Characteristics of starting a business in developing countries
A poor supply of food to the population. As a result, malnutrition and hunger. Poor health care. Hardly educational opportunities and a high illiteracy rate. Many unemployed and an overall lower standard of living. Spread poverty.
Characteristics, several of which often apply to the developing countries of the world. And the current list of developing countries of the Development Committee (DAC) is long: the Organization for Economic Cooperation and Development (OECD) counts over 140 countries. Around a third of these countries are in Africa.
Africa: Popular expansion target for Germans Company
More and more German companies are expanding into states that appear on the OECD list. Despite - or even better - because of the problems in developing countries. Because foundations always make a contribution to progress. They create jobs, improve education and infrastructure, and boost the economy.
African countries are a particularly popular destination for expansion. Forerunners are huge corporations such as various car manufacturers with their locations in South Africa. The medical technology is also strongly represented. For example, one German company operates 30 dialysis centers in South Africa and four in Zimbabwe. Further examples of German expansion are the production site of the pharmaceutical industry in Kenya, cement plants in Namibia and mining companies in Mozambique.
Progress on the example of Rwanda
One of the smallest African countries enjoys particularly strong growing popularity among German companies: Rwanda. The most densely populated country in the heart of Africa is currently considered a model country of progress.
After the terrible genocide in the 90 years, today's Rwanda has long been stable again. And it can become a blueprint for other emerging countries in Africa and worldwide.
6 tips on starting a business in developing countries
But what do companies have to pay attention to when they want to start up in developing countries? In the following I would like to explain 6 basic tips on how expansion can be a success.
1. Use development potential for companies
More and more medium-sized companies from Germany are also daring to gain a foothold here. The opportunities and the development potential are enormous. Skilled workers can be developed and trained on site.
Nevertheless, despite all my positive experiences in Rwanda, I know that the decision to establish a subsidiary in a developing country is a real challenge.
2. Use positive mood
The foreign engagement is very much appreciated here, as I already noticed when I arrived at the airport. A customs officer asked me about the reason for my trip.
"I've founded my company in Kigali," I replied. His young face turned into a huge smile. "You are coming to give work to our people?" Was his next question. Then he truly congratulated me and I have rarely had a warm welcome.
3. Preparation is everything
The legal and administrative framework in many developing countries is complicated. Therefore, it is essential to get informed in advance and visit country-related events. Various associations, counseling centers and chambers of commerce are a good starting point.
You can support them accordingly when starting up a business. In addition, local partners who have in-depth knowledge of the regional market and legal system as well as local experts help.
4. Everything is nothing without culture
Probably the most important factor is to focus on the respective culture. Local conditions must always be taken into account and accepted by the expanding company.
Suppressing cultural peculiarities is counterproductive and will lead to failure in the long term.
5. Use the potential of local employees
Local employees are the solution to deal with the different mentalities in foreign cultures and to generate customers. No manager from Germany knows so much, or can empathize with people's thinking like colleagues on the ground.
For example, it is perfectly normal in Africa to wait longer for results or meetings - because the clocks are ticking differently here. The business model must therefore always be adapted to regional conditions and ethnic structures.
6. Communication is the key to success for companies
The right communication can do a lot. That's why it's essential to have employees at the new location who can express themselves perfectly in the local language. In Africa, personal contact is enormously important despite digitization.
Most shops are handled here personally. So you have to get involved in the foreign meeting and business structures. In Rwanda, for example, you always meet the entire team directly and not just a business partner.
Conclusion: Starting a business in developing countries creates a future
The expansion of companies into developing countries is an important and necessary step in the right direction.
Because the activities of foreign companies can help in the long term to eliminate the initially mentioned, negative features of the developing countries. This is how a developing country can really develop and progress becomes visible.
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German edition: ISBN 9783965961302
English version: ISBN 9783965961319 (Translation notice)
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