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Sunday, April 3, 2011

Laughing all the way to the bank can be so sweet!

Who would have thought that the richest man in Mainland China sells sodas? Not efficiently made consumer electronics and certainly not automobile parts or power tools. He sells sodas!

Billionaire Zong Qinghou of Hangzhou Wahaha Group Co., with "Wahaha" being a literal translation of Laughing Child in Chinese, has an estimated net worth of over 7.0 billion (USD) as stated by Forbes Magazine, 2010.

Mr. Zong, who started his company back in 1987 with a loan of just under $22,000 (USD), is now looking to invest in other industries as well, including high technology and now, as reported by Bloomberg, Department Store Retailing. If only I had listened to my grandfather (a man in his own right who made millions selling soft and hard drinks) before he passed away, he implored me to "...boy, go and get the sodas and the malt-tonics and start selling!!!" I might have been, at least, a millionaire by now.

However, it's more than just the money aspect of it and it is even more than just the weird fact that China's richest man sells mere sweetened, flavoured water. The fact is that in a market like China, some goods are simply universal. Also, it shows that with a little idea, as non-unique as it is, the right strategy, commitment and diversification with needs at the forefront, one can turn a non-unique idea into something spectacular.

Now, the Caribbean, if we take it island by island, does not and probably will never reach the population size of China. However, we do have a unique position as we are a tourist destination and our population can multiply every year due to tourist arrivals.

With that being said, the question has to be asked about the development of such an entrepreneur like Mr. Zong, relative to scale to the Caribbean, is how does the Caribbean- especially with the typically non-unique things that the Caribbean does as a collective- take inspiration from that and exploit our advantages.

Take for example the Tourism Industry. I can't think of one globally recognized Tour Company that is Caribbean based and solely owned by Caribbeans’. Considering that selling tours is something that happens in the Caribbean on a daily basis, there should be a company, or, group of companies, that do this for different markets at a mass scale. The markets for selling tours may be different and vary in size but, the fundamental to selling tours isn't. Also, the efficiencies in the business model within tour companies, is where Caribbean companies have perfected the art of the business, if only through the repetitive nature of our consistent business.

Can you imagine a Caribbean based Tour Company, receiving a loan or grant to venture into the Asian market? Can you imagine a Caribbean based Tour Company, actually breaking into the increasingly lucrative Asian market? With the list of millionaires and billionaires growing in countries such as India and China, the efficiency of the tour selling business compared to the growing market, would make endless profits for a successful firm, with or without full service tours to other jurisdictions outside of the Caribbean e.g., Chinese tourist going to Malaysia or Germany.

Let's go a little deeper into the Tourism market and take a look at Hotel Construction and Maintenance. In the Caribbean, we build hotels, we are a major tourist destination, and will always be in need of Hotels. However, I can think of very few cases in the Caribbean, where a major tourism related project was designed and erected by a solely owned Caribbean Contractor or Developer. More so, there are very few Caribbean construction magnates that specialise in Hotel construction, even though Hotel Construction and Maintenance is a key element of the tourism product.

Now, this is not to say that the construction industry doesn't have its own peculiarities, but, I contend that it's simply a part of doing business in a globalized world where expertise is top notch. For example, raw materials for construction are imported in many developed countries as it is the case for Caribbean countries. Manufacturing of machines and equipment for refining raw materials for construction is also an issue to consider in addition to the maintenance of such equipment. However, in a globalized world where labour and goods are to move freely, and with the open borders as we have in the Caribbean along with the very flexible regulatory regimes, these matters can be solved with a commitment to development and intentions to making progress, as doing nothing gets you nothing.

Can you imagine a government securing a bond for a construction company to build a world class hotel? And can you imagine a Caribbean where that firm not only receives the bond guarantee, but secures the right to import as much labour and materials to build world class Hotels?

Then there is the market for education in Tourism, in all facets of tourism related production and service. From construction development and manufacturing, to service oriented training in Hotel administration to housekeeping, Caribbean centres for tourism industry development would be world class and produce world class talent.

The millions of people that visit the Caribbean on a yearly basis can't be wrong. They come to our islands because we are doing something right as well as we have the right look about what we're doing. This is what makes the comparison to Mr. Zong in the Chinese domestic market for sodas such a sweet comparison, if we allow our minds to grasp the non-unique idea he had that turned his market inside- out.

However, Mr. Zong’s initial $22,000 dollar loan certainly did a great deal in kick starting his empire, especially due to his need, his market’s readiness for his effort and the trust from the regulatory regime in making his venture and subsequent expansion a success.
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