Reporting from: San Diego, California
If you’ve ever spent time selling your own product or service, you’ve inevitably run into hurdles with people who don’t value what you’re selling. Perhaps you’ve even wanted to throw your hands up in the air and curse your non-buyers, blaming them for your failures. It’s frustrating.
While entrepreneurship always involves risks, it’s interesting to note differences between highly developed and developing markets.
I was recently speaking with my friend Chris Tell, who has worked with startups in exotic locales from Myanmar to Cambodia to Mongolia. He talked about the importance of not being dogmatic when doing business in these places. You have to respect the culture and understand how it works outside of the normal business culture you’re used to.
One thing he mentioned about these frontier markets is just how straightforward setting up a business can be. While there are the usual technical indicators for each country which highlight areas in need of improvement, actually being on the ground is an important indicator as well.
And what I keep hearing from frontier market entrepreneurs is just how easy things seem in comparison to the western “free market” world.
Take opening a bakery. In California, where I’m visiting for a conference this weekend, you’d have to jump through hoops for several three-letter state and local agencies, take hours of bakery classes, buy special equipment certified by the right people, and hope you didn’t violate any of the innumerable ordinances, laws, and regulations governing everything from food serving to hiring to advertising.
In a frontier market, you rent a space, hang your shingle, and start baking. It’s a lot easier and a lot less frustrating.
Of course, if you live in a western country, a bakery probably isn’t first on your list of businesses to start. The return on your time invested just isn’t that great, and the barrier to entry is so low that supply exceeds demand, leading many businesses to fail.
In rapidly growing developing markets, however, demand often outpaces supply, creating an enviable position for business owners on the ground.
Imagine, for example, a market not yet penetrated by Coca-Cola. After all, Coke is ubiquitous. But up until a year ago, they had no presence in Myanmar. The military dictatorship there prevented any foreign investment, similar to the current situation in North Korea.
Now that the markets have been re-opened and many western nations are lifting economic sanctions, business there has become a veritable gold rush.
Companies following the Indian concept of “paisa vasool” (value for the money) are thriving here, as a young base of consumers with new discretionary incomes are flocking to spend money everything from cell phones for cheap internet access to coffee and cola as everyday affordable indulgences. With the median age in Myanmar at just under 30, you can see why things are moving at a feverish pace. Even concepts as simple as an English-language school have proven to be good opportunities for fresh-off-the-boat entrepreneurs. While it could be done, I wouldn’t be too thrilled with renting expensive retail space to open a second-language school in the US, or even perhaps China, but I see it as a viable opportunity in a frontier market.
In the west, smart businesses have become all about niche. With so much supply in the market it can be a death sentence to compete with huge, established players in a large market. In developing markets, however, opportunity is everywhere if you can offer affordable products for a market with increasing buying power. This includes finding new ways to improve upon current lackluster offerings. Home internet service, for example, is not widely used in many of these countries as it is costly to set up; mobile networks offer better value. Find ways to deliver widely used, large market products at good price points and you can have an incrementally higher probability of success than you would in the west.
Think of the long list of potential opportunities when you realize the frontier and developing markets’ penchant for western style affluent living is largely untapped. That, combined with a more simplistic process to many business practices, should ignite your passion for finding new products and services to market if you answer the call of these rapidly increasing economies.