Naran Group

The legitimacy edge

Mongolia’s beauty and retail market is flooded with imports — 95% of cosmetics cross a border before reaching a consumer. In a market structured by informal trading, the question is never which brand you carry. It is whether anyone will trust that you carry it properly.

Naran Group built its competitive advantage on the answer to that question. When the company signed Mongolia’s first official distributorship with Schwarzkopf & Henkel in 1995, it was not simply acquiring a product line. It was establishing a new category of commercial relationship — one with legal standing, quality standards, and after-sales accountability — in a market where none of those norms had previously existed. Competitors were importing goods through grey channels and selling whatever margins allowed. Naran was introducing the infrastructure of legitimate trade.

That infrastructure has compounded across 35 years. The brands that Naran secured through authorized relationships in the 1990s created the trust that attracted Yves Rocher in 1996, Sony in 1997, THANN in 2010, and Hard Rock Cafe in 2016. No informal trader could have held those relationships. The quality-first decision was not strategically obvious at the time — it cost more, required more documentation, and offered narrower margins than opportunistic imports. It was also the only decision that built something durable.

The currency store in the collapsing economy

The founding moment is not complicated. In early 1990, Mongolia’s communist government collapsed under mass protests. The MPRP Politburo resigned. Private enterprise — prohibited for generations — became legal almost overnight.

D. Udval and S. Boldkhet were exactly positioned for what came next, though not by planning. S. Boldkhet had spent a decade in Mongolia’s Ministry of Foreign Trade, handling commercial relationships with Western countries, then served as trade and economic attaché at Mongolia’s embassies in Japan and then Singapore. By the late 1980s, he had watched consumer capitalism function at scale in two of Asia’s most dynamic markets — the department stores of Tokyo, the trading floors of Singapore — while his official role was to represent a state system that controlled distribution, production, and retail as unified government functions. He returned to Ulaanbaatar with a commercial literacy that almost no one in Mongolia possessed. D. Udval had trained as a chemist, worked at Mongolia’s Chemistry Institute, and spent years teaching secondary school. Neither had business training in any conventional sense. What they had was access to networks that no other prospective private entrepreneur in Ulaanbaatar possessed, and a firsthand understanding of what well-functioning markets produced.

They borrowed $8,000 from Khotsh Bank — their starting capital, their entire stake — and opened Naran Shop in Bayanzurkh’s 13th microdistrict, in a building that departing Russian workers had left half-finished. They sold goods on commission: Japanese 200-yen store products, East German Intershop goods, clothing ordered from German Quelle fashion catalogs, small imports from Beijing. In a country with no template for private commerce, the first board meeting happened at the kitchen table.

The economy surrounding them was in freefall. By 1992, inflation had reached 325.5% annually. The tugrik was losing value faster than any price could be set. GDP per capita fell to $355. Soviet aid — previously equal to one-third of Mongolia’s GDP — had vanished when the union collapsed. Ration tickets were in effect.

Naran survived this period through pure adaptability: commission-based selling kept inventory risk minimal, cashmere exports generated hard currency when the tugrik was unreliable, and proximity to the China and Russia border kept small-goods imports flowing. The company became one of Mongolia’s first private enterprises to conduct foreign trade directly — an activity the state had monopolized for generations. The survival logic was not visionary. It was, as D. Udval later admitted with unusual candor, simply “how do we make money” — everyone doing what they could.

The quality pivot that shaped everything

The decisive crisis came early. Naran’s first electronics imports were cheap products sourced from low-cost markets. When they broke — and they did — customers returned them, demanded refunds, and left the founders with losses instead of profits and a warehouse of unsaleable goods instead of inventory.

D. Udval described the moment in a September 2025 interview with Mongolian Economy: “Our first import experience involved low-cost products. But when some of them broke or didn’t work properly, we had to take them back and refund the customers. Instead of making a profit, we faced losses and were left with piles of broken electronics. That was a turning point.”

The decision that followed was not written down as policy. It was simply a different way of operating: never sell anything that cannot be guaranteed. Premium brands, authorized relationships, official distributorships. Every subsequent acquisition was filtered through this principle.

In 1995, that principle produced Mongolia’s first official distributorship agreement — Schwarzkopf & Henkel, then Carlsberg/Tuborg, then Sony. Naran Department Store opened the same year in the former “Children’s Store No. 100” in central Ulaanbaatar. The pivot from opportunistic trading to systematic brand stewardship was complete.

The second major crisis tested the model from a different angle. Around 2003, a competitor bribed an international company’s regional manager and seized Naran’s Stimorol and Dirol chewing gum distributorships — erasing years of brand-building investment overnight. Naran’s response was not to quit franchise relationships but to deepen them. The company accelerated the development of its own products: Mondent toothpaste, manufactured under contract in Spain to ISO 9001/13485/14001 standards, and Tulip — a proprietary fragrance brand. The stolen franchises produced, years later, products that could not be taken.

