Why Developing Countries Copy Business Ideas from West?

By | June 1, 2015


The world is filled with impostors and imitators. Field of business is the place where imitators breed majorly and never cease to exist. When a new business idea is nurtured and executed successfully in the market, soon one can find cloner imitating the same idea. For instance, Pepsi came after Coke, Dominos came after Pizza Hut, Burger King came after McDonalds, Puma came after Adidas, SOTC came after Thomas Cook and so on. Most of the new businesses are imitations or replications of other businesses.

One of the major reason why people copy business ideas is that it saves a lot of time and energy. All they have to do is to slightly twist and alter the ideas to suit the place and process. However, copying ideas is not unethical as it may sound to be. Major big brands are imitators of some other businesses. A company is successful if they are able to produce a product and bring in a set of customers they are able to serve. Though imitation has its own limitations, it requires a bit of smartness of the entrepreneur to imitate the same idea in a different place with the modifications it requires to suit that place and its needs. Copying an idea from one country and replicating it in the other gives more scope to grow. It is a common practice for the developing countries like China and India to copy idea from developed countries like USA. The risk invlved is considerable reduced in an imitated business idea rather than a completely new one. Apart from it, there are various reasons why it is commonly practiced in the world. The reasons are listed below:

1.Being best matters not being first:
In the startup tech market, it is not about who does it first but it is all about who gets it right. Just because a startup is the first to introduce an idea, there is no assurance that it would be successful. In developing countries like China and India, being the first in the race will not get him anywhere nor it is a competitive advantage. If another company with the same business idea but have a better business plan launches few months later, the chances of winning are higher than the first company.

In countries like China, being first can be at their disadvantage. For instance, Fanfou was the first microblogging service in China. They were doing incredibly well at the initial stages until government meddled with them. Government felt uncomfortable with its rise and its potential to spread dissent and protest and so got Fanfou pull down its shutters. This close down got time for many other competitors to communicate and convince the government about the merits of microblogging services. By the time, the rules were cleared and Fanfou reopened, it was too late as its competitors were far ahead of it.

Another example is Groupon, which has given way to thousands of imitators all over the globe. Though Groupon has money and is the market leader, it miscalculated on how to resolve customers issues and it faced troubles to make the business model work for customers. Its competitors like LivingSocial and other coupon websites have made of the Groupon’s mistakes and did better in business, pushing Groupon behind.

The problem crops up from the need to first to stand apart. But it is necessarily not sufficient pre-condition for a great product. The emphasis on overtaking others in the market just seems silly and misguided. Startups have to understand that customers look for the best product not the first product in the market, which is why developing countries look on to western countries for ideas and refine on it.

2.Better view of the future:
Most of the internet entrepreneurs from the India reproduced ideas from the west for a simple reason, they knew the ideas worked. The developing countries like Sri Lanka, India, China or Malaysia does not have a strong internet ecosystem and infrastructure to experiment with. So for them, looking at the working and advancements in the tech companies in the USA is like looking at the future of one’s country. The entrepreneurs just considered this as a crystal ball to predict the future. Companies that failed to make use of this crystal ball was left behind. Flipkart in India, came much after the successful business of Amazon and Ebay in USA.



Though many companies were started as replications of some USA-based companies, now they are more or less giants in their own fields. Most of the American companies who try to expand in China fail because the internet users’ habits in China are way different from that of users in USA, which is why the Chinese entrepreneurs copy the core idea but make changes to fit it for their market. The ideas from the west act as the blueprint for the entrepreneurs to build a successful startup. But it has to be noted that same ideas, over and over again will not work on longer run, if there is no innovation.

3.Lesser risk involved:
Cloning a startup based on the ideas from the companies in USA considerably reduces the risk of the entrepreneur as well as investor’s risk as the idea has already been validated in the market. Since it was common practice in the China, it did not bring stigma attached to using the copy-to-China model in the Chiese scene. The non-existence of the intellectual property laws in China or India, unlike USA, gave a green signal for the new startups to copy the ideas from the west without having to worry about the lawsuits and other legal affairs.

The risks involved many be comparatively lesser but it not reduce it to zero. The news entrepreneurs have to make note of it. The risks involved in starting the same company in another place would not be mutually inclusive. So the entrepreneurs have to take abundant care to check the risks involved and take necessary steps to reduce it.

4.Create new niche:
The ideas from the west paves way to create a new niche in the developing countries which would be new and different to their country. For instance, in the early 2000s, there was a popular social site called Hot or Not, which allows its users to post photos of them and ask others to rate their attractiveness on the scale of 1-10. Users who found each other mutually attractive was connected to each other. The site was considered quite addictive and enjoyed by the Americans. The popularity of this site probed to create one such in India named RateDesi. The idea proved successful with more than 25 million views for the site and generated decent revenue. This shows how an Indian entrepreneur took a proven idea and modified it fit a new niche. This is one such example, there are lot more out there who have taken the existing successful business and tweaked a bit to create a new different niche for the developing countries. Some examples are Etsy is Ebay for artists, Zomato in India is the Burrp for restaurants, Alibaba in China is like the Amazon in USA. However, it has to be noted that the chosen niche should not be too small. Spending one’s resources and energy for a niche that is too small will not help in getting back what one expects. So it is wise to choose a potential business where the return rate of success could be high and could bring back more than what was invested.

5.Easy marketing and PR:
Cloning a successful hot and interesting startup from USA can create a buzz much easily in the market than a completely new startup. OLA cabs in India created a big buzz in the industry when it was launched as many compared it how Uber operated in USA. (It has to be noted that now Uber has expanded to India as well). For most of the developing countries, marketing that is popular in the USA means it is something high-funda and would automatically create a stir. People would be more willing to try it as it is something similar to ones in USA. So replicating startup ideas from the USA means the marketing and PR gets easier.



 



These above discussed reasons show why it is so popular for the developing countries in the east to follow the footsteps of the western countries in coming up with a startup idea. Not everyone who runs a successful business are inventors or innovators, rather they are capable to adapting the business idea to the place and the requirements. So there is absolutely nothing wrong in taking an idea and doing the same thing with modifications elsewhere or with a different niche. However,more than the online business ideas, the ideas which have a significant offline component and demands people on ground is worth copying as long as it addresses a problem or serves a utility.