setup, not a strategy.
Frontier markets pay you back in volatility for every dollar you save on labor.
If your model only works in one macro scenario, it’s fragile by design.
🛠️ Operator Playbook:
🎛️ Draw your “Kill Switch” math
Explicitly model:
At what FX rate, tariff %, or energy cost does the business stop working?
If you don’t know the exact number, you’re flying blind.
✌🏻 Build at least one structural hedge
Examples founders actually use:
Dual-country production (even 10–20% outside your main base).
FX buffer pricing clauses with buyers.
Shorter contract cycles in volatile jurisdictions.
🔗 The Runway Insights
💰 Southeast Asia Funding Radar
Toku, a SG-based AI-powered customer experience platform, raises $12M in IPO on SGX Catalist (More)
Congrats 🎉
WeLab raises $220M (Series D) to fuel expansion in SEA (More)
Spun raises $1.8M (Seed) to simplify visa-processing operations across SEA (More)
Level3AI raises $13M (Seed) to reshape customer engagement for enterprises (More)
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Thanks for reading. I hope you enjoyed today's issue. More than that, I hope you’ve learned some actionable tips to build and grow your business.
You can always write to me by simply replying to this newsletter and we can chat.
See you again next week.
- Admond
Disclaimer: The Runway Ventures content is for informational purposes only. Unless otherwise stated, any opinions expressed above belong solely to the author.
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