The third crisis arrived in 2015, when Mongolia’s economic downturn cut Naran’s sales in half. Management shut down shopping center escalators to reduce monthly electricity costs, reduced staff hours, and paused construction on Naran Palace. D. Udval’s public statement captured the philosophy: “We are cutting costs without shame or hesitation.” The companies that could not make that statement — that hesitated, that borrowed to maintain appearances — did not survive the cycle. Naran did.

The distribution empire

What Naran built across three decades is not a single business — it is an architecture. The 13 subsidiaries span categories that no Mongolian competitor has replicated: Naran Trade (distribution headquarters), Naran Department Store, Naran Beauty World (THANN, Pupa Milano), Naran Cosmetics (mass-market beauty imports including Evoluderm, Enchanteur, Romano, Creme 21), Naran Foods (Storck, Toblerone, Mirabell, Guylian, Granini, Del Monte), Naran LifeStyle (formerly Timberland and Esprit), Naran Mart (supermarkets), Inter Cuisine (Hard Rock Cafe, Coffee Bean & Tea Leaf), Naran Travel, City Real Estate (Naran Mall, Plaza, Place), Capital Properties (Naran Residence), and Super Vision Cable Television (SBN Television, broadcast channel M-3085). Seven proprietary shopping centers anchor the retail real estate division in Ulaanbaatar — a level of owned infrastructure that no other Mongolian retailer has matched.

The 1996 Yves Rocher franchise was the pivot that defined the beauty division’s identity for two decades. Naran transformed Mongolia’s State Medical Beauty Salon — a place that mixed oils in 10-liter plastic buckets and wrapped them in cellophane — into a Paris-branded center with professionally trained staff. Staff traveled to Paris and Moscow for professional training, and the franchise expanded to 12 stores and 5 beauty salons at its peak in 2018. It ran for 22+ years and became, by Yves Rocher’s own standards, Asia’s longest-running operation. Its eventual transfer to competitor Amuulai LLC, sometime around 2019, ended quietly — no press release from either party, no public explanation. The conglomerate’s diversification across 100+ brands absorbed the blow; no single franchise could now threaten the whole.

The 2010 THANN franchise from Thailand — four stores and three Sanctuary Spas in Ulaanbaatar — anchored the beauty portfolio after the Yves Rocher transition. Naran Beauty World expanded Pupa Milano (Italian makeup) and continued developing the Tulip retail chain (six locations) carrying premium fragrance houses including Kenzo, Paco Rabanne, Carolina Herrera, Calvin Klein, Hugo Boss, and Versace. The own-brand manufacturing thread that began with Mondent toothpaste in 2014 extended to Tulip fragrance — products developed precisely because they cannot be seized by a competitor with a better bribe.

The Hard Rock Cafe represented a different kind of patience. S. Boldkhet first proposed the franchise after visiting the United States and was told Mongolia was not ready — Moscow and Beijing did not yet have locations. He held the relationship for 18 years. On December 10, 2016, Hard Rock Cafe Ulaanbaatar opened at Naran Place as the 73rd country in the network, beating both cities that had made him wait. It was later named among the Top 10 Best Designed Hard Rock Cafes globally, featuring a Shamanic Mongolian Mask collection with memorabilia from Taylor Swift, Metallica, and John Lennon.

The question at 35 years

In September 2025, D. Udval told Mongolian Economy: “A company is not private property — it is the wealth of society.” The statement is unusual from a founder who built one of Mongolia’s first private enterprises. It also describes, with precision, the institutional character Naran has acquired across 35 years of continuous operation.

The twin challenges now facing the company are visible and structurally significant. The Yves Rocher franchise is gone — the anchor relationship of the beauty division for a generation. The company that trained its staff in Paris and built Asia’s longest-running YR franchise is now building its premium beauty identity around THANN, Pupa Milano, and the Tulip chain. The transition has not been announced publicly. It is simply being executed.

The succession question is equally present. The founding couple, who have led Naran together since 1990, have reached the age at which any institution must answer whether its leadership can extend beyond its founders. D. Udval’s children are actively involved in the company’s digital infrastructure development. A professional management layer exists at the subsidiary level — Naran Beauty World has had a separate CEO since at least 2009. Milan B., their child and a Baruch College graduate, serves as Director of Business Development. The architecture for transition is present; the formal handover is not yet documented.

Mongolia’s cosmetics market is growing at 21% annually, estimated at approximately $58 million, and 95% import-dependent. Every brand entering that market needs a logistics partner with authorization. Naran has been that partner for longer than any other company in Mongolia’s history.

What is demonstrable is the foundation. The company that survived the collapse of Soviet communism, Mongolian hyperinflation, competitive bribery, and a 50% revenue crash did so because it chose legitimate distribution over informal trading at every inflection point. Brand legitimacy compounds — slowly and then suddenly. Naran has been proving this for 35 years.

Last updated: April 18, 2026