Doing Business in Emerging Economies
What are Emerging Economies?
The emerging economies are countries like Iran, Brazil, India, Russia, Turkey, Argentina and China. Zara hails from Iran, or Persia. She tells us that Iran is the original name, then it became Persia only to revert to Iran.
Zara Zamani – her background
Zara’s official forename is spelt Zahra, but she has gone by Zara since aged 12. She is just 32, but Zara runs 2 companies, each with 3 business sections.
Zara was born in Iran. She is very proud to be from Iran too. When she took up her studies, she studied in Malaysia, Iran and the United Kingdom. She currently is studying part time in Sweden. Then studied electronics and petroleum engineering. After that, Zara took up business law and business management and later ended up in innovation sciences.
Zara has always been working. She started her first business aged 7 and was privileged to work in a multi-cultural environment. Zara worked as a field engineer in the oil and gas industry where only 3% of the workforce was female. After more than a decade away from Iran, when she returned, she discovered Iranian ladies were not allowed to work on oil and gas rigs. This limitation created an opportunity for Zara Zamani. She became an entrepreneur.
How did Zara get into the travel business?
She decided to travel around Iran, to get to know her country better. It became obvious there was a desperate need for travel technology and infrastructural technology in this emerging economy. The market gap was identified and that is how she got started – in travel technology.
Here’s a snippet from her http://www.egsdigital.com website
Watch Zara Explain The State of Travel Technology in Iran
Graham Arrowsmith asks Zara Zamani about the state of travel technology in Iran.
Iran is actually attracting visitors. Despite sanctions. See this link to an article in The Telegraph: https://www.telegraph.co.uk/travel/destinations/middle-east/iran/Galleries/Irans-travel-highlights/
It is also one of the cheapest destinations for tourism in the world. The political issues do prevent tourism. Beyond the political, there are so many other barriers, similar to other emerging economies, than limit innovation, certainly when it comes to technology.
Huge opportunity for business in this emerging economy
Her travel business required many international agreements. Zara wanted to give travel services abroad access to Iranians. And to tourists coming to Iran.
There is no Expedia. Right now, there is basically NO competition. That’s a feature of an emerging economy.
If you are prepared to innovate, then there is huge opportunity.
Right now, a lot of the innovation is INNOVATION IMMITATION. This is the first phase to generating original innovation.
What are the characteristics of emerging economies?
These are the things that make it a dream investment:
- They have a large population of young educated professionals.
- A huge population of young ICT users. (information and communications technology) – which means if you have a tech solution, users will be onboard quickly.
- Very little competition. Had Expedia been present in Iran, Zara would have had to send her CV to loads of companies!!
- Market growth is very rapid.
- There is an expanding middle class. This means more purchase power by people.
- Operation costs are much lower.
- There is a higher return of investment (especially important for entrepreneurs).
The emerging economies are reaching originality
This idea of imitation has almost reached originality in emerging economies. Her booking engine business was required by people in Iran. But, Zara realised that copying Expedia is NOT good enough. She has localised her business. Innovation PLUS culture.
You have to know what EXTRA the local people need. Iranians needed something like Halal Tourism. Something unique for the region. You need to customise with the needs of the local economy.
Zara realised that when people travel form Iran, they will have financial issues, not least from sanctions.
That is how Zara got interested in FINTECH. By having deals with payment providers. She has used to Blockchain. This business is not limited to Iran either. She is showcased internationally, because she is marketing Iranian hotels.
Her competitors don’t.
The media is both friend and foe
In a way, the media’s view of Iran is helpful to her building an Iranian business.
Zara says that Iran is different to the one that is portrayed.
Iran must treat itself properly too. She asks that Iran does more self publicity. Zara asks, are they lazy? Oddly many Iranians who are educated overseas, they bring back a work ethic that is not always present.
What will it take to make Iran a success?
Here are some things that will help make a success of Iran.
- Religious diversity creates more patience with other cultures.
- Labour mobility is high.
- Young ICT users
There are barriers which can create a link between DEVELOPED and EMERGING economies.
There are barriers too that also present an opportunity:
- Urban Development – less mobility, higher crime rates
- Developing rapidly leading to air pollution, energy shortages, noise levels
- Institutional immaturity – very little diversity, little institutional learning, transparency problems. Overall they miss government structure.
- Financial barriers – suffering from corruption, sanctions, weak financial funding, high transaction costs
- Cultural barriers – experience has shown it has caused poor communication. Public habits has lead to people being too lazy.
Above all, “we don’t know where to go in emerging economies”. There is no data flow. Knowledge is there but education and training is required.
Globalisation creates opportunities for knowledge transfer
There more the world goes global, the more businesses need to expand to new markets. Like Iran.
It is not easy. You have to localise.
But, with localisation, by already sophisticated developed country businesses, you will have access to a huge market.
A huge market, with less competition.
The most attractive way developed and emerging economies can work together is KNOWLEDGE TRANSFER. There isn’t enough knowledge locally. A big opportunity for consultancy businesses.
Integrating companies helps the developed country access cheaper prices.
Speak at conferences to create your network. Human to human.
Have a good link. Networking with influential entrepreneurs in the emerging economy.
Check integrated VC events. Dubai, Istanbul, Moscow. Plus conferences in emerging countries.
Face to face network.
You are Wanted in Emerging Economies
You are appreciated. Zara sees a lot of European consultants and they tell her they are paid 4x their fees in their own country. Their knowledge is not knowing how to manage things.
Sanctions make life a tougher than it needs to be. There are so many side effects. The challenges are already legion.
So many side effect that you need to take care of.
Despite being criticised by local and western politicians, she remains firm in her beliefs.
Zara says Iran has so many domestic technologies. They have built themselves so strong, despite 40 years of sanctions.
Iran: “The country is amazingly strong.”
In the West our ecosystem is taken for granted.
That is how each business was built. There is no hotel booking system. So she built one. It is tough.
“Imagine you had your knowledge today, but were born 50 years ago, how much could you do? A lot.”
Iran is probably 50 years back in technology. It is a privilege for her to be trading today in Iran.
What are the key things to do in the next 100 days?
- Look for services similar to yours in the emerging markets. You’ll be surprised that they aren’t there.
- If they are not there enter the market